Arista Networks Stock Dips Despite Earnings Beat Amid AI Trade Pullback
Arista Networks shares fell 6% on November 5 despite reporting third-quarter results that exceeded analyst expectations. The cloud networking provider posted earnings of $0.75 per share on $2.31 billion revenue, surpassing estimates of $0.72 EPS and $2.26 billion sales. Year-over-year revenue growth stood at 27%.
The decline reflects broader profit-taking in AI-related stocks after this year's rally. ANET had gained over 30% in 2024 prior to earnings, buoyed by its data center switching technology crucial for AI infrastructure. Raymond James analysts attributed the sell-off to "elevated expectations" rather than fundamental weaknesses.
As a key supplier to Microsoft and Meta Platforms, Arista remains positioned to benefit from ongoing AI infrastructure spending. However, the market appears to be reassessing valuations across the tech sector following this year's aggressive positioning in AI-related names.
