Arista Networks' Nvidia Problem And The Solution

Uttam Dey
3.26K Followers

Summary

  • Arista Networks remains a dominant Ethernet switch leader, but conservative AI revenue guidance has caused it to lag peers like Nvidia and Celestica.
  • Despite slowing sequential growth, Arista’s robust margins and strong client base position it well for continued upside; as hyperscaler capex ramps up.
  • Markets have already priced in competitive pressures, and I expect Arista to revise its AI revenue targets upward, supporting a higher valuation.
  • I reiterate my buy rating on Arista Networks, and raise my year-end price target to $114 per share, seeing attractive risk/reward.
Ethernet Cables Connected to Network Switch

panumas nikomkai/iStock via Getty Images

Investment Thesis

The AI landscape is an interesting place for investors to be in and continues to chug along despite being whipsawed by a host of off-and-on headwinds ranging from tariff threats, export restrictions, and competitive pressures.

Particularly, competitive pressures are

This article was written by

3.26K Followers
Uttam is a growth-oriented investment analyst whose equity research primarily focuses on the technology sector. Semiconductors, Artificial Intelligence and Cloud software are some of the key sectors that are regularly researched and published by him. His research also focuses on other areas such as MedTech, Defense Tech, and Renewable Energy. In addition, Uttam also authors The Pragmatic Optimist Newsletter along with his wife, Amrita Roy, who is also an author on the newsletter as well as on this platform. Their newsletter gets regularly cited by leading publications such as the Wall Street Journal, Forbes, etc. Prior to publishing his research, Uttam worked in Silicon Valley, leading teams for some of the largest technology firms in the world, including Apple and Google.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of CLS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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