Goldman and Bank of America see 30%-plus upside for this under-the-radar AI play
Two major Wall Street shops singled out Arista Networks as a buy, even as shares pull back in the wake of earnings. The cloud computing company on Tuesday narrowly topped LSEG first-quarter revenue estimates, but managed a solid beat on the bottom line. Arista earned 65 cents per share, excluding items, on revenue of $2 billion. Analysts predicted it would earned 59 cents per share on $1.97 billion in revenue. Shares of Arista have tumbled 18% in 2025, and were down more than 7% on Wednesday. ANET 1Y mountain ANET 1Y chart Goldman Sachs and Bank of America both reiterated their buy ratings on the stock. However, Goldman Sachs analyst Michael Ng lowered his 12-month target price to $115 from $130, citing uncertainty from tariffs in the latter half of the year. Ng's forecast represents a 27% upside for Arista. Ng expects Arista will continue to benefit from the artificial intelligence trade, which will be a catalyst for the stock. "ANET highlighted momentum in AI demand & reiterated its expectations to generate at least $750 mn in back-end AI switching revenue in 2025 across its four major AI cluster projects, with 3/4 already in production; the company expects to see strong pull through of front-end AI switching (~1:1) but acknowledged the difficulty in identifying what products are deployed in the front-end," he wrote. While tariff uncertainties certainly linger for the stock, most of Arista's production volume is in Mexico, which is compliant with the current U.S.-Mexico-Canada trade agreement, or USMCA. Ng added that Arista's full-year outlook appears conservative given its positive momentum in the cloud computing business. Bank of America analyst Tal Liani also highlighted Arista's potential in cloud computing as a major tailwind. Liani's $130 price target corresponds to a potential 43% rally from Arista's Tuesday close. "Putting aside the tariff impact, we believe Arista proves repeatedly that it can successfully compete with white box switching and Nvidia's solutions, with a stable position within its key Cloud Titan customers, and a leading position with Baby Clouds and Enterprises," Liani wrote. Specifically, Arista's key cloud titan and hyperscaler customers, Meta and Microsoft, have announced plans to respectively increase capital expenditures spending by 70% and 44% this year. "For next year, we expect Meta to slow meaningfully but Microsoft should ramp its Ethernet back-end (AI) deployments, benefiting Arista and potentially offsetting some of Meta's rationalization," the analyst added.
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Caution Regarding Forward-Looking Information and Statements This press release includes certain statements and information that may constitute 'forward-looking information' within the meaning of applicable Canadian securities laws and/or 'forward-looking statements' within the meaning of applicable United States securities laws (collectively, 'forward-looking statements'). 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Often, but not always, forward-looking statements may be identified by the use of words such as 'expects', 'anticipates', 'plans', 'projects', 'estimates', 'assumes', 'intends', 'strategy', 'goals', 'objectives' or variations thereof or stating that certain actions, events or results 'may', 'could', 'would', 'might' or 'will' be taken, occur or be achieved, or the negative of any of these terms and similar expressions. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements in this press release are based upon, without limitation, the following estimates and assumptions: the Company carrying out its public offering; the Company successfully completing the SEC review process; obtaining requisite regulatory approvals; and general business, economic and market conditions. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. Important factors that may cause actual results to vary, include, without limitation, that the Company may not carry out its public offering or complete the SEC review process. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. 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