Is Arista Networks (ANET) Doomed? Stock Downgraded Due To Nvidia AI Products!

Chip Stock Investor explores the implications of a recent stock price downgrade of Arista Networks (ANET), emphasizing the importance of a moderate viewpoint in evaluating businesses.

The downgrade, which shifted Arista from a 'buy' to a 'sell' due to Nvidia's (NVDA) “rising competition,” spurred a discussion on the essential technologies of Ethernet and InfiniBand, their roles in data centers and AI, and how these technologies impact the rivalry between Nvidia and Arista Networks.

Nick and Kasey explain why Ethernet and InfiniBand matter, Nvidia's strategic acquisition that put them in the lead in InfiniBand, and the evolving landscape of AI and data center networking. Arista Networks is no slouch though. And Ethernet is still very much a part of the modern data center.

Check out this episode of Chip Stock Investor for our take on Arista Networks business model, and whether the “new Nvidia risk” is valid or not.

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Chapters:
00:00 Arista Networks and NVIDIA's Market Dynamics
03:50 Understanding Ethernet, InfiniBand, and Their Roles in AI and Data Centers
06:20 Arista Networks vs. NVIDIA: Financial Performance and Market Position
08:50 The Future of Ethernet and InfiniBand in AI Training
14:34 Analyzing the Rosenblatt Downgrade and Its Impact on Arista Networks
24:23 Concluding Thoughts on Investment Strategies and Market Analysis

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Nick and Kasey own shares of Nvidia and Arista Networks

[dfsafsadfsadf]

This is the second time I've seen one of your slides that lists "Blackfield." I think you're meaning "Blackwell." Or maybe Bluefield.

[chipstockinvestor]

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[themusic]

My thesis on Nvidia is that they’ll end up being to AI as Microsoft was to personal computing in the 1990’s. Maybe Jensen Huang touring around touting every large tech name they’re collaborating with is actually showing who will be dependent on them lol Either way Arista is a great company, and their financials & balance sheet is flawless they’ve done a great job at producing shareholder equity & ROIC. Best never to sell on what analysts predict. Look at earnings and fundamentals instead.

[Carol-cbyu]

Current market action, great! You two are really on it.🌱

[Jason]

ANET killing it...another good call! You guys are a dynamic duo! Start a hedge fund, sign me up.

[EnriqueVazquezUSA]

I have a 0.2% allocation to ANET based solely on price action since IPO.

[geordiehawkins]

Interesting and very educational. Own both, NVDA my largest holding, ANET much smaller. Holding both obviously

[fpsninja]

Loved the video

I know this sounds like a crazy request. But you know how you did a deep.doce into chip manufacturing (my fav. Video so far). Can we have one over networking? How does arista compare vs oracle and cisco for example. What types of networks are there? What are the pros and cons. Etc.

Thanks for the work so far

[hamidnbl]

This two put great videos and great dip analysts. Thank you to both of you. Keep up the great job you are doing.

[jonathanlaue]

Arista may be a well run company, but it’s business is not diversified enough to justify faith in it’s moat. The stock has risen predominantly to current levels due to perception that it’s growth will align with NVDA’s due to being a complimentary service. The fact that NVDA is even involved in Ethernet justifies a significant downgrade from analysts. I’m out and have redistributed funds to ISRG.

[peter]

Thank you for another informative and enlightening webcast

[liewchintong]

Thank you for sharing. Is very educational for me.

[amyc]

Morningstar gives TERadyne a wide moat as one of a few semi testing providers. I've never heard of them and a brief search of your channel didn't find a vid. Are they like Toely, the test company you covered a couple weeks ago? Have you ever published a vid on them?

[onesung]

Not to go too tangent, but still related to Arista Network. Is it true that maximum throughput of Nvidia's Infiniband is around 800 Gbs versus 1 Gbs for ethernet? I know ethernet consortium is working on faster ethernet (ultra ethernet), but I can find very little information regarding its throughput.

[brettk]

So basically put all my life savings into Nvidia stock got it 👍

[jessrosenblatt]

Nvidia is concerned about network speed since it is its Achilles heal versus Groq and the other small companies that have rad different platforms that aren't built around the slowest GPU in the loop.

[nycesports]

I’m curious your thoughts on Navitas Semiconductor- NVTS after they provide some of their pipeline technology (GaNfast) and having a 100%+ year over year growth for 2023. At the price it’s trading now, I wonder if this is good position to keep adding more and why could one reason it’s trading downward.

[laCruzoz]

copped the hat so fast, can't wait to drip as hard as kasey.

[Jason]

here we go again today - seems after every Nvidia earnings report Arista takes a big hit, then recovers, rinse repeat.

[minervaj]

If you had increased your position then...