OT: ANET Chart chat

From IBD for those that add technicals to fundamentals:


Arista Networks (ANET) is acting like a true market leader and remains just 2% off its high.

The provider of software-driven cloud networking solutions has increased its market share of its high-speed data-center switching ports to 14.9% as of Q3 2016, according to Crehan Research.

The stock has performed well this year. Since breaking out of it first base in August, the stock has risen 28% from that entry.

In mid-December, a court ruled that Arista Networks owed no damages over Cisco’s (CSCO) claim of copyright infringement. Cisco had been seeking roughly $335 million in damages. However, litigation continues as an International Trade Commission judge ruled Dec. 2 that Arista infringed on two Cisco patents.

After breaking out of a flat base in mid-November, the stock has moved up nicely, about 13% from its 87.72 buy point, so it hasn’t triggered a profit-taking sell rule yet.

Now, Arista Networks has built an add-on entry for investors with a profit cushion. A three-weeks-tight, especially when the market is correcting, is particularly constructive. Despite the market weakness, institutions are unwilling to part with their shares.

The add-on entry point at 99 is in play if the stock breaks above that level in high volume. Be mindful of your position’s cost basis if you add shares.

The volume has been encouraging as well. As the stock hits new highs, volume tends to be above average, but when the stock pulls back, the volume recedes.

The stock’s relative strength line has remained near highs during the recent market volatility.

Might be a place to transfer NVDA profits while we wait for that one to see if it will retrace to the 50dma and start a new base.


Good article, may be behind a paywall


Summary and snippets:
Made inroads vs Cisco by acquiring large customers.

Now it’s poised to make an even stronger move in the market, provided it can hang on to those customers, the likes of which include Microsoft (MSFT), Facebook (FB), Netflix (NFLX), Apple (AAPL), Alphabet’s Google (GOOGL), eBay (EBAY) and Yahoo (YHOO).
…even though industry leader Cisco now holds nearly 60% of the data center-switching market. Many of those companies will rely on Arista more as they crave faster network speeds to whisk content and apps to mobile devices or, in Netflix’s case, stream high-quality video.

While some of Arista’s blue-chip clients are now developing their own switching hardware, a development that has some analysts worried, others say Arista’s software expertise gives it an edge as the market evolves.

“Arista is gaining share by focusing on the needs of a very demanding set of data center customers. They have a big presence with (web) hyperscalers, the cloud titans,” said Brad Casemore, an analyst at research firm IDC

IDC expects demand for 40- and 100-gigabit switches to boom through 2020 and for Arista to grow along with that.

One worry is that cloud builders may use contract manufacturers to make their own network switches — basically servers with built-in, high-speed communications functions — at the expense of Arista, Cisco and other suppliers. Ullal says Arista isn’t worried about the white box trend.

Facebook and Google are building their own switches too.

When Facebook, Arista’s second-biggest customer behind Microsoft, in November announced “Backpack,” its first 100-gigabit switch, it set off alarm bells among industry watchers at Goldman Sachs.

“Facebook believes it now has a full road-map to building a data center,” a report from the investment bank said. “We view these developments as a long-term negative for data center switching vendors Arista, Cisco, and Juniper (Networks) (JNPR).”

“While cloud service providers from time-to-time experiment with homegrown switching applications, such initiatives are not to fully displace the merchant suppliers,” Moskowitz said in a report. “In certain cases, these homegrown efforts are designed to influence the technology road maps of the merchant suppliers.”

Citigroup analyst Stanley Kovler said in a report that Arista’s risk of market share loss due to the white-box trend is “negligible as Arista’s products are primarily in the core, complex part of the data center.”

Arista, which has over 4,000 switching customers, aims to have over 100 routing customers by mid-2017. Morgan Stanley, in a report, estimates that Arista could garner $200 million to $300 million in revenue from router products by 2020

This could be a nice new market for them. David Gardner loves a stock with “multiple possible futures”.

Aside from its push into the routing market, Arista aims to target the corporate market through a new alliance with Hewlett-Packard Enterprise (HPE). And, it aims to grow revenue from government customers as well.

No sell signals here.