- Stock has jumped 23% in a week to all-time record
- Q3 earnings smash forecasts with more to come in Q4
- AI tech in data centres helping drive booming demand
Investors have been racing to buy shares in Arista Networks (ANET:NYSE) more than any other US stock this week. The stock has jumped 23% in the past few days, taking the share price to an all-time $211.68 high, which means the valuation has increased by $15 billion to $65.5 billion.
Put it another way, Arista Networks’ market cap has gone up by the equivalent of a BT (BT.A) in a week, two Burberrys (BRBY) or three Taylor Wimpeys (TW.).
A Santa Clara, California neighbour of chips giants Intel (INTC:NASDAQ) and Nvidia (NVDA:NASDAQ), Arista designs software solutions that allows all the clever tech bits and pieces in data centres to talk to each other. If you imagine a data centre as London, Arista’s software-designed networks are the Tube system.
WHAT’S HAPPENED THIS WEEK?
On 30 October, Arista reported knock-out third quarter results for 2023 that saw revenues top consensus and earnings smash forecasts. Revenue soared to $1.51 billion, fuelled by enhanced component supply and robust demand from enterprise customers across Europe, Asia Pacific and elsewhere.
Earnings per share soared to $1.83, up 46% year-on-year and 16% above the $1.58 consensus.
It also launched AI and ML-driven solutions (artificial intelligence and machine learning) that helped power just shy of $224 million. Arista had approximately $1.75 billion of net cash on the books.
The company also nudged up Q4 guidance to between $1.5 billion and $1.55 billion, ahead of the $1.47 billion consensus.
This puts Arista on track for 2023 full year revenue and earnings of $5.85 billion and $6.55 per share, roughly 42% and 33% up on 2022. By 2025, Koyfin data shows Arista could be posting more than $8 per share of earnings on close to $7.4 billion of revenue.
