Latest news with #ExtensibleOperatingSystem
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
Globe and Mail
30-04-2025
- Business
- Globe and Mail
This Buy-Rated Tech Stock Could Be an Underrated Tariff Winner, According to Analysts
Rosenblatt Securities, a New York-based investment firm, has upgraded Arista Networks Inc.'s (ANET) stock from 'Sell' to 'Neutral,' citing its resilience and new market advantages. Arista's projections for the second half of 2025 and into 2026 remain strong despite macroeconomic headwinds, giving investors reason to stay the course. Rising tariffs have turned the tide, making White Box switching options from China and Asia less appealing. This shift benefits Arista directly. Rosenblatt analyst Mike Genovese noted the company's strong lineup of switches compatible with Linear-drive Pluggable Optics transceivers, reinforcing its competitive edge. Moreover, Rosenblatt says its original 'Sell' thesis has now played out. Once concerned that Arista's Extensible Operating System might lose value in artificial intelligence (AI) factory data centers, analysts now see the firm securing major contracts. Microsoft Corporation (MSFT) could bring in several hundred million dollars, with Oracle Corporation (ORCL) and Alphabet Inc. (GOOG) (GOOGL) each contributing $100 million to $200 million over two to three years. This boosts confidence in Arista's $750 million AI back-end revenue goal for 2025. About Arista Stock Based in Santa Clara, California, Arista Networks Inc. (ANET) is a key player in data-driven, client-to-cloud networking, supporting large-scale AI, data centers, campus systems, and routing environments. With a market cap of $101.3 billion, ANET delivers a robust network stack focused on agility, automation, security, analytics, and availability. Central to its platform is the Extensible Operating System (EOS), a modern publish-subscribe, state-sharing OS that anchors its advanced infrastructure. Over the past 52 weeks, ANET stock has chalked up a 28.3% gain. In just the past five trading days, the stock rose 16.3%, including a 3% pop on April 29 after the Rosenblatt upgrade. Currently trading at 32.43 times forward adjusted earnings, ANET commands a premium over its peers. Yet compared to its own five-year average, the valuation is right in line - and even slightly discounted. For seasoned investors, it may be the kind of subtle pricing mismatch that opens the door to a strategic entry before the broader market catches on. Arista Falls After Q4 Earnings Beat On Feb. 19, ANET slumped more than 6% after the company beat fourth-quarter earnings results, but offered up lighter-than-expected guidance. The networking firm reported revenue of $1.93 billion for the quarter, marking a 25.3% increase year over year and topping the estimated $1.9 billion. Non-GAAP gross margin came in at 64.2%, a shade above the guided range of 63% to 64%, though slightly lower than the 65.4% reported in the same quarter last year. Arista delivered a non-GAAP EPS of $0.65, reflecting a 25% jump from the year-ago period and beating the consensus estimate of $0.57. Plus, AI demand has started to pick up. During the quarter, Meta Platforms, Inc. (META) deployed Arista's Ethernet switch for its latest AI cluster. The win has enhanced the company's presence in the AI space and fueled operational cash flow, which saw a year-over-year increase of more than 95%. CFO Chantelle Breithaupt noted that this strong performance enables Arista to double down on its investments in strategic areas like AI and Campus markets. Arista expects revenue for the first quarter of 2025 to range between $1.93 billion and $1.97 billion. It projects a non-GAAP gross margin of around 63% and a non-GAAP operating margin of approximately 44%. The company is slated to report its Q1 2025 earnings results on May 6. Analysts expect ANET's Q1 EPS to rise 17.8% year over year to $0.53. For the full fiscal year, EPS is forecasted to grow 7.3% to $2.21, with a further projected jump of 16.7% year over year to $2.58 in fiscal 2026. What Do Analysts Expect for Arista Stock? Across Wall Street, the sentiment leans decidedly bullish, with an overall rating of 'Moderate Buy.' Of the 20 analysts tracking the stock, 13 are backing a 'Strong Buy,' two suggest a 'Moderate Buy,' four maintain a 'Hold,' and one has issued a 'Strong Sell.' Rosenblatt's newly constructive view on ANET stock comes with an upwardly revised price target of $85. The average price target of $112.22 represents potential upside of 36.4%, while the Street-high target of $145 signals a possible surge of 76.2% from current levels.
