Cloud networking solutions provider Arista Networks (NYSE:ANET) reported better-than-expected results for the fourth quarter of 2023, driven by an improved supply chain and higher demand for renewals. Despite strong results, ANET stock fell about 7% in the extended trading session after the company said that it is “cautiously optimistic” about its ability to meet the $750 million AI networking revenue target for 2025.
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ANET’s adjusted earnings of $2.08 per share outpaced the Street’s estimates of $1.70 per share and increased 47.5% from the prior-year quarter. Similarly, revenues grew about 21% year-over-year to $1.54 billion and slightly exceeded analysts’ estimates of $1.53 billion.
Q1 Guidance
The company expects first-quarter revenue to come in the range of $1.52 billion to $1.56 billion, compared with the consensus estimate of $1.52 billion. Furthermore, ANET forecasts the adjusted operating margin to be around 42%.
Is ANET a Good Stock to Buy?
The company’s presence in the booming cloud networking and AI markets bodes well for its long-term growth. Furthermore, increased investments in AI technologies and an improved supply chain are expected to contribute to ANET’s growth.
However, the company’s cautious approach towards achieving the AI networking revenue target may be due to a probable delay in the deployment of Ethernet networking infrastructure for backend AI clusters
On TipRanks, ANET stock commands a Strong Buy consensus rating based on 11 Buy versus two Hold ratings received during the past three months. The average Arista stock price target of $289.85 implies a 3.19% upside potential from current levels. Shares of the company have gained 33.6% in the past three months.
