Arista Networks has rallied nearly 99% in 2024, with shares reaching an all-time high on Dec. 16. In a pause, Arista stock has formed a bullish three-weeks-tight pattern with a buy point of 116.94. Arista is Monday's selection for IBD 50 Growth Stocks To Watch.
The stock has recovered from a November stumble. Arista stock fell below the 10-week moving average despite third-quarter results announced Nov. 7 that beat views.
Sales grew 20% to $1.81 billion in the third quarter while earnings per share of 60 cents rose 30% from the prior year.
The company also reported a healthy backlog of orders, as several hyperscalers, including Meta Platforms and Microsoft, seek networking gear that keeps pace with fast AI workloads.
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2025 Outlook Meets Views; Analysts Split On Arista Stock
For the current quarter, the AI network company gave a sales outlook of $1.88 billion at the midpoint. Analysts polled by FactSet have a $1.9 billion estimate. Its midpoint sales growth forecast for 2025 was in line with estimates of 16%.
Analysts are divided between the stock's high price-to-earnings multiple and continuing growth outlook for its AI switches and Ethernet routers.
While analysts at William Blair have a buy rating on the stock due to Arista's strength in AI networking, UBS analyst David Vogt believes the AI networking opportunity may already be priced into the stock. Further, slower growth in the non-AI networking segment may affect sales beyond 2025.
The company completed a 4-for-1 stock split on Dec. 4.
Arista Networks provides AI networking tools for data centers, which makes it an AI stock to watch.
Arista stock ranks first in the computer networking group, according to IBD Stock Checkup, and holds a Composite Rating of 99, the best possible score from Investor's Business Daily. The Relative Strength Rating of 93 is also outstanding, while the EPS Rating of 98 reflects strong growth in earnings in recent quarters.
More funds have been net buyers of Arista stock over the past seven quarters as well as in recent weeks. Mutual funds own 40% of shares outstanding. In the IBD mutual fund index, Artisan Midcap Fund (ARTMX) and Allspring Growth Fund (SGRAX) hold Arista shares.
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