From Nasdaq: 2025-02-22 04:35:00

Shares of Arista Networks (NYSE: ANET) fell despite strong Q4 results and increased full-year 2025 guidance. Revenue rose 25% to $1.93 billion and adjusted EPS climbed 25% to $0.63, beating analyst expectations. Deferred revenue also increased, with AI and data center products accounting for 65% of total revenue. The company forecasts revenue to grow by 17% to around $8.2 billion for the year. For Q1, revenue is projected to range from $1.93 billion to $1.97 billion, representing growth of 23% to 25%.

Investors were concerned about white-box competition and a decline in revenue from major customers like Meta Platforms. Arista is heavily dependent on Cloud Titans like Microsoft and Meta, with Meta accounting for around 15% of revenue. The company has more than 1,000 400G customers and expects to see 800G customers this year. Arista ended the quarter with $8.3 billion in cash and marketable securities after buying back $423.6 million worth of stock.

Despite the dip in stock price, Arista’s forward-P/E ratio remains high at 41 times 2025 analysts’ estimates. The company tends to be conservative with guidance, and the decline in Meta revenue was expected after the end of a large switching upgrade. With strong deferred revenue and a positive outlook for Q1, Arista is well-positioned for growth. However, the stock’s valuation may not justify an immediate investment.

Before investing in Arista Networks, consider the analysis from The Motley Fool Stock Advisor team. Arista Networks was not among their 10 best stock picks, which have historically outperformed the S&P 500. The service provides guidance on building a successful portfolio and offers regular updates and stock recommendations to help investors achieve long-term success.



Read more at Nasdaq: Arista Network Shares Slump Despite Upbeat Outlook Fueled by AI. Should Investors Buy the Stock on the Dip?