Arista Networks (NYSE: $ANET), a leader in client-to-cloud networks for large AI, data, center, and routing environments, released its Q4 fiscal 2024 results after markets closed to a negative market reaction. Here is a deep dive into why ANET shares dipped despite the revenue and earnings beat.
Arista Networks Q4 Results
For the fourth quarter of fiscal 2024, Arista Networks reported revenue of $1.93 billion and a diluted EPS of $0.65. That was above estimates of $1.90 billion in revenue and an adjusted EPS of $0.57. Arista Networks’ impressive results were driven by a 25% surge in sales and rising demand for AI infrastructure.
Full-Year Highlights
Full-year revenue increased 19.5% YoY to $7 billion, while the adjusted EPS came in at $1.73 on an adjusted net income of $2.2 billion.
Commenting on the results, Arista CFO Chantelle Breithaupt said that the company “generated over 95% year-over-year growth in operating cash flow for the quarter, allowing us to continue to invest in strategic initiatives such as the AI and Campus markets.”
Q1 Fiscal 2025 Outlook
For the first quarter of fiscal 2025, Arista Networks expects revenue of $1.93 billion to $1.97 billion, beating estimates of $1.91 billion at the midpoint.
Arista Networks (ANET) Stock Dips
Following the earnings and revenue beat in Q4, ANET shares dipped 3.21% to $107.50 per share as of 8:01 AM EST during premarket trading. Over the past month, ANET stock has dipped 7.41%. However, it has risen 25.53% in the past six months and 69.72% in the past 12 months.
Despite the recent dip, Analysts give ANET shares a strong buy rating. They forecast an average price of $126.71, which is a 14.09% upside. At the low end of the forecasts, they expect $108, while on the higher end, they expect $145.
Why ANET Stock Dipped
The recent dip in ANET stock is due to a confluence of several factors. One of the biggest was the sale of nearly $9.5 million worth of shares by founder and Chief Technology Officer Kenneth Duda on February 6, 2025, according to an SEC filing. While there are many reasons an executive would sell their stock, investors often react negatively to an insider sale.
Another factor was the release of an analysis by Rosenblatt analyst Mike Genovese, who noted there were widespread concerns regarding the pace of AI back-end networking at Microsoft. Analysts at Morgan Stanley also highlighted the 17% YoY decline in revenue from Meta.
That is quite concerning since, according to CEO Jayshree V. Ullal, Arista’s core cloud AI and data center products drove around 65% of revenue.
There is also concern about the release of cheaper open-source AI models following the release of DeepSeek, which requires less computing power.
Is Arista Networks A Buy In 2025?
While Arista Networks could continue to experience some volatility in the near term, the overall long-term trajectory looks promising. Spending on AI data centers is still in the early stages, and it is unlikely to pull back anytime soon. Consequently, the current pullback could potentially present a buying opportunity.
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