Arista Networks Blows Out Earnings and Rises While Most AI Suppliers Fall After Midterms
Eric Bleeker, Chief Investment Officer at 24/7 Wall St., looks at why Arista Networks (NYSE: ANET) earnings could make the stock a safe haven in the AI trade. Arista makes the high-speed switches that connect AI servers inside data centers,…
Eric Bleeker, Chief Investment Officer at 24/7 Wall St., looks at why Arista Networks (NYSE: ANET) earnings could make the stock a safe haven in the AI trade. Arista makes the high-speed switches that connect AI servers inside data centers, and its quarter beat across the board.
Adjusted EPS came in at $1.20 against expectations of $1.08. Revenue was $3.66 billion, up 58.5%, versus estimates of $3.33 billion. Arista guided fourth quarter revenue to $3.9 billion to $4 billion and adjusted EPS to $1.26 to $1.30, both above analyst expectations. It raised its annual outlook for the fourth time this year, pointed to 2027 growth of about 38% to 40%, and forecast $7 billion in AI networking sales next year, double the $3.5 billion this year. Purchase commitments rose to $11.4 billion from $9.7 billion.
Most AI suppliers are falling after the midterms, as data center restrictions raise the odds of slower spending, while hyperscalers like Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT) are rising. Bleeker sees Arista as a systems company that could gain from that shift. The catch is valuation: after another 10% gain, the stock trades near 35 times expected 2027 profits. Watch whether money keeps rotating from memory and other bottleneck stocks into Arista.
Eric Bleeker, CFA has been investing for more than 20 years. He began his career working at Microsoft before joining Motley Fool, one of the largest publishers of financial research. In his 15 years at Motley Fool Eric served as the General Manager for Fool.com and led coverage in the Technology & Telecom sector. In addition, he was a featured columnist and has hosted dozens of investing seminars attended by more than a million total investors. Eric has more than 1,000 financial bylines to his name and has been featured in The Wall Street Journal, CNBC, Fox Business, and many other leading publications. He is currently focused on artificial intelligence investing and is a CFA Charterholoder.
