Arista Networks (ANET): Analysts Eye $140 Price Target Amid AI Growth

Core Viewpoint - Arista Networks Inc is highlighted as a key AI stock to monitor, with a price target increase to $140.00 while maintaining a Neutral rating following a successful Analyst Day presentation [1]. Group 1: Company Performance and Guidance - Arista's differentiation is shifting from operating systems to cloud integration, telemetry, automation, network diagnostics, and power savings strategies as AI data centers emerge [2]. - The company provided 2026 operating margin guidance of 43% to 45%, which is lower than the 2024A and 2025E estimates above 47% [2]. - Revenue CAGR for 2026-2029 is projected in the mid-teens, contrasting with a 25% sales growth forecast for 2025 and 20% for 2026 [2]. - Management anticipates that approximately 25% of its business, particularly in AI Data Center and Campus, will grow by around 70%, while the remaining 75% of sales are expected to remain flat [2]. - Gross margins are expected to decline from 63%-64% in 2025 to 62%-64% in 2026, and further to 60%-64% post-2026 due to pricing pressures from major cloud customers [2]. - Operating expenses are projected to grow significantly faster than sales in 2026, with a similar trend expected in 2027 [2]. Group 2: Financial Projections - Revenue estimates for 2025 have been increased to $10.5 billion from $10.1 billion, while the EPS forecast remains around $3.10 [2]. - New revenue and EPS projections for 2027 are set at $12.2 billion and $3.50, respectively [2]. - The updated price target of $140 is based on a 40x multiple of the 2027 EPS [2].