Citi upgraded Arista Networks to Buy from Neutral with a price target of $220, up from $177. The analyst expects 400G cloud spend to recover into next year as hyperscaler spending on traditional data center infrastructure rebounds and a top customer’s capex recovers. While “round one” went to InfiniBand, Arista and networking peers expect ethernet to gain share in 2024 and 2025 as artificial intellitence clusters grow and are more broadly implemented across existing networks, the analyst tells investors in a research note. Citi increased 2024 and 2025 earnings estimates to reflect modestly stronger mid-teens sales growth and margin expansion for Arista Networks. It expects the November investor day to be a a positive catalyst for the stock.
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