ANET reported excellent results yesterday after market close. Revenue was up 51% while operating income more than doubled to $116 million, all customer segments recorded doube-digit growth. New products launched last year now represent around 30% of sales, incredible achievement. And according to the CEO, the upgrade cycle for 100-gig switches is just beginning:
" First of all, I think we are in very early stages of 100-gig upgrade cycles in general. 40-gig was a window of opportunity, mostly in the enterprises, but almost every major cloud is going to 100-gig spine. Right? And I think that cycle started for us with especially the R Series. There's a little bit of it in the E, but it really started in 2016 and I believe it's a five-year cycle."
The company's market share is around 14-15% at this point, they still could possibly double it or more. In addition they are getting more visible in other markets like routing and data analysis which will start contributing in the next few quarters.
I have been long ANET since September 2016 and do not plan to sell anytime soon. Their P/E ratio has climbed above 56, which is really nosebleed territory, but then revenues and income are growing this fast, it might be justified. Jayshree Ullal, Andy Bechtolsheim and Kenneth Duda are executing flawlessly and they have exceeded all my expectations. Cisco is trying hard to stop Arista, but the company is just firing on all cylinders. There is really no reason to sell these shares at this point, I think their revenues and cash flows will be much higher 3-5 years from now so I keep holding.
" First of all, I think we are in very early stages of 100-gig upgrade cycles in general. 40-gig was a window of opportunity, mostly in the enterprises, but almost every major cloud is going to 100-gig spine. Right? And I think that cycle started for us with especially the R Series. There's a little bit of it in the E, but it really started in 2016 and I believe it's a five-year cycle."
The company's market share is around 14-15% at this point, they still could possibly double it or more. In addition they are getting more visible in other markets like routing and data analysis which will start contributing in the next few quarters.
I have been long ANET since September 2016 and do not plan to sell anytime soon. Their P/E ratio has climbed above 56, which is really nosebleed territory, but then revenues and income are growing this fast, it might be justified. Jayshree Ullal, Andy Bechtolsheim and Kenneth Duda are executing flawlessly and they have exceeded all my expectations. Cisco is trying hard to stop Arista, but the company is just firing on all cylinders. There is really no reason to sell these shares at this point, I think their revenues and cash flows will be much higher 3-5 years from now so I keep holding.
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