Here's Why Nvidia Caused BNP Paribas to Downgrade Arista Networks Stock (ANET)
Shares of Arista Networks (ANET) are down at the time of writing after the cloud networking firm was downgraded by BNP Paribas. In fact, 4.5-star analyst Karl Ackerman lowered his rating on the stock from Outperform to Neutral due to increasing competitive pressure from Nvidia (NVDA) and low-cost whitebox vendors like Celestica (CLS) and Accton. These new threats could take market share away from Arista in the AI networking space.
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Ackerman explained that the AI networking market is shifting quickly from Ethernet to InfiniBand, with Nvidia and other companies positioned to dominate this segment. Indeed, Nvidia's upcoming Quantum-X switches, which are expected to support 1.6T speeds and launch in the second half of 2025 — about a year ahead of comparable Ethernet products — may significantly limit Arista's near-term growth opportunities.
In addition, the move toward rack-scale GPU architectures is accelerating this shift, thereby giving Nvidia and other players an advantage when it comes to capturing the bulk of the Ethernet switching market. As a result of these competitive pressures, Ackerman revised his outlook for Arista's AI-related revenue. He now expects the company to generate $2.5 billion in AI sales by 2027, which is down significantly from his previous forecast of $3.4 billion.
Is ANET Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on ANET stock based on 11 Buys, four Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average ANET price target of $109.38 per share implies 17% upside potential.
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