Arista Networks should be bought on significant weakness, says Rosenblatt

Rosenblatt recommends buying Arista Networks on a significant pullback of 10% to 15%. The company reported solid first half of 2023 results and guidance, but management’s cautious commentary likely disappointed bullish investors that expected it to buck the industry trend of lower cloud orders, backlog, and visibility, the analyst tells investors in a research note. The firm believes some analysts were too optimistic on the timing of the positive inflection in Arista Switching revenues, specifically driven by cloud spending on artificial intelligence-clusters. Rosenblatt sees the consensus expectation for 11% revenue growth in 2024 as potentially conservative and also believes the thesis about AI-clusters becoming a significant revenue driver for Arista will be more correct in 2024, than 2023.