Amid worries over share loss at top customer Meta Networks, shares in Arista Networks fell on Wednesday. Arista reported fourth-quarter earnings and revenue that topped Wall Street targets. But full year 2025 revenue guidance for Arista stock underwhelmed.
The maker of cloud computer networking gear reported its results after the market close on Tuesday. Arista reported earnings as Wall Street analysts rethink artificial intelligence driven data center upgrades.
Meta, Microsoft Top Customers
One worry on Wall Street is that Arista could be losing business at Meta to contract manufacturers such as Celestica.
"Normally, a solid quarter and a slight increase to the full year guide would be enough in our view to support shares," said UBS analyst David Vogt in a report. "However, concern that white-box could take share from branded vendors like Arista at Meta and Microsoft will likely linger despite the company reiterating the $750 million AI target for 2025."
Wall Street analysts say Arista garnered about 20% of 2024 revenue from Microsoft and just under 15% from Meta.
"At Morgan Stanley, analyst Meta Marshall said in a report: "We think similar to other Arista quarters, that ANET (management) will need to get on the road to calm concerns around share, particularly at Meta."
ANET Stock: 2025 Outlook Disappoints
"Management only modestly increased its 2025 full-year guidance to 17% growth year-over-year (up from 16% in the prior quarter, but below consensus of 19% growth)," said William Blair analyst Sebastien Naji in a report. "While by all accounts Arista remains on track to deliver steady quarterly beats while stepping up its full-year growth guidance, we expect investors will be frustrated by the lack of significant upside to expectations over the last two quarters."
For 2025, Arista has been projecting $750 million in artificial-intelligence-related revenue. Most of that is expected to come from Ethernet networking technology that connects the clusters of AI servers in cloud-computing data centers.
At Barclays, analyst Tim Long said in a report: "We are accustomed to management's approach to guidance and view the annual outlook as conservative on both the top and bottom lines, as it is very possible Arista raises it as the year progresses."
For the three months ended Dec. 31, Arista earnings rose 25% to 65 cents per share on an adjusted basis. Revenue jumped 25% to $1.93 billion.
Analysts estimated Arista earnings per share of 57 cents on an adjusted basis with revenue of $1.90 billion.
Artificial Intelligence Upside Expected
For the current quarter ending March 31, Arista predicted revenue of $1.95 billion at the midpoint of guidance, edging by estimates of $1.90 billion.
On the stock market today, Arista stock fell 7.9% to 102.28 in midday trading. In Tuesday's regular session, ANET stock rose 3.9% to close at 111.06. Arista is among artificial intelligence stocks to watch.
Heading into the Arista earnings report, shares were about flat in 2025.
Also, Arista's biggest customers are Microsoft and Facebook-parent Meta Platforms. Newer customers include Oracle and Google-parent Alphabet.
Meanwhile, Arista stock has dipped below its 50-day moving average.
Arista sells computer network switches that speed up communications in internet data centers. Further, its chief rivals are Cisco Systems and Juniper Networks.
In 2025, analysts expect ANET stock to get a boost from customer investments in artificial intelligence infrastructure. Internet data centers are expected to need more computing power and network bandwidth to process AI workloads.
But Arista stock sold off on Jan. 27 as China-based DeepSeek's new AI models raised questions over AI-related infrastructure spending.
According to analysts, Arista is gaining ground in the so-called "enterprise" market — large companies, government agencies and educational institutions.
ANET Stock Technical Ratings
Further, ANET stock holds a Relative Strength Rating of 96 out of a best-possible 99, according to IBD Stock Check-up.
Arista stock holds an IBD Composite Rating of 98 out of 99, according to IBD Stock Checkup.
Meanwhile, ANET stock had an Accumulation/Distribution Rating of B-minus, according to IBD MarketSurge analysis. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
