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Globe and Mail
10 hours ago
- Business
- Globe and Mail
Will ANET's Deeper Focus on Cloud-Native Software Pay Off?
Arista Networks, Inc. ANET has made several additions to its multi-cloud and cloud-native software product family with CloudEOS Edge. It has introduced new cognitive Wi-Fi software that delivers intelligent application identification, automated troubleshooting and location services. This supports video conferencing applications like Google Hangouts, Microsoft Teams and Zoom. The acquisition of Awake Security, a Network Detection and Response platform provider that combines AI with human expertise to autonomously hunt and respond to insider and external threats, has expanded its cognitive campus portfolio with new platforms. These include the 750 Series modular chassis and the 720 Series 96 port fixed switch. Arista has also announced unified edge innovations across wired and wireless networks for its Cognitive Campus Edge portfolio for Enterprise Workspaces and an enterprise-grade Software-as-a-Service offering for the flagship CloudVision platform. Arista should benefit from its software-driven, data-centric approach that helps customers build their cloud architecture and enhance the cloud experience they offer their clients. The company holds a leadership position in 100-gigabit Ethernet switching for the high-speed datacenter segment. It is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations. Other Tech Firms Focusing on Cloud Networking Cisco Systems, Inc. CSCO is the largest player in the networking space. The company has a strong presence in the router and switch market. It has retained a leadership position in WLAN and Ethernet switching and is rapidly expanding its presence in the network security domain. Cisco provides Next-Generation Network Routers that transport data, voice and video information from one IP network to another. It is expanding its Agentic AI footprint with the introduction of Webex AI Agent, Cisco AI Assistant for Webex Contact Center, Workflow Automation in Cisco AI Assistant for Webex, AI Capabilities in Webex Control Hub and Webex Calling Customer Assist. Its strategy of integrating AI across security and collaboration platforms and developing agentic capabilities across the portfolio is a key catalyst for improving the customer experience. Juniper Networks Inc. JNPR is taking significant steps to enhance the adoption of its AI-Native Networking Platform through the introduction of its Blueprint for AI-Native Acceleration. This comprehensive framework is designed to simplify and accelerate the deployment and utilization of AI-driven networking solutions, benefiting enterprises across various sectors. By leveraging Juniper's AI-Native Networking Platform, organizations can expect up to an 85% reduction in operational expenses and a 90% decrease in network trouble tickets. The platform's industry-leading AIOps technology is key to delivering these results, providing reliable, measurable and secure connections across all devices and applications. The Blueprint for AI-Native Acceleration further enhances these capabilities, enabling customers to achieve up to nine times faster deployments. ANET's Price Performance, Valuation and Estimates Arista has surged 10.7% over the past year compared with the industry 's growth of 34.3% Image Source: Zacks Investment Research From a valuation standpoint, Arista trades at a forward price-to-sales ratio of 13.47, above the industry. The Zacks Consensus Estimate for Arista's earnings for 2025 has increased over the past 60 days. Arista currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Research Chief Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months. Free: See Our Top Stock And 4 Runners Up Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cisco Systems, Inc. (CSCO): Free Stock Analysis Report Juniper Networks, Inc. (JNPR): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis Report
Yahoo
15-05-2025
- Business
- Yahoo
Arista Rises 18.8% in a Year: Should You Bet on the Stock Now?
Arista Networks, Inc. ANET has increased 18.8% over the past year compared with the communication components industry's growth of 40.5%. The stock has outperformed the Zacks Computer & Technology sector and the S&P 500's growth of 11.9% and 11.2%, respectively. Image Source: Zacks Investment Research The company has outperformed its peer, Juniper Networks, Inc. JNPR, but underperformed relative to Cisco Systems, Inc. CSCO. Juniper has gained 4.5%, while Cisco has surged 34.1% during this period. Arista is steadily expanding its portfolio to match the ever-growing demand for modern AI infrastructure. It is witnessing solid demand among enterprise customers backed by its multi-domain modern software approach, which is built upon its unique and differentiating foundation, the single EOS (Extensible Operating System) and CloudVision stack. It has introduced Cluster Load Balancing, a sophisticated network load-balancing solution integrated into Arista EOS. The solution streamlines the management of large flows of data across network latest Arista Etherlink AI Platforms are capable of supporting ultra-fast data rates (800G/400G). It can efficiently support small AI clusters as well as large deployments with 100,000+ accelerators. NVIDIA's NVDA GPU roadmap focuses on pushing the boundaries of high-performance computing and supporting data centers with next-generation capabilities. NVIDIA's upcoming Blackwell Ultra GPUs are likely to provide up to 25X the token throughput for AI inference compared to Hopper 100. To connect these GPUs in AI clusters, enterprises need networks with ultra-low latency and extremely high throughput. Arista is actively aligning its innovation strategy with such emerging technology trends. Backed by strong momentum in cloud and AI networking solutions, the company is expected to generate $750 million in front-end AI revenues in 2025. In the first quarter, Arista generated net cash flow of $641.7 million from operations, up from $513.8 million a year ago. Healthy growth in cash flow indicates efficient working capital management. As of March 31, 2025, the company had $1.84 billion in cash and cash equivalents and $257.8 million in other long-term liabilities. At the end of the first quarter of 2025, ANET reported a current ratio of 3.93, way above the industry's average of 1.48. A current ratio above 1 suggests that a company is well-positioned to meet its short-term obligations. Such a strong liquidity position will allow Arista to steadily invest in growth initiatives and expand opportunities across several end markets. Growing geopolitical and trade uncertainty remains a major concern for Arista. The recent decision by the United States and China to temporarily reduce reciprocal tariffs for a period of 90 days is a positive. However, if the countries fail to reach a resolution and tariffs are imposed again, this will have a negative impact on Arista's gross margin. Amid such uncertainty, the company has ramped up its inventory to create a supply chain buffer. This reduces the availability of capital for strategic investments as a higher part of the capital is locked in the company is facing intense competition from Cisco in the cloud network solution market. In the network equipment market, Juniper is a major competitor. To fend off the competition, the company has to steadily invest in enhancing its existing product line and developing new technologies. This is weighing on the margin. In the first quarter of 2025, total operating expenses were $417.3 million, up from $341.2 million in the year-ago quarter. Research & development costs rose to $266.4 million from $208.4 million. Image Source: Zacks Investment Research ANET is currently witnessing an uptrend in estimate revisions. Earnings estimates for 2025 have jumped 3.64% to $2.56 over the past 60 days, while the same for 2026 has increased 1.73% to $2.94. The positive estimate revision portrays bullish sentiments about the stock's growth potential. Image Source: Zacks Investment Research The company is aiming to become the core network backbone for next-generation AI clusters. Arista is placing strong emphasis on expanding its Etherlink portfolio and developing cutting-edge features focused on maximizing AL cluster efficiency. NVIDIA's GPU roadmap presents a solid growth opportunity for the company. Strong balance sheet and healthy growth in cash flow are positive factors. Upward estimate revision underscores growing investors' rising operating expenses and fierce competition are weighing on the bottom line. Sino-U.S. trade uncertainty remains a major concern. Despite some near-term challenges, Arista is poised to gain from solid AI traction, and investors are likely to profit in the long run if they bet on this stock delivered a trailing four-quarter average earnings surprise of 11.82%. Arista currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report Juniper Networks, Inc. (JNPR) : Free Stock Analysis Report NVIDIA Corporation (NVDA) : Free Stock Analysis Report Arista Networks, Inc. (ANET) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
