TSP Weekly Tech Stock Update—Feb 10, 2024
This Week: DDOG/MNDY/HUBS earnings previews, Confluent shares surge, Vision Pro wins supporters, WDAY/NOW/MSFT new record highs, Lumentum is one to watch, more Nutanix bulls, GOOGL rebounds & more.
Hello from Rob…
—Ahead of the release of Q4 results from Arista Networks (ANET, $282.45) after the close on Monday, the stock last week rose 3.4% and hit a new all-time high of $284.82. The Q4 consensus revenue estimate of $1.54 billion (closer to the high end of the guidance range) represents growth of 20.8%. In Q3, Arista’s revenue rose 28.3% to $1.509 billion, slightly above the high end of the guidance range.
This week, JMP Securities raised its Arista price target to $325 from $215 because it sees demand for AI networking solutions as a top growth driver this year. Wells Fargo upped its target to $310 from $225, saying it looks for strong Q4 results driven by accelerating spend on AI infrastructure by hyperscalers. However, Wells Fargo cautions that the market might have gotten ahead of itself in terms of expectations for 2024 guidance upside. The latest 2024 consensus revenue estimate of $6.57 billion represents growth of 12.2%.
—One to Watch: Shares of Lumentum (LITE, $50.21), a provider of optical components/modules and lasers, this week fell 22% in one session primarily because a product transition will hurt 800G transceiver sales in the June quarter. However, the stock on Friday rebounded 10% based on the company’s longer-term opportunity to build market share in AI 800G+ datacom transceivers over the next few years, competing against Coherent (COHR, $62.35). Given the surging bandwidth demands for AI datacenters, Lumentum said it’s strategically expanding its transceiver manufacturing capacity.
*Inside This Issue: Confluent Surprises To The Upside
—Paid subscribers will receive the February 2024 PDF of Tech-Stock Prospector (TSP #264) via email on Tuesday, February 13.
—Paid subscribers have access to the TSP Market Overview and TSP Portfolio Updates sections inside this issue.