Arista Networks (ANET) Stock Forecast & Price Target

Arista Networks reported a significant revenue increase of 20% for the full year 2024, reaching $7.0 billion, largely attributable to strong demand from Cloud and AI Titan customers, which represented approximately 48% of total revenue. The company exceeded its guidance and street expectations for the fourth quarter, growing sales by 25% to $1.93 billion, with notable strong performance in services. With projected annual capital spending growth of 15-30% in the next 3-5 years and a forecasted 17% revenue growth for FY25, Arista is well-positioned to continue gaining market share in the Ethernet space, particularly against competing technologies.

Arista Networks has faced a decline in key revenue segments, with Enterprise and Financials reducing their contribution to 35% of 2024 sales from 36% the previous year, along with the Providers segment dropping from 21% to 17%. The company's international revenues also showed weakness, declining 9% year-over-year and representing only 16% of total revenues, indicating vulnerability particularly in a tightening macroeconomic environment. Additionally, concerns regarding potential customer losses, especially with Meta, combined with decelerating product billings at 20% and a lackluster growth forecast raise significant concerns about the sustainability of its stock valuation.