Arista Networks reported second-quarter earnings and revenue that topped analyst estimates as its business expands from cloud computing giants to corporate clients. Arista stock gained as analysts said its push into data center Ethernet products has gained traction.
The maker of computer network gear reported Arista earnings after the market close on Tuesday.
For the three months ended June 30, Arista earnings popped 33% to $2.10 per share on an adjusted basis. Also, revenue rose 16% to $1.69 billion. Sales growth decelerated for the sixth straight quarter.
Analysts estimated earnings per share of $1.94 on revenue of $1.656 billion. A year earlier, Arista earnings were $1.58 a share on revenue of $1.46 billion.
"Strong results were largely the result of campus/data center modernization across enterprise and service provider customers, as well as increasing demand for its AI fabric capabilities across cloud titans and tier-2 cloud," said William Blair analyst Sebastien Naji in a report.
Revenue Guidance For Arista Stock
For the current quarter ending Sept. 30, Arista predicted revenue in a range of $1.72 billion to $1.75 billion, topping estimates of $1.73 billion.
On the stock market today, Arista stock popped 11.3% to close at 346.55. In Tuesday's regular session, shares fell 2.8%.
Heading into the earnings report, Arista stock had advanced nearly 34% in 2023. But Arista is down from a 52-week high of 376.50 set on July 9.
Also, Arista's biggest customers are Microsoft and Facebook-parent Meta Platforms. According to analysts, Arista is gaining ground in the so-called "enterprise" market — large companies, government agencies and educational institutions.
Arista sells computer network switches that speed up communications in internet data centers. Its chief rivals are Cisco Systems and Juniper Networks.
In 2025, Arista has projected $750 million in artificial-intelligence-related revenue. Internet data centers will need more computing power and network bandwidth to process AI workloads.
"The large AI backend trials are moving to pilots and the customer count overall for AI deals is growing," said Barclays analyst Tim Long in a report. "We see the $750 million bogey for 2025 revenues as beatable."
Meanwhile, Arista is among AI stocks to watch.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
