TSP Weekly Tech Stock Update—March 23, 2024
This Week: Cybersecurity spending overview, ANET new record high, GOOGL back in favor, MSFT adds AI talent, KeyBanc bullish on NOW, Broadcom's AI focus, a new MNDY bull, GTLB DevOps catalysts & more.
Hello from Rob…
—Shares of Arista Networks (ANET, $306.42), a provider of cloud networking solutions, on Friday hit a new all-time high of $307.74. The stock is up 30% YTD (after rising 94% in 2023), powered by the company’s AI upside potential, which we wrote about back in the middle of January.
After Arista reported Q4 results in February, Goldman Sachs lifted its price target to $313 from $274 even though the company did not raise its 2024 revenue growth outlook. At the time, the firm argued that the guide likely did not reflect the benefit from recent increases in the 2024 outlook for overall hyperscaler CapEx. Goldman expects Arista’s revenue to ramp once large GPU cluster deployments begin in 2025.
On the Q4 call, Arista Networks CEO Jayshree Ullal said:
AI at scale needs Ethernet at scale. AI workloads cannot tolerate the delays in the networks because the job can only be completed after all flows are successfully delivered to the GPU clusters. All it takes is one culprit or worst-case link to throttle an entire AI workload.
Yesterday, Goldman boosted its Arista price target to $356 from $313, saying it is increasingly confident in its bullish view due to growing CapEx in 2024/2025 from Arista Cloud Titan customers Meta, Microsoft and Oracle. The firm also called out Arista’s participation in Meta’s large-scale AI Research SuperCluster and the growing application of Ethernet in AI networking.
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