Arista Earnings: Investors Should Stay Patient After Another Tremendous Quarter

We maintain our $270 per share fair value estimate for wide-moat Arista Networks after its strong second quarter was in line with our long-term thesis. Arista’s results crushed its guidance ranges and it raised its full-year outlook closer in line with our bullish model. Strong growth and profitability in 2024 thus far adhere to our thesis for Arista to take share in high-speed networking over the next five years, particularly in artificial intelligence networks. We see the firm as best-of-breed for high-speed switching, which we expect to generate great growth as cloud providers invest in networking infrastructure to support AI clusters. We view its current valuation as challenging but believe patient long-term investors can wait for a better entry point for this blue-chip stock and its strong AI exposure.