Arista Networks Stock Rises After Strong AI Cloud Demand Powers Earnings, Outlook

Cloud networking giant Arista Networks (ANET) saw its shares rise almost 7% higher in extended trading Tuesday after a trifecta of upbeat news—an earnings beat, better-than-expected current-quarter outlook, and a big share buyback program amid strong cloud demand from artificial intelligence (AI) applications.

For the quarter ending March 31, the Silicon Valley-based firm posted adjusted earnings of $1.99 per share, handily surpassing analysts’ estimates of $1.74 a share. Revenue in the period of $1.57 billion jumped 16% from a year earlier and edged above the $1.55 billion Street expectation.

Growing Demand for Cloud AI Networking Solutions

Looking ahead, the company said it expects current-quarter net sales of between $1.62 billion and $1.65 billion, with the $1.635 billion midpoint of that forecast coming in ahead of the $1.62 billion consensus view.

Arista, whose clients include tech giants Microsoft (MSFT) and Meta Platforms (META), continue to benefit from insatiable demand for cloud AI networking solutions, such as Ethernet switches and routers, that connect cloud and data center infrastructure which powers the technology.

“I am pleased with our progress in the Arista 2.0 journey as seen in breakthrough innovations, customer traction and building our next generation leaders.” CEO Jayshree Ullal said in the company’s earnings statement.

The cloud networking company also increased its stock buyback program, authorizing the repurchases of an additional $1.2 billion worth of shares. To date, Arista has purchased $2 billion of its common stock.

Monitor This Chart Level Amid Earnings Price Pop

The Arista share price has trended steadily higher over the past 12 months apart from several retracements to the 50—day moving average. The most recent pullback found buying interest around $240, with the price sitting just below the closely-watched indicator leading into the company’s quarterly results. 

Amid the stock’s anticipated earnings pop, investors should monitor the $290 level where the shares may encounter resistance from a trendline linking a series of price action over the past three months. A close above this key level could see the stock go on to make a new all-time high (ATH) and continue its longer-term uptrend.

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As of the date this article was written, the author does not own any of the above securities.