With a market cap of $110.8 billion, Arista Networks Inc (ANET) provides cloud networking solutions for data centers, AI, and enterprise environments, offering high-performance Ethernet switches and routers optimized for next-generation networks with multiple silicon architectures. Its core technology, the Linux-based Extensible Operating System (EOS), is fully programmable and modular, supporting cloud and virtualization solutions.

Companies worth more than $10 billion are generally described as “large-cap” stocks, and Arista Networks fits this criterion perfectly. The Santa Clara, California-based company played a key role in developing the Virtual Extensible LAN (VXLAN) protocol and continues to advance VXLAN routing and integration.

Despite this, ANET declined 34.3% from its 52-week high of $133.57. Shares of the cloud networking company have decreased 17.8% over the past three months, a steeper decline compared to the Nasdaq Composite’s ($NASX) 5.8% dip over the same time frame. 

In the longer term, ANET stock is down 20.6% on a YTD basis, underperforming NASX’s 3.9% drop. However, shares of Arista Networks have gained 25.3% over the past 52 weeks, outperforming NASX’s 16.4% return over the same time frame.

Despite recent fluctuations, ANET has been trading above its 50-day and 200-day moving averages since last year. 

Despite reporting better-than-expected Q4 2024 adjusted EPS of $0.65 and revenue of $1.9 billion on Feb. 18, ANET shares fell 6.4% the next day. Investors were disappointed with the company's Q1 guidance, which projected only a 1% sequential sales increase and a slight decline in gross margin to 63%. Additionally, while Arista expects $1.5 billion in AI revenue this year, including $750 million from AI back-end networking clusters, some investors had anticipated even higher projections, contributing to the sell-off.

Nevertheless, ANET has outperformed its rival, Dell Technologies Inc. (DELL), which declined 17.4% over the past 52 weeks. But, on a YTD basis, Dell's 15.6% drop is less pronounced than Arista Networks' decline.

Despite Arista Networks’ outperformance over the past year, analysts remain cautiously optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from 19 analysts in coverage, and as of writing, ANET is trading below the mean price target of $122.98.