ANET Gains Traction in AI Networking Vertical: Will the Trend Continue?

Arista Networks, Inc. ANET is witnessing healthy traction in the AI networking vertical. Enterprises across industries are steadily adopting generative AI applications, IoT devices, cloud computing and 5G technologies across their operations. However, the daily operation of these advanced technologies is generating a vast pool of data, which is putting a huge strain on the company’s network infrastructure and GPU resources. Poor networks often lead to bottlenecks, causing idle cycles on GPUs, wasting capital resources and increasing operating costs.

These factors are driving demand for robust AI networking solutions. Per a Precedence Research report, the AI in networks market size is projected to grow from $15.28 billion in 2025 to $192.42 billion in 2034 with a compound annual growth rate of 32.51%.

Arista’s cutting-edge Etherlink and Extensible Operating System are expected to gain from this emerging market. The company’s product portfolio facilitates the implementation of high-performance, highly scalable and appropriate solutions for every environment. It offers one of the broadest ranges of data center and campus Gigabit Ethernet switches and routers in the industry. Its routing and switching platforms are well known for their industry-leading capacity, low latency, port density and power efficiency.

Backed by strong demand trends, ANET is projected to generate $750 million in revenues from back-end AI networking, while aggregated AI networking revenues are projected to cross $1.5 billion in 2025.

How are Competitors Faring?

In the AI networking space, Arista faces competition from Hewlett Packard Enterprise Company HPE and Cisco Systems, Inc. CSCO.

HPE is steadily venturing into the AI networking market. The $14 billion acquisition of Juniper Networks has significantly strengthened its networking business arm. With an exhaustive portfolio offering, HPE is set to gain from solid growth across AI and hybrid cloud markets.

Cisco also boasts a robust portfolio catering to the AI networking and AI infrastructure domains. The company is leveraging its collaboration with NVIDIA to strengthen its footprint in the AI infrastructure space. Cisco Nexus 9000 switches are witnessing growing adoption in data centers owing to their high performance, scalability and support for high-bandwidth AI applications.

ANET’s Price Performance, Valuation & Estimates

Shares of Arista have surged 72.8% over the past year compared with the industry’s growth of 45.7%.

From a valuation standpoint, Arista trades at a forward price-to-sales ratio of 45.71, above the industry average.

The Zacks Consensus Estimate for Arista’s earnings for 2025 has increased 9.8% over the past 60 days to $2.81 per share.

Arista currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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