2024-07-08 14:26:28 ET
Summary
- Arista Networks has surged over 40% in 2024, owing to anticipation of an AI-driven surge in revenue.
- Despite strong performance, Arista's bloated valuation multiples, currently at 46x FY24 P/E and 40x FY25 P/E, may not be sustainable.
- The company has historically had very lumpy business cycles, based on the ordering patterns of its "cloud titan" customers.
- AI may be driving an investment cycle into datacenter hardware now, but there's no guarantee this doesn't represent a pull-in from future revenue.
- Downgrading Arista to sell primarily on valuation concerns.
2024 and the AI revolution have brought quite a bit of respite for tech hardware names, and Arista Networks ( ANET ) is no exception. The leading cloud-oriented networking hardware vendor has seen tremendous growth this year, as the cloud hyperscalers invest in their data center to prepare for AI applications....
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Arista Networks: Time To Sell