Investing.com -- UBS upgraded Arista Networks (NYSE:ANET) Inc to "Buy" from "Neutral" and raised its price target to $115 from $112, citing strong data center capital expenditure growth and improving financial metrics.
The bank expects investments in AI infrastructure to drive data center spending at a 25% compound annual growth rate through 2027, benefiting Arista, which derives nearly half its revenue from major cloud providers like Microsoft (NASDAQ:MSFT) and Meta (NASDAQ:META).
UBS sees Arista's 2025 revenue guidance of 17% growth as conservative, forecasting up to 25% growth instead.
Shares trade at roughly 35 times UBS's 2025 earnings estimate of $2.51 per share, a valuation the bank views as attractive given expected hyperscaler investment in AI capacity.
UBS also downplayed concerns over competition from white-box vendors, noting that Arista's software advantages remain a key differentiator.
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