Why should you monitor Arista Networks?

Technology: The S&P 500 Index showcases the top 500 U.S. companies, making it an important barometer for the health of the stock market. Inclusion is not arbitrary; companies must be U.S.-based, have a market capitalization greater than $18 billion, exhibit high liquidity, offer at least 50% of shares for trading, and demonstrate recent and overall profitability under GAAP rules. Since August 2018, Arista Networks has been part of this prestigious group. Recently completing a 4-for-1 stock split, this networking powerhouse continues to exhibit strong financial health, highlighted by an astonishing 3,823% increase since its 2014 IPO.

Recently, its 5-year stock appreciation reached 779%, a sign of investors’ continued optimism. Founded in 2008, Arista Networks transformed network connectivity with innovative high-speed, low-latency solutions. The company’s cutting-edge EtherLink AI platforms support massive AI workloads and boast appliances like the distributed EtherLink 7700 AI Platform, which connects up to 10,000 GPUs. Arista’s remarkable contributions have earned it accolades, such as being named a “Visionary” by Gartner, praised for simplifying network management and excellence in AI-powered server integration.

Financially, Arista continues to shine. Its third quarter revenue reached $1.8 billion – a 20% increase year-over-year – driving earnings per share growth of 35%. This led the company to raise its expectations, forecasting 23% revenue growth to $1.9 billion in Q4. Wall Street largely supports this optimism. Analysts, including a particularly bullish valuation by Barclays, have predicted continued growth in the stock, despite a 51 times earnings valuation thanks to its substantial S&P 500 outperformance over the past five years.