Arista Networks, Inc. (ANET) Stock Forecasts

Summary

Stocks wrapped up an impressive first half with a year-to-date gain of 16.9%. Bonds also ended higher for the period, but with a much more modest gain of 1.0%. Looking ahead, our Stock-Bond Barometer model modestly favors bonds over stocks for long-term portfolios. In other words, these asset classes should be near their target weights in diversified portfolios, with a slight tilt toward fixed income given the rise in yields since early 2022. We are now overweight on large-caps. We favor large-caps for growth exposure and financial strength, while small-caps offer value. Our recommended exposure to small- and mid-caps is now 12%-13% of equity allocation, below the benchmark weighting. U.S. stocks have outperformed global stocks over the past five years. We expect this long-term trend favoring U.S. stocks to continue given volatile global economic, geopolitical, and currency conditions. That said, international stocks offer favorable near-term valuations, and we target 7%-8% of equity exposure to the group. In terms of Growth and Value, Growth stocks have rebounded in 2023, outperforming Value as interest rates have stabilized. Over the long term, we anticipate that Growth, led by the Tech and Healthcare sectors, will top returns from Value, led by Energy and Materials, due to favorable secular, demographic, and regulatory trends.