Arista Networks (NYSE:ANET) shares are trading down nearly 9% in premarket Tuesday despite the company delivering better-than-expected Q1 results and outlook for the second quarter.
Arista posted EPS of $1.43 on revenue of $1.35 billion, beating the consensus for earnings of $1.35 per share on revenue of $1.31B. Overall, revenue rose 54% year-over-year as product revenue increased by 62%.
“Amid macroeconomic uncertainty and a gradually recovering supply chain, Arista continues to bring innovative, leading-edge platforms to market, while delivering superior customer and financial outcomes," said Jayshree Ullal, president and CEO of Arista Networks. “Our Q1 results illustrate this with continued growth in revenue and profits.”
For this quarter, the company sees revenue at $1.375B, ahead of the $1.35B estimate.
Raymond James analysts said the visibility into the cloud customers “has normalized faster than we expected.”
“Arista remains a share-taker playing in growth markets, but it is not immune to normalization. Its high customer concentration remains a risk, and we stay on the sideline,” they said.
Morgan Stanley analysts are also cautious on ANET shares despite seeing it as a “best-in-class [business] primed to experience accelerated growth with AI.”
“[The] reason for hesitancy in jumping into the name was chance of cloud titan volatility, which company spoke to seeing,” they explained in a note.