Chicago, IL – March 17, 2025 – Today, Zacks Investment Ideas feature highlights Vertiv VRT, Super Micro Computer SMCI and Arista Networks ANET.
As we’ve all become aware, volatility has swept the markets over recent weeks, with tariff talks and other economic data causing a risk-off environment.
Many stocks, including those involved in the Data Center side of the AI frenzy – Vertiv, Super Micro Computer and Arista Networks – have faced pressure, with shares well off 2025 highs.
But is it a buying opportunity? Let’s take a closer look at the current standing of each.
Concerning headline figures in Vertiv’s latest release, it exceeded both consensus EPS and sales expectations, with EPS soaring 77% on the back of a 26% move higher in sales. The growth rates here are quite significant, reflective of healthy underlying demand.
Importantly, Vertiv upped its full-year 2025 sales guidance into a band of $9.1 - $9.3 billion, with the midpoint reflecting roughly 16% year-over-year growth. Vertiv also reaffirmed its five-year financial outlook, citing growing AI adoption as a key driver of data generation and data center demand. The company overall remains to benefit in a big way from providing the critical infrastructure needed to support the expansion.
Valuation isn’t rich, with the current 0.8X PEG ratio indicative of both growth and value. The current forward 12-month earnings multiple works out to 22.7X, nearly half of 2025 highs of 43.9X.
Analysts have continued to be bullish on ANET’s EPS outlook over recent months, with the stock holding a favorable Zacks Rank #2 (Buy). Strong quarterly results that have revealed snowballing demand have been a big tailwind for the stock amid the AI frenzy.
Strong top line growth looks set to continue nicely, with current year expectations alluding to 18% YoY growth. The stock sports a Style Score of ‘A’ for Growth.
In addition, the company’s margin performance has been positive over recent quarters, providing a nice profit boost overall. ANET’s Data Center products are likely higher-margin by nature, helping partly explain the positive change.
The most volatile of the bunch, SMCI shares have been hit hard from their rich 2024 high, down 66% since. A short report took a lot of wind out of its sail last year, but it’s critical to note that the company cleared the allegations after a period of uncertainty.
Quarterly results haven’t been enough to shake the stock out of its slump, with the company’s current negative EPS outlook warranting a level of concern. SMCI is currently a Zacks Rank #4 (Sell) due to the cloudy earnings picture.
The company is still forecasted to see 15% EPS growth on 59% higher sales in its current fiscal year, undoubtedly impressive, but the growth rates have consistently suffered from downward revisions from analysts over recent months.
Data Center stocks have been hit hard in the market’s recent wave of volatility, perhaps bringing about nice buying opportunities for those looking to join the trade.
All three stocks above are prime considerations for Data Center exposure, though investors should be patient with SMCI until its earnings outlook shifts positively.
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Super Micro Computer, Inc. (SMCI) : Free Stock Analysis Report
Arista Networks, Inc. (ANET) : Free Stock Analysis Report
Vertiv Holdings Co. (VRT) : Free Stock Analysis Report
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