Nvidia Dominance Continues As AI Demand Grows: Can Arista, Cisco Keep Up?

Nvidia Corp NVDA just delivered another knockout quarter, smashing expectations as AI infrastructure demand remains red-hot.

With its Blackwell chips already raking in $11 billion, compute players like Dell Technologies Inc DELL, Super Micro Computer Inc SMCI and Hewlett Packard Enterprise Co HPE are set to benefit.

But for networking giants like Arista Networks Inc ANET and Cisco Systems Inc CSCO, the competition is only getting fiercer.

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Blackwell Powers Nvidia's Blowout Quarter

JPMorgan analyst Samik Chatterjee sees Nvidia's latest results as a bullish signal for compute and optical stocks. Data center revenue soared 93% year-over-year to $35.6 billion, with compute revenue alone skyrocketing 116%.

Blackwell's meteoric rise makes it Nvidia's fastest-ramping product ever, with hyperscalers like Microsoft Corp MSFT, Alphabet Inc GOOGL GOOG, Amazon.com Inc AMZN and Oracle Corp ORCL driving adoption.

On top of that, Nvidia is already looking ahead to Blackwell Ultra, expected in the second half of the year, said Chatterjee. With AI model inferencing demand accelerating, particularly for OpenAI's GPT-4o, DeepSeek-R1, and Grok 3, the need for more compute is only growing.

Networking Stumbles, But Recovery Is In Sight

Not everything was flawless – networking revenue dropped 9% as Nvidia transitions from NVLink 8 with InfiniBand to NVLink 72 with Spectrum-X, noted Chatterjee. However, the company expects networking to return to sequential growth next quarter, thanks to deployments at major AI factories.

According to Chatterjee, Microsoft, Oracle, and CoreWeave are among those fueling Spectrum-X adoption, while Nvidia's recent Cisco partnership could help expand its enterprise reach.

The Pressure Mounts On Arista & Cisco

With Nvidia increasingly controlling the AI stack, Arista and Cisco must fight to maintain market share. AI networking demand is surging, but Chatterjee notes that Nvidia's Spectrum-X is winning customers.

The next few quarters could be make-or-break for traditional networking giants.

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