- Goldman adjusts its outlook on Arista Networks by increasing the stock’s price target to $356 from the previous $313.
- Goldman’s optimism is attributed to Arista Key Cloud Titan’s projected capital growth in 2024 and 2025 for clients including Meta, Microsoft and Oracle.
- Arista’s participation in Meta’s large-scale AI research super cluster and the continued growth forecast for AI server shipments are the other contributing factors to the positive outlook.
Up-regulation of the stock’s price target
Goldman Sachs adjusted its outlook for Arista Networks, a leader in cloud networking solutions, raising its stock price target to $356 from $313 previously. The firm maintained a buy rating on the stock and revised its forecast based on several optimistic factors. The main reason for the company’s optimism is Arista Key Cloud Titan’s projected capital expenditure growth in 2024 and 2025 for customers, which include industry giants Meta, Microsoft and Oracle. Assuming revenue from Meta and Microsoft as a percentage of its capex remains consistent, the increase in spending is expected to support Arista’s 2024 revenue guidance.
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Other contributing factors
Another contributing factor to the positive outlook is Arista’s participation in Meta’s large-scale AI Research Super Cluster (RSC). The participation highlights the growing use of Ethernet in artificial intelligence networks. The continued growth in AI server shipment forecasts is another reason to raise the price target. The analyst singled out Meta’s planned RSC infrastructure build-out in 2024 as a key development. The project is seen as a validation of Ethernet’s competitiveness as an AI network architecture solution, which could lead to an upward revision of Arista’s financial forecast. The timing of the expansion and subsequent revenue recognition are considered key factors that could affect the company’s financial results.
