Cloud Companies Will Spend Billions on AI. Buy Arista Networks Stock.

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Morgan Stanley analyst Meta Marshall raised her call on the stock to Overweight from Equal Weight and boosted her target for the price.

Arista Networks shares are getting a post-earnings boost, aided by a bullish call from Morgan Stanley analyst Meta Marshall, who sees the company getting a big boost from AI-driven data-center buildouts.

In a research note Monday, Marshall lifted her rating on Arista shares to Overweight from Equal Weight. She raised her target for the stock price to $220, from $185. Marshall sees Arista as the best way to take advantage of “the $25 billion AI networking market.” In particular, she sees Arista benefiting from the adoption of Ethernet networking in data centers, replacing a competing networking standard called Infiniband.

Marshall said that the ethernet-networking opportunity is largest with cloud providers, where the company already has a strong relationship. Microsoft and Meta Platforms are the company’s largest customers, together accounting for more than 40% of revenue in the most recent fiscal year.

 

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Earnings Show Growth in Public Cloud MarketSteve McDowell is principal analyst and founding partner at NAND Research. Steve is a technologist with over 25 years of deep industry experience in a variety of strategy, engineering, and strategic marketing roles, all with the unifying theme of delivering innovative technologies into the enterprise infrastructure market.
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