Cloud computing stock Arista Networks (ANET) is ranked first in the IBD Networking industry group. Shares have gained 29% this year so far, as the company is poised to report first-quarter earnings Monday.
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The Santa Clara, Calif., company designs and sells network switches used in data centers, cloud and high-performance computing and high-frequency trading environments.
Arista announced its artificial intelligence (AI) driven network identity service for enterprise security and IT operations on April 24.
Arista jumped on the AI trend with its November launch of startup OpenAI’s ChatGPT internet search software.
Arista has some Big Tech names in its Cloud Titans segment, including Meta Platforms (META) and Palo Alto Networks (PANW). Its Cloud Extensible Operating System (EOS) partners with Amazon Web Services.
ANET Stock Dips From All-Time Highs
ANET broke out of a cup base following its Feb. 13 fourth-quarter earnings report, and pulled back before making a steep ascent in March.
Shares hit the 20% profit zone from the 140.91 buy point. ANET hit an all-time high of 171.44 on March 23, riding 21-day exponential moving average on the way up.
The new highs were short-lived as the cloud computing stock reversed course, and started to drop. It is now testing support at the 50-day moving average.
Can Arista Beat Earnings Expectations Once Again?
Arista beat it fourth-quarter earnings and sales expectations. ANET has posted accelerating earnings growth for five consecutive quarters, topping out at 72% in Q4.
Sales growth has also been impressive, up 55% in Q4 following 57% and 49% gains in the prior two quarters.
FactSet estimates Q1 EPS of $1.35, or 60.7% growth over the prior year’s quarter. Quarterly sales are projected to be $1.307 billion, equaling 49% growth.
Full-year earnings growth is expected to grow 27% in 2023, then easing to 10% in 2024.
Mutual funds own 50% of shares, with 2,113 owning shares in March, up from 2,103 in December. Management owns 20% of shares, showing it has a large interest in the company’s success.
Follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.
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Source: https://www.investors.com/stock-lists/sector-leaders/cloud-computing-stock-builds-ai-position/?src=A00220&yptr=yahoo