Arista Networks Stock Drops Despite Strong Earnings and AI Growth Potential

Concerns over declining sales to Meta weigh on shares, but analysts remain optimistic about AI-driven opportunities and long-term growth.

Arista Networks reported better-than-expected Q4 2024 earnings, with revenue rising 25% to $1.93 billion and adjusted earnings per share at 65 cents, surpassing analyst expectations.
The company projects 2025 revenue growth of 17%, slightly higher than prior guidance but below Wall Street's consensus of 19%, leading to mixed reactions from investors.
Declining sales to Meta, which accounted for a significant portion of Arista's revenue last year, have raised concerns about customer concentration risks.
Analysts remain optimistic about Arista's long-term prospects, citing a $70 billion market opportunity and expected growth in AI-related infrastructure demand, including Ethernet networking for AI data centers.
Despite a 6% drop in share price on Wednesday, Arista's stock has gained nearly 70% over the past year, reflecting its strong position in the cloud networking and AI markets.