Santa Clara, California-based Arista Networks Inc (ANET) develops and markets data-driven, client-to-cloud networking solutions for data center, campus, and routing environments. Valued at a market cap of $136.4 billion, the company offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for next-generation data center networks and uses multiple silicon architectures across its products. 

Companies worth $10 billion or more are generally described as “large-cap” stocks, and Arista fits right into that category, with its market cap exceeding this threshold, reflecting its substantial size, stability, and influence in the technology sector. The company is a leader in manufacturing networking equipment for data centers, cloud companies, financial service providers, and internet service providers (ISPs).

The computer hardware company is trading just 2.2% below its 52-week high of $110.74, achieved on Dec. 6. Shares of ANET have rallied nearly 30.5% over the past three months, significantly outperforming the broader S&P 500 Index’s ($SPX) 10.6% gains over the same time frame.

Moreover, in the longer term, ANET has soared 89.1% over the past 52 weeks, significantly outpacing SPX’s 31.5% returns. On a YTD basis, shares of ANET are up 79.9%, massively outperforming SPX’s 26.9% gains over the same time frame.

To confirm its bullish trend, ANET has been trading above its 200-day moving average for the past year, and the stock has been trading above its 50-day moving average since late November. 

ANET’s commendable performance can be primarily attributed to the expanding cloud networking and artificial intelligence market. The company continues to benefit from its innovative scaled-out Ethernet offerings, including the Etherlink 7700 AI networking platform and its recently debuted Arista Etherlink AI platforms, which speed up networking for large-scale AI models.

However, shares of ANET fell 7.1% following its Q3 earnings release on Nov. 7, despite delivering a better-than-expected performance. The company’s revenue increased 7.1% year-over-year to $1.81 billion and exceeded the Wall Street estimates of $1.76 billion. Its adjusted EPS of $2.40 grew 31.1% from a year ago and surpassed the forecasted figure by 14.8%.

However, ANET’s non-GAAP gross margin guidance of 61% and non-GAAP operating margin guidance of 43.5% came below consensus estimates, which might have dampened investor confidence and led to its downward price movement. 

ANET’s outperformance becomes more evident when compared to its rival, Cisco Systems, Inc. (CSCO), which gained nearly 21.9% over the past 52 weeks and 16.7% on a YTD basis. 

As ANET’s outperformed the broader market, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 19 analysts covering it, and the mean price target of $110.32 suggests a 4.5% premium to its current levels.