TSP Weekly Tech Stock Update—June 22, 2024
This Week: Generative AI to boost cybersecurity, BofA bullish on ANET, NOW rebounds, NTNX stabilizes, GOOGL/CRWD/MSFT new record highs, Palo Alto gets an upgrade, JP Morgan lifts Apple target & more.
Hello from Rob…
—Shares of Arista Networks (ANET, $337.36), a provider of cloud networking solutions, on Thursday hit a new all-time high of $345.89. Arista has been deemed an AI winner: After rising 94% last year, the stock is up 43% YTD.
On the Q1 earnings call in early May, Arista Networks CEO Jayshree Ullal said:
We are witnessing an inflection of AI networking and expect this to continue throughout the year and decade. Ethernet is emerging as a critical infrastructure across both front-end and back-end AI data centers. AI applications simply cannot work in isolation and demand seamless communication among the compute nodes, consisting of back-end GPUs and AI accelerators and as well as the front end nodes like the CPUs, alongside storage and IP/WAN systems as well.
A good AI network needs a good data strategy, delivered by our highly differentiated EOS and network data lake architecture. We are, therefore, becoming increasingly constructive about achieving our AI target of $750 million in 2025.
The 2024 consensus revenue estimate of $6.71 billion represents growth of 14.5%. For 2025, analysts on average expect Arista’s top-line growth to accelerate to 16%. Over the past two months, the 2024 consensus EPS estimate has advanced to $7.92 from $7.51, while the 2025 consensus has risen to $8.99 from $8.60.
This week, BofA raised its Arista price target to $380 from $320, saying the company remains one of the top beneficiaries of rising demand for AI Ethernet switching.
*Inside This Issue: New Growth Drivers At Zscaler
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