An obscure cloud networking company has quietly become one of the biggest winners of the artificial-intelligence build-out.
Arista Networks has seen its share price surge from $9.79 on March 31, 2020, to roughly $123 on Wednesday afternoon, a gain of about 1,156 percent in less than six years, according to data compiled by News Of Los Angeles.
At a Glance
- Arista Networks stock has soared 1,156% since March 2020
- Shares climbed from $9.79 to around $123 in under six years
- Relative Strength Rating upgraded from 64 to 78 on Wednesday
- Why it matters: The rally underscores how infrastructure providers are capitalizing on the AI megatrend
The momentum continued this week when Arista’s Relative Strength (RS) Rating jumped from 64 to 78, signaling renewed institutional demand for the stock.
What Drives the Rally
Arista sells high-performance cloud networking switches and software that data-center operators use to move massive AI workloads. As hyperscalers such as Microsoft, Meta and Amazon race to build larger AI clusters, they need the low-latency, high-bandwidth gear Arista produces.
The company’s results have reflected that demand:
- Revenue rose 23 percent year-over-year in the latest quarter
- Gross margin widened to 64 percent, helped by premium product mix
- Management guided full-year sales above Wall Street estimates
Chart Action
Wednesday’s RS upgrade pushed Arista into the top 22 percent of all stocks in terms of price strength over the past 12 months. The rating combines share-price performance with volume trends to gauge institutional accumulation.
Key technical levels to watch:
- All-time high: $133.89, set in December 2024
- 50-day moving average: $119, which the stock is holding above
- Support zone: $115-$118, site of prior resistance
Institutional Support
Portfolio managers have increased exposure. Latest 13-F filings show:
- Vanguard Group lifted its stake to 28.1 million shares, a 4-percent boost
- BlackRock now owns 25.4 million shares after adding 1.2 million
- State Street raised its position by 3 percent to 11.7 million shares
Combined, the top five holders control about 45 percent of the float, according to News Of Los Angeles data.
Valuation Check
Even after the run-up, analysts see room for upside:
- Forward P/E ratio: 28× next-year earnings, below the five-year median of 32×
- PEG ratio: 1.3, suggesting growth expectations are not stretched
- Free-cash-flow yield: 3.4 percent, topping many peers
Wall Street’s average 12-month price target stands at $140, implying another 14 percent upside from Wednesday’s close.
Competitive Moat
Arista’s Extensible Operating System (EOS) runs on off-the-shelf silicon, letting customers automate tasks and plug into cloud orchestration tools. That open approach contrasts with legacy vendors that lock clients into proprietary hardware.
Customers cite:
- Faster deployment times-days instead of weeks
- Lower total cost of ownership, cutting capex by up to 30 percent
- Programmable interfaces that mesh with in-house DevOps pipelines
Risk Factors
No rally is immune to setbacks. Potential headwinds include:
- A slowdown in hyperscaler spending if AI ROI disappoints
- Supply-chain snarls that could delay key chip deliveries
- Heightened competition from Cisco, Nvidia and startups
Management has acknowledged these risks, guiding investors to expect lumpy order patterns as large customers time data-center upgrades.
Key Takeaways
- Arista Networks has ridden the AI infrastructure wave to a 1,156 percent gain since early 2020.
- The latest RS Rating upgrade shows big money is still accumulating shares.
- Strong fundamentals-23 percent revenue growth, 64 percent gross margin-support the advance.
- Valuation remains below historical averages, leaving room for further upside if execution stays on track.
