Arista tops Wall Street’s forecasts, highlighting the role of high-speed networking for AI applications – Business

Shares of the cloud networking company Arista Networks Inc. were trending higher in late trading today, after it reported a trifecta of positive news – beating expectations on Wall Street’s earnings and revenue targets, delivering a better-than-expected outlook, and announcing another big share buyback program.

The company, which told inventors it is enjoying strong growth on the back of the broader technology industry’s generative artificial intelligence wave, reported first quarter earnings before certain costs such as stock compensation of $1.99 per share, easily beating the Street’s forecast of $1.77 per share. Revenue for the period rose 16% from one year ago to $1.57 billion, edging past the analysts’ target of $1.55 billion.

In total, Arista delivered a net profit of $637.7 million in the quarter, up from a profit of $436.5 million one year earlier.

The company is one of the most important players in the networking industry, having emerged as one of the main rivals of market leader Cisco Systems Inc. It sells premium networking gear such as high-speed switches that support enormous bandwidths in order to accelerate communications between servers in corporate networks.

Arista Chairperson and Chief Executive Jayshree Ullal (pictured) said in a statement that the company delivered “solid” first quarter results. “As we get ready to celebrate the 10th anniversary of our IPO in June, I am pleased with our progress in the Arista 2.0 journey as seen in breakthrough innovations, customer traction and building our next generation leaders,” she added.

The company is confident that its solid start to the year will continue. In its guidance, it said it’s looking for revenue of between $1.62 billion and $1.65 billion, which came in ahead of the Street’s forecast of $1.62 billion at the midpoint.

Arista, which counts the likes of Microsoft Corp. and Meta Platforms Inc. as its major customers, said it is seeing huge demand for its products to enterprises’ insatiable appetite for cloud-based networks that can handle the high-performance needs of powerful generative AI models

According to Ullal, Ethernet switches are emerging as one of the most critical infrastructure components for AI data centers. On a conference call, she was happy to explain why that’s the case.

“AI applications simply cannot work in isolation, they demand seamless communication among compute nodes,” she told analysts. “As generative AI training tasks evolve, they are made up of many thousands of individual iterations. Any slowdown due to network congestion can critically impact the application performance, creating an inefficient wait stage and idling away processor performance by 30% or more.”

Investors were impressed by her explanation and the company’s solid numbers, as Arista’s stock gained more than 6% in extended trading, erasing a drop of almost 2% during the regular trading session.

On the product front, Arista’s biggest news during the quarter was the launch of a new networking observability platform for AI networks that brings together data from the network infrastructure, plus compute and server systems of record, to deliver key application and workload performance insights. The new offering is called CloudVision Universal Network Observability or CV UNO, and it aims to reduce enterprise risk, improve on application and network fault detection and correction, and simplify the cross-functional coordination of systems. According to Arista, the platform is able to speed up recovery times no matter what the cause of the application or network outage is.

Adding to investors’ enthusiasm, Arista announced that its board of directors has authorized a new share buyback program of up to $1.2 billion.

Photo: SiliconANGLE