Investing.com -- JPMorgan has added Arista Networks (NYSE:ANET) to its Analyst Focus List (AFL), citing an attractive entry point following a pull-back in the stock.
The analysts note that concerns around AI spending and potential market share losses to white-box companies have been overblown and do not materially affect the company's long-term outlook.
“ANET shares are now trading at 28x 2026 consensus EPS, which although not inexpensive, is leaving ample room for upside in the shares both from earnings upsides as well as upside to the valuation multiple,” said JPMorgan (NYSE:JPM).
The analysts expect earnings growth to surpass consensus in 2025, with acceleration in revenue growth through 2026 and 2027, driven by the higher adoption of Ethernet in AI Datacenters.
JPMorgan sees significant opportunities ahead as AI datacenters ramp up and Arista's customer base adopts Ethernet-enabled AI infrastructure.
This, combined with Arista's strong growth strategy, is said to support their $140 price target for December 2025, suggesting room for further upside.
The analysts also point out that while Arista’s valuation remains relatively high, much of the premium attributed to the stock due to anticipated growth acceleration has already been erased.
Arista’s stock is now trading at a 33x NTM P/E, close to its long-term average of 32x, making the current price level more attractive for investors looking to take advantage of potential upside.
Overall, JPMorgan's decision to add Arista to its Analyst Focus List reflects the firm's belief that the recent pull-back has created a favorable entry point, with potential for strong earnings growth and higher revenue in the coming years.
