Goldman expresses increasing confidence in this AI networking investment opportunity

Goldman Sachs Analyst Bullish on Arista Networks’ Earnings Potential

Goldman Sachs analyst Michael Ng has expressed increased confidence in Arista Networks’ ability to exceed Wall Street’s earnings expectations, particularly as its artificial intelligence networking business continues to grow. Ng currently has a buy rating on the stock and has set a price target of $356, reflecting a 16.9% potential upside from Thursday’s closing price.

Ng’s optimism is driven by his expectations for Arista Networks to deliver strong financial performance in the coming years. He predicts that the company will achieve earnings per share of $7.61 in 2024 and $8.91 in 2025, both of which are above the consensus forecasts of analysts polled by FactSet. Ng attributes this positive outlook to the significant gains in the AI business segment.

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One of the key reasons for Ng’s bullish stance on Arista Networks is the increasing capital expenditures from major customers in the Cloud Titan business, such as Meta, Microsoft, and Oracle. These investments are expected to support Arista’s revenue growth. Additionally, Ng highlights Meta’s AI Research SuperCluster as a significant driver of his high expectations for the company.

Furthermore, Ng points to the rising demand for AI servers and the growing use of ethernet in AI networking as positive indicators for Arista Networks. He also cites positive performance data revealed during Broadcom’s AI Infrastructure Investor Meeting as further supporting factors for his optimistic outlook.

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The upbeat assessment from Michael Ng comes amidst a strong period for Arista Networks’ stock, which has already seen impressive gains in 2024 following a significant increase in share price the previous year. Investors and analysts will be closely watching to see if Arista Networks can deliver on its promising potential in the AI networking space.

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