Artificial intelligence workloads depend on network infrastructure such as switches that can help communication between devices, servers and the internet. That's where AI network stock Arista Networks comes in. Arista is today's selection for IBD 50 Stocks To Watch.
Arista is holding in a buy zone, just above a 376.50 entry. Shares have broken out of an early stage consolidation pattern which could lead to higher gains.
The stock has climbed 8% in September, as of Friday's closing price, while Nvidia is up around 1% for the month. Arista also rose to its all-time high of 395.82 on Thursday.
Arista stock gapped up to its 50-day moving average after the company reported second-quarter results on July 30. Sales grew 16% to $1.69 billion while earnings of $2.10 per share were 33% higher than the prior year.
For the current quarter, the company's outlook stands at $1.74 billion at the midpoint in sales. Analysts polled by FactSet estimate 16% sales growth to $1.75 billion with a 13% gain in earnings to $2.08 a share.
For the full year, analysts see profits rising 19% with earnings of $8.27 per share. In 2025, higher profit estimates of 14% suggest earnings of $9.40 per share.
Arista Stock Leads The Network Group
Arista makes switches and software for networking in data centers, cloud and other routing environments. Its network platform supports large AI cluster workloads for training and inferencing while also allowing workflow automation and visibility across the business.
Arista also offers "microsegmentation features" that do away with endpoint software that can cause porting issues.
Arista leads the computer networking group. Its leadership is also evident in its near-ideal EPS Rating of 98 and Composite Rating of 97. The Relative Strength Rating is also high at 94.
Mutual funds hold 40% of outstanding shares. More funds have been net buyers of Arista stock over the past seven quarters and in recent weeks, giving Arista stock an Accumulation/Distribution Rating of B-. The Artisan MidCap Fund (ARTMX) holds shares of the network leader.
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