Wall Street Says This Artificial Intelligence (AI) Stock Is a Bargain Hiding in Plain Sight

Core Viewpoint - Arista Networks is positioned as a strong investment opportunity in the AI sector, with a 12-month target price of $175, indicating a potential upside of 23.6% from its recent closing price [1]. Revenue Visibility - Arista's Ethernet-based AI networking solutions are moving from pilot phases to production-level deployments, with expected AI networking revenues to nearly double to $3.25 billion by 2026 [4]. - The company anticipates continued growth as large customers scale their AI deployments, with networking investments expected to follow GPU and AI chip deployments [6]. - Arista is also expanding into campus and branch markets, projecting $1.25 billion in revenues from these segments by 2026, which will account for 18% of total revenues [7]. Profitable Growth - Arista maintains strong profitability with gross margins in the low-to-mid 60% range and expects operating margins of 46% by 2026, despite rising supply chain costs [8]. - The company's software and subscriptions business, including its EOS operating system and CloudVision platform, enhances its competitive position and contributes to high-margin revenue streams [9][10]. Financial Flexibility - Arista ended fiscal 2025 with a cash balance of $10.7 billion and negligible debt, providing the company with the financial flexibility to invest in future growth initiatives [11].