Arista, Cisco Poised to Dominate AI Switch Market
Warning! GuruFocus has detected 2 Warning Sign with ANET.
Back-end network switching for AI is set to grow from $6.3 billion in 2024 to $29 billion by 2029, with hyperscalers driving $17.6 billion of that demand. Evercore's Amit Daryanani estimates Arista could add $7 billion in revenue and over $2.00 in EPS by hitting market-share targetsroughly matching its 2024 run ratewhile Cisco could tack on $3.5 billion in revenue and $0.25 in EPS.
Ethernet is forecast to capture the lion's share of growth, potentially up to 90%, as AI clusters at Meta (NASDAQ:META), Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN) scale out. Daryanani notes that traditional data-center switches won't cut it for AI workloads, and that large enterprises will lean on model-as-a-service rather than build full clusters in-house. He also flags upside for Celestica (NYSE:CLS) and NVIDIA (NASDAQ:NVDA) in supporting components and InfiniBand alternatives.
Investors should care because Arista's and Cisco's AI-centric networking strength could drive outsized revenue and profit growth well beyond the broader IT spending cycle.
This article first appeared on GuruFocus.
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