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- 30% Growth. 38% EPS Jump. The AI Networking Surge Investors Can’t Ignore
30% Growth. 38% EPS Jump. The AI Networking Surge Investors Can’t Ignore
Arista Networks just delivered blockbuster Q2 results with 30% revenue growth and 38% EPS gains.
Fueled by booming AI and cloud demand, the company raised its full-year growth forecast to 25%. Here’s why this hardware stock should be on your radar.
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Arista Networks, Inc.
August 13 – Pre‑market
Ticker: ANET | Sector: Computer Hardware / Technology | Market Cap: ~ $174.9B
30‑Second Take
Why now? Arista Networks just crushed Q2 with ~30% revenue growth and 38% EPS gains.
These mammoth results also prompted a full-year guidance increase, with a new expectation of 25% year-on-year growth.
Demand from AI and cloud players is exploding, and Wall Street is taking note. Goldman Sachs has set a target of $155 with ANET, with other analysts clustering between $140 and $160.
The stock’s Relative Strength Rating of 93 shows strong market leadership, and institutional buyers are adding to their positions at pace.
With fundamentals, sentiment, and technicals aligned, this could be a prime entry point for investors seeking to expand their hardware portfolios before the next AI-driven leg up.
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Trade Setup
Time frame: Swing to medium-term
Edge type: Momentum breakout
Snapshot Table
Metric | Value | Current Stance |
|---|---|---|
Price | $141.29 | Above average |
52‑week range | $59.43 - $141.01 | Above average |
Short interest | 1.27% | Average |
Next catalyst | Q3 earnings |
Chart
1-Month Synopsis: The month of July was good to ANET, with the stock moving from a mid-month range of $108–$110 to close at $123.22 on July 31.
This 15% increase was achieved with a steady cluster of daily gains and no major declines.
The major driver was yet to come, however, with Q2’s excellent earnings report triggering a surge from ~$118 on Aug 5 to a high of $139.53 the following day.
An improvement in the Relative Strength (RS) Rating (to 93) placed Arista in lofty company, qualifying it for a spot in the top 7% performers gallery for all stocks over the last 52 weeks.
Bull Case
Core thesis: Arista is an industry leader in data-driven client-to-cloud networking.
It stands at the center of two of the decade’s fastest-growing technology waves: AI-driven data center expansion and next-generation cloud networking.
The company’s highly scalable, software-driven networking solutions are becoming the de facto standard for hyperscalers, cloud service providers, and enterprise clients needing ultra-low latency and massive throughput.
Founded in 2008, the Santa Clara-headquartered firm specializes in large data center/AI, campus, and routing environments.
It serves more than 10,000+ cloud customers worldwide and has deployed 100M ports to date.
Crucially, Arista's award-winning platforms are purpose-built to satisfy the dramatically higher bandwidth, lower latency, and more flexible network architectures that AI workload demands, giving it a clear edge over legacy competitors working retroactively to scale their solutions for the AI generation.
With performance well above the market average, Arista has a moat from a software-centric approach. Its EOS (Extensible Operating System) is a differentiator, offering automation, programmability, and reliability unmatched by hardware-only rivals.
This software focuses on higher margins, recurring revenue opportunities, and customer stickiness.
Catalysts: Hyperscalers and enterprises are racing to expand their networks to handle AI training and inference workloads at warp speed.
This transition requires massive bandwidth and ultra-low latency. Arista’s switches and EOS software are already embedded in many of these environments, giving it a front-row seat to this multi-year capex cycle.
Arista’s software-driven architecture, automation features, and integration flexibility make it the go-to choice for new deployments, which is why it's fast eating into the market share of rivals such as Cisco.
What’s more, rising network traffic from edge computing, 5G backhaul, and hybrid cloud adoption creates multiple growth lanes beyond AI-specific workloads.
Valuation upside: Analyst price targets run from a low of $103.00 to a high of $160.00. ANET is currently trading around the average analyst price target of $138.17.
Technical tailwind: ANET stock has climbed to a Relative Strength Rating of 93 amid its 17% post-earnings surge.
If volume and momentum remain elevated, the current upward trajectory could become steeper still.
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Bear Case
Key risk: The single biggest risk facing ANET currently is its customer concentration in hyperscalers.
Hyperscaler spending is notoriously cyclical, often swinging from aggressive buildouts to temporary freezes.
A significant portion of Arista’s revenue – perhaps even as high as 50% - comes from hyperscaler tech giants, including the likes of Microsoft, Meta, and Amazon.
If just one of those large MVPs shifts to another vendor, cuts capex due to project delays, or slows their network expansion plans, Arista's growth trajectory could quickly invert.
Macro/sector headwinds: The AI/cloud buildout is capital-intensive and prone to “boom-and-pause” cycles.
A slowdown in spending—even for a single quarter—can hit orders hard.
With GDP growth slowing in the US, China, and Europe, we may be approaching a pause cycle where enterprises feel forced to cut IT budgets during periods of economic stagnation.
Competitive threat: Large legacy vendors like Cisco still hold massive enterprise and government contracts and are aggressively pushing AI-ready switching solutions.
These larger incumbents can bundle networking, security, and services into all-in-one deals, which is something Arista doesn't do on the same scale.
This makes it that much harder for ANET to win price-sensitive or relationship-driven accounts.
Crowded-trade concern: ANET has become a high-conviction AI infrastructure play owned heavily by momentum funds, meaning any shift in sentiment or sector rotation could trigger a sharp, accelerated sell-off as investors rush to exit at the same time.
Quick Checklist
✅ Thesis still valid after today’s close
✅ Volume confirms move above key levels
✅ Catalyst date double-checked (August 12, 2025)
Deep‑Dive Links
That’s all for today’s Everyday Alpha. We’ll have a new pick for you every morning before the market opens, so stay tuned!
Best Regards,
—Noah Zelvis
Everyday Alpha