We came across a bullish thesis on Cisco Systems, Inc. on Value investing subreddit by MarketFlux. In this article, we will summarize the bulls’ thesis on CSCO. Cisco Systems, Inc.'s share was trading at $76.04 as of December 1st. CSCO’s trailing and forward P/E were 29.36 and 18.55  respectively according to Yahoo Finance. Why GDS Is Still a Solid Pick Among China Data Center Stocks Photo by Markus Spiske on Unsplash Cisco Systems (CSCO) shares surged approximately 7% on November 13, approaching dot-co ...

Core Insights - The company reported a record profitable quarter in Q4, with revenue growth of 14% and profit growth of 26%, exceeding both EPS and free cash flow guidance [2] - There is strong demand in the AI sector, with $2 billion in new orders, although some deals have been delayed into 2026 due to external factors like the U.S. government shutdown [3][4] - The company has a backlog exceeding $4.7 billion, indicating robust future growth potential despite current delays in datacenter projects [4] Datacenter Buildout Challenges - Delays in datacenter projects are attributed to a combination of supply chain issues, real estate complexities, and the time required for power and cooling installations [5][6] - The scale of datacenter buildouts is significant, often involving tens to hundreds of megawatts, which necessitates careful planning and execution [6][7] - Working capital requirements are also extended, impacting the overall timeline for project completion [8] Customer Demand and Technology Adoption - Customers are increasingly interested in the latest technology generations before committing to large-scale projects, which can lead to delays [9] - There is a growing trend towards flexibility in building datacenters, with a focus on networking capabilities and the adoption of new technologies [10][11] - The company has successfully returned its server segment, including AI, to approximately 10% operating profit in Q4, reflecting effective management of costs and demand [12] AI and Use Cases - Enterprises are accelerating the adoption of AI, with over 400 use cases already in production at the company, spanning various sectors [14] - The deployment of AI is increasingly occurring at the edge, where data is generated, which is seen as a cost-effective approach [15] - The concept of sovereignty cloud is gaining traction in Europe, emphasizing the importance of data sovereignty and hybrid designs in cloud solutions [16]

Core Viewpoint - Hewlett Packard Enterprise (HPE) shares fell over 9% intra-day following a weaker-than-expected revenue forecast, attributed to softness in AI server and hybrid cloud businesses as customers delayed orders until the latter half of next year [1] Financial Performance - In the fiscal fourth quarter, HPE reported adjusted earnings of $0.62 per share, slightly above the prior-year period and exceeding its guidance range of $0.56 to $0.60 [2] - Revenue increased by 14% year-over-year to $9.7 billion, but fell short of analyst expectations of $9.9 billion [2] - Server sales decreased by 5% to $4.46 billion, while hybrid cloud revenue declined by 12% to $1.41 billion [2] Business Segments - The AI server business, reliant on advanced Nvidia chips, experienced delays as customers postponed deployments [3] - Networking revenue surged by 150% to $2.8 billion, driven by HPE's recent acquisition of Juniper Networks [3] Future Outlook - For the fiscal first quarter, HPE projected adjusted EPS of $0.57 to $0.61 on revenue of $9.0 billion to $9.4 billion, below Wall Street estimates of $9.91 billion in sales but slightly above expectations for EPS of $0.54 [4] - HPE raised its full-year fiscal 2026 outlook, guiding adjusted diluted EPS between $2.25 and $2.45, and increasing the midpoint of its free cash flow forecast to $1.7 billion to $2.0 billion [4]

Financial Data and Key Metrics Changes - Q4 revenue reached $9.7 billion, a 14% increase year-over-year, with non-GAAP operating profits growing 26% year-over-year [5][24] - Non-GAAP operating margin was a record high at 12.2%, with non-GAAP diluted net earnings per share of $0.62, exceeding guidance [5][27] - Full-year revenue for fiscal 2025 was $34.3 billion, also a 14% increase year-over-year, with non-GAAP diluted net earnings per share of $1.94 [9][24] Business Line Data and Key Metrics Changes - Networking segment revenue increased 51% year-over-year to $6.9 billion, driven by the acquisition of Juniper Networks [9][10] - Server segment revenue grew 10% year-over-year, with strong demand for AI systems, totaling $6.8 billion in new AI system orders [12][30] - Hybrid cloud revenue grew 5% year-over-year, with approximately 7,000 new customers added to GreenLake, totaling around 46,000 customers [13][24] Market Data and Key Metrics Changes - Orders for the new combined networking segment grew faster than revenues, indicating strong market recovery [10][11] - The campus and branch business saw double-digit revenue growth, with strong traction in AI networking solutions [12][28] - Total company annualized revenue run rate (ARR) reached $3.2 billion, up 62% year-over-year, reflecting strong performance in GreenLake and software solutions [13][27] Company Strategy and Development Direction - The company aims to build a new networking industry leader, capture AI infrastructure opportunities, and accelerate high-margin software and services growth through GreenLake [6][20] - By fiscal year 2028, the company is committed to generating at least $3 in non-GAAP diluted net earnings per share and over $3.5 billion in free cash flow [7][8] - The integration of Juniper Networks is a top priority, with expectations of approximately $1 billion in annualized structural savings by fiscal 2028 [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand environment, noting an acceleration in orders towards the end of the quarter [5][6] - The company is monitoring commodity cost inflation and expects to pass through most component cost increases while managing demand elasticity [36][55] - The fiscal year 2026 revenue growth outlook is reaffirmed at 17%-22% on a reported basis, with networking revenue growth expected to be 65%-70% [36][37] Other Important Information - The company plans to sell its remaining 19% stake in H3C for approximately $1.4 billion, expected to close in the first half of calendar year 2026 [8][35] - The cash conversion cycle improved to 30 days, driven by strong collections and a decrease in inventory [34][36] - The company returned $886 million to shareholders through dividends and share repurchases, demonstrating commitment to delivering value [24][34] Q&A Session Summary Question: EPS and Free Cash Flow Guidance - The increase in EPS and free cash flow guidance is attributed to a favorable business mix and strong execution in networking [44][45] Question: Acceleration in Orders - The acceleration in orders towards the end of the quarter was noted, with a strong performance across the entire portfolio [47][49] Question: ARR and GreenLake Traction - The addition of Juniper has positively impacted ARR, particularly in software subscription services, enhancing the networking business [51][52] Question: Commodity Cost and Demand Elasticity - The company has implemented pricing changes to reflect DRAM cost increases and is monitoring demand elasticity closely [55][56] Question: Seasonality in Q1 - Q1 revenue is expected to align with historical seasonality, with some AI deals moving from Q4 to Q1 [59][60]

Core Viewpoint - Arista Networks reported strong Q3 2025 earnings, with significant year-over-year revenue and earnings growth, driven by robust demand and innovative product launches [2][3][4]. Financial Performance - GAAP net income increased to $853 million (67 cents per share) from $748 million (58 cents per share) year-over-year, while non-GAAP net income rose to $962.3 million (75 cents per share) from $769 million (60 cents per share) [3]. - Revenues surged to $2.31 billion from $1.81 billion in the prior-year quarter, exceeding the consensus estimate of $2.24 billion [4]. - Product sales totaled $1.91 billion, up from $1.52 billion, and service revenues increased to $396.6 million from $287.1 million [5]. Market Position - Approximately 80% of total revenues came from the Americas, with the remainder from international markets, highlighting Arista's strong leadership in the Data Center and Cloud Networking sectors [6]. Profitability Metrics - Non-GAAP gross profit rose to $1.51 billion, with margins improving to 65.2% from 64.6% due to better inventory management and supply-chain discipline [7]. - Operating income for the quarter was $978.2 million, up from $785.3 million, with total operating expenses increasing to $512 million from $376.4 million [8]. Cash Flow and Liquidity - In the first nine months of 2025, Arista generated $3.11 billion in net cash from operating activities, compared to $2.68 billion in the previous year [9]. - As of September 30, 2025, the company had $2.33 billion in cash and cash equivalents, with $1.4 billion available for share repurchase under its buyback program [9]. Future Outlook - For Q4 2025, management expects revenues between $2.3 billion and $2.4 billion, with a full-year revenue growth projection of 26%-27% to approximately $8.87 billion [10]. - Revenue for 2026 is anticipated to reach roughly $10.65 billion, reflecting a 20% year-over-year increase [10]. Analyst Sentiment - Recent estimates for Arista Networks have trended upward, indicating positive sentiment among analysts [11][13]. - The company holds a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the coming months [12][13].

This networking company has proven to be a significantly better investment than Broadcom in 2025.Broadcom (AVGO +0.41%) has been gaining prominence in the artificial intelligence (AI) chip market thanks to its application-specific integrated circuits (ASICs). The custom AI processors designed by the company have helped it secure multibillion-dollar deals with hyperscalers and AI companies.That's not surprising, as these chips can help lower the operating costs of data centers while boosting performance when ...

Core Insights - The ongoing growth trend in generative artificial intelligence (AI) presents significant investment opportunities beyond the "Magnificent Seven" stocks, with companies like Arista Networks positioned to benefit greatly from this trend [1][2]. Company Overview - Arista Networks has been a key player in cloud networking solutions for over 20 years, achieving a billion-dollar valuation approximately a decade ago, with a notable resurgence in growth over the past three years [4]. - The launch of ChatGPT in late 2022 marked the beginning of a generative AI growth trend, leading to substantial investments by tech companies in AI infrastructure [5]. Financial Performance - Arista Networks has seen a dramatic increase in demand for networking hardware and software, resulting in annualized revenue growth from approximately $4.4 billion in 2022 to around $8.5 billion in the trailing-12-month period [6]. - The company's diluted earnings per share (EPS) rose from just over $1 in 2022 to around $2.63, reflecting a nearly 150% increase, while the stock price surged by nearly 267%, from about $35 to around $129 [7]. Market Potential - Currently, Arista Networks has a market capitalization of approximately $161.3 billion, with the potential to reach $500 billion within six years, necessitating a sustained annualized growth rate of 20% [9]. - The company faces skepticism regarding the sustainability of the AI boom, but if AI meets productivity growth projections, it could lead to continued elevated growth levels for Arista [11][12]. Competitive Landscape - Concerns about "whitebox" competition and reduced demand due to customers building their own networking solutions exist, but Arista's history of technological innovation may mitigate these risks [12]. - The stock's forward price-to-earnings (P/E) ratio is just under 40, and while growth may remain around 20%, a potential de-rating could occur as investors anticipate a slowdown [14]. Strategic Considerations - To achieve its ambitious market cap goal, Arista may need to pursue mergers and acquisitions to enhance growth and cost synergies [15]. - Investors are advised to consider market conditions and potential buy-the-dip opportunities rather than entering positions at any price [16].

Core Thesis - Arista Networks Inc is experiencing strong demand for AI-driven networking solutions, with a current share price of $130.68 and trailing and forward P/E ratios of 49.69 and 39.53 respectively [1][2] Technical Analysis - The stock is at a critical technical juncture, nearing a well-defined resistance zone, which may lead to a short-term pullback following a significant guidance raise last quarter [2][3] - A potential three-wave pullback is expected, with support anticipated around $126, allowing the stock to reset before continuing its upward trend [4] Future Projections - The next upward movement is projected to target approximately $193, supported by ongoing strength in AI-driven demand [4] - The completion of the multi-wave structure suggests a target range of $227 to $235, requiring two additional corrective phases before the next major leg higher [5] Historical Context - Previous bullish theses on Arista Networks highlighted strong AI-driven networking growth and solid financials, with the stock appreciating by 88% since April 2025 [6]

Core Insights - The U.S. equity markets experienced significant volatility recently, with a five-day winning streak interrupted by a decline in cryptocurrencies, particularly Bitcoin, which struggled to maintain a value above $90,000 [1][2] - Concerns regarding the high valuations of AI firms are prevalent, with expectations of a market correction due to growth not matching substantial investments [2] - The likelihood of the Federal Reserve reducing its benchmark borrowing rate has increased, with markets pricing in an approximately 89% chance of a rate cut at the upcoming meeting [2] Momentum Investing Strategy - Momentum investing is characterized by the strategy of "buying high and selling higher," capitalizing on established trends in stock prices [3] - This investment approach is based on the human tendency to project current trends into the future, allowing investors to profit before prices revert to their mean [3][4] - Momentum strategies have historically generated alpha across various market conditions, although identifying trends can be challenging [4] Screening Parameters for Momentum Stocks - The screening process identifies the top 50 stocks with the highest percentage price change over the past 52 weeks, ensuring selection of stocks with consistent appreciation [5] - From these, the 10 worst performers over the past week are chosen to identify those experiencing short-term pullbacks [6] - Stocks are further filtered by Zacks Rank 1 (Strong Buy) and a Momentum Style Score of B or better, indicating strong potential for success [7] Selected Momentum Stocks - Phibro Animal Health Corporation (PAHC) has seen a 74.9% increase over the past year but a recent decline of 8.2%, holding a Momentum Score of B [11] - Argan, Inc. (AGX) has surged 138.5% in the past year with a recent drop of 4.2%, achieving a Momentum Score of A [13] - Ubiquiti Inc. (UI) has increased by 56.6% over the past year but lost 2% in the last week, also holding a Momentum Score of A [15]

Core Insights - HPE expands its GreenLake cloud portfolio to assist enterprises in modernizing IT and addressing increasing AI demands, with over 80% of enterprises re-evaluating their workload deployment strategies due to rising costs and hybrid cloud growth [1][2]. Hybrid Cloud Innovations - HPE introduces new capabilities in HPE Morpheus Software, providing an agile and secure enterprise-grade virtualization alternative, significantly reducing VM license costs by up to 90% [3]. - The updated GreenLake cloud platform accelerates the adoption of hybrid cloud operating models, enhancing operational efficiency and performance [3][8]. Security Enhancements - HPE implements zero-trust security with software-defined networking, enhancing agility and multi-layered security for virtual machines [4]. - New data protection solutions, including HPE StoreOnce appliances, are designed for high-performance data protection, capable of ingesting up to 300 TB/hour [12]. AI and Data Management - HPE collaborates with NVIDIA to enhance AI capabilities, introducing HPE Alletra Storage MP X10000 Data Intelligence Nodes for real-time data enrichment in AI pipelines [7]. - The integration of HPE Zerto Software with HPE Morpheus provides continuous data protection for VMs, ensuring operational continuity [11]. Financial Services and Cost Efficiency - HPE Financial Services extends financing programs for HPE CloudOps Software and HPE Alletra Storage, allowing customers to spread costs over three years with potential savings of up to 10% [9].