Arista Analyst Sees 68% Upside As Stock Pullback Presents Buying Opportunity

Arista Networks Inc ANET has seen a recent pullback with the stock down about 25% over the past month. But JPMorgan analyst Samik Chatterjee sees it as an opportunity rather than a red flag.

He's adding the stock to the firm’s Analyst Focus List, pointing to upside potential fueled by AI-driven Ethernet adoption in data centers. “Investors are overestimating the risks from Nvidia Corp NVDA and White Box competitors,”

Chatterjee stated, maintaining an Overweight rating with a $140 price target — implying a significant upside from current levels.

Arista stock closed the trading day, Friday, at $83.51 a share. That’s an upside of approximately 68%.

Arista Stock: Pullback Presents A Buy Opportunity

According to Chatterjee, the recent decline in Arista stock stemmed from broader AI spending concerns among cloud customers and fears of competition from White Box companies.

However, he argues that these worries are overstated. “Arista's AI-driven networking demand remains strong, and market fears are not aligned with long-term fundamentals,” he said.

Trading at 28x 2026 consensus EPS, Arista stock isn’t cheap, but with earnings growth ahead and potential multiple expansion, the stock remains well-positioned for gains.

Valuation Retraces, But Growth Potential Remains

While Arista stock’s premium valuation reflected its high growth expectations, recent weakness has erased much of that premium. Currently trading at 33x next-twelve-month P/E, close to its historical average, Arista stock still offers room for appreciation as AI-related Ethernet adoption accelerates in 2026 and beyond.

“We believe the stock’s premium valuation is justified given its dominant role in high-speed Ethernet switching for AI workloads,” Chatterjee noted.

Seasonal Weakness, But Second-Half Strength?

Historically, Arista stock underperforms in the first half of the year due to conservative guidance practices. However, the second half tends to see stronger performance, with guidance raises playing a key role.

“Our confidence in Arista's second-half rebound remains high, particularly as AI-driven deployments ramp up,” Chatterjee said.

Investors looking for AI-driven upside may find upcoming earnings reports to be the catalyst needed to reinforce confidence in the stock's trajectory.

Arista Vs. Nvidia: Market Share Concerns Overstated

A key question among investors is whether Nvidia's dominance in AI networking could hinder Arista's growth. Chatterjee pushes back against this concern, highlighting Arista's strong presence in front-end networks and ongoing market share gains.

“While Nvidia dominates the AI accelerator market, Arista continues to win share in the Ethernet switching segment, which remains critical for AI infrastructure,” he explained.

Despite some revenue moderation from Meta Platforms Inc META in early 2024, Arista remains a critical supplier for AI-driven data centers, positioning it well for future growth.

The White Box Question

White Box competitors have maintained a steady market share, but Arista's foothold with major cloud players remains strong. According to Chatterjee, White Box adoption outside top-tier cloud customers is limited due to software complexity, keeping Arista's competitive edge intact.

“The software-driven differentiation Arista provides remains a key moat against commoditization,” he added.

With AI data centers shifting toward Ethernet adoption and Arista’s long-term growth intact, the current pullback presents an attractive entry point.

“We see this as an opportunity for long-term investors, given Arista's clear path to AI infrastructure leadership,” Chatterjee concluded. As market concerns fade and earnings momentum builds, he sees a compelling case for Arista stock's continued outperformance.

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