Arista Stock Surges 12.5% in 3 Months: Worth a Solid Buy?

Riding on a software-driven, data-centric approach that helps customers build their cloud architecture, Arista Networks, Inc. ANET has surged 12.5% over the past three months compared with the industry’s growth of 10.2%. It has also outperformed its peers like Juniper Networks, Inc. JNPR and Cisco Systems, Inc. CSCO over this period. While Cisco has gained 1.5%, Juniper has declined 0.5%.

Three-Month ANET Stock Price Performance

Healthy Demand Trends Buoy ANET

Arista is benefiting from strong momentum and diversification across its top verticals and product lines, backed by an improved market demand supported by a flexible business model and solid cash flow. As more and more business enterprises transition to the cloud, the company is well-positioned for growth in the data-driven cloud networking business with proactive platforms and predictive operations.

Arista holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. It is gradually gaining market traction in 200 and 400-gig high-performance switching products. 

Moreover, Arista offers one of the broadest product lines of data center and campus Ethernet switches and routers in the industry. It provides routing and switching platforms with industry-leading capacity, low latency, port density and power efficiency. The company also innovates in areas such as deep packet buffers, embedded optics and reversible cooling. Portfolio strength has translated into solid revenue growth for the company over the years.

ANET Focusing on Cloud-Native Cognitive Software

Arista boasts a multi-domain modern software approach built upon a unique and differentiating foundation, the single EOS (Extensible Operating System) and CloudVision stack. The versatility of Arista’s unified software stack across various use cases, including WAN routing and campus and data center infrastructure, sets it apart from other competitors in the industry. In addition to high capacity and easy availability, its cloud networking solutions promise predictable performance and programmability, enabling integration with third-party applications for network management, automation and orchestration.

With customers increasingly deploying transformative cloud networking solutions, the company has announced several additions to its multi-cloud and cloud-native software product family with CloudEOS Edge. It has introduced cognitive Wi-Fi software that delivers intelligent application identification, automated troubleshooting and location services. This supports video conferencing applications like Microsoft Teams and Zoom.

Arista 2.0 Strategy Resonating Well

The Arista 2.0 strategy is resonating well with customers, with its modern networking platforms being foundational for transformation from silos to centers of data. The company boasts a comprehensive portfolio with the right network architecture for client-to-campus data center cloud and AI (artificial intelligence) networking, backed by three guiding principles. These include the best-in-class, highly proactive products with resilience, zero-touch automation and telemetry with predictive client-to-cloud one-click operations with granular visibility and prescriptive insights for deeper AI algorithms.

The Arista 2.0 strategy includes three components that are likely to drive growth over the next few years. The first component involves focused plans to invest in core businesses by rolling out new solutions and improved AI offerings. Secondly, Arista aims to emphasize more on software-as-a-service for improved revenue visibility. Last but not least, the company plans to enter adjacent markets to target a broader customer base.

Estimate Revision Trend

Earnings estimates for Arista for 2025 have moved up 3.6% to $2.56 over the past 60 days, while the same for 2026 has increased 1.7% to $2.94. The positive estimate revision depicts optimism about the stock’s growth potential.

End Note

With solid fundamentals and healthy revenue-generating potential, driven by robust demand trends, Arista appears to be a solid investment proposition. Further, a strong emphasis on quality, diligent execution of operational plans and continuous portfolio enhancements are driving more value for customers. Steady improvement in lead times and easing of supply-chain woes are major tailwinds. 

The stock delivered a trailing four-quarter average earnings surprise of 11.8%. Arista currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Riding on a robust earnings surprise history and favorable Zacks Rank, Arista appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock now.

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

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