Key Takeaways

Arista Networks ( ANET ) shares tumbled Wednesday amid some concerns about the company's sales to a key customer, though several analysts said they're still bullish on the cloud networking company's stock, anticipating a boost from demand for AI.

Arista on Tuesday reported better-than-expected earnings for the fourth quarter, but shares dropped Wednesday as Melius Research analysts suggested investors may have been concerned about a decline in Arista’s sales to Meta ( META ), which accounted for about a fifth of Arista's sales a year ago. However, the analysts maintained a “buy” rating and $140 price target for the stock, pointing to the company's strong outlook and "significant AI upside."

On the company’s earnings call, Arista said it expects revenue to grow 17% in 2025, the upper end of its previous guidance, according to a transcript provided by AlphaSense. Citi analysts raised their price target to $121 from $115, calling the forecast “a good sign for the things to come.”

Morgan Stanley analysts said they would “continue to be buyers of weakness,” after the results, citing “the quality of software in combination with a $70 billion market opportunity.” The analysts reiterated an “overweight” rating and $118 price target.

Shares of Arista fell over 6% to close at $103.92 Wednesday, though even with Wednesday's losses, they've gained nearly two-thirds of their value over the past 12 months.

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