Arista Unveils New Platforms to Enhance Routing & Switching

Arista Networks ANET recently launched 7050X3 and 7260X3 platforms. The platforms, functioning on low power, deliver an astounding tenfold increase in execution of routing higher bandwidth and switching.  Both the new platforms boast of doubled capacities compared with 7050X and 7060X versions. The physical specifications however remain same to avoid changes in existing cabling infrastructure.

The new dual leaf-spine systems will support 25G and 100G, enabling both enterprise and cloud customers to smoothly switch networks. The new systems leverage the company’s operationally consistent CloudVision. It also empowers the company to support two-tier cloud networks.

The Arista 7050X3 and 7260X3 Series is based on the Broadcom AVGO Trident 3 and Tomahawk 2 chip sets. It also supports Arista EOS with enhanced automation and visibility capabilities. The improved features which helps in reducing operational costs as well as complexity for enterprises by simplifying integration and management of hybrid clouds across private cloud data centers and public cloud providers.

The systems allow users to effortlessly insert into available networks making it ideal for integrated complex futuristic datacenters. The customers will also benefit from the improved traffic management which ensures intelligent buffering.

Both the series are available now. 7260CX3 system can support “up to 64 ports of 100G”. 7050X3 Series has two variants, namely, the 7050CX3-32S which supports 32 ports of 100G and 7050SX3-48YC12 which delivers high density 25G server and 100G uplinks. The 64 x 100G system is priced at “under $800/100G port.”

What the Investors Need to Know?

The stock has returned 90.3% in the past year, substantially outperforming the 5.0% rally of the industry. The momentum can be attributed to robust demand for 100-gigabit routing and switching products.

Arista is well poised to benefit from strong demand for its data center switches and routers. Per Transparency Market Research (“TMR”), the data center networking market is likely to grow at a CAGR of 15.5% between 2017 and 2025. At this pace, the market’s valuation is forecasted to reach $228.40 billion by the end of 2025, from $63.05 billion in 2016.

Moreover, continued spending on IT infrastructure products (server, enterprise storage, and Ethernet switches) for deployment in cloud environments is positive catalyst. According to market research firm IDC, total spending on IT infrastructure products will increase 15.3% year over year to $41.7 billion in 2017.

Notably, Arista has become a strong challenger to Cisco’s CSCO dominant position within a short span of time driven by its robust portfolio of switches and routers, ably supported by EOS. According to Crehan Research, the company achieved the second largest market share in data center 10/25/40/50/100 Gigabit Ethernet switch ports sold in 2016.

The new time saving and cost efficient platforms will not only strengthen Arista’s existing product portfolio but also its growth prospects.

To Conclude

The company’s switches and routers support the high-end cloud networking market that require fast throughput at low cost. The company is targeting a large and growing market, which is worth more than $10 billion in 2017. The robust product portfolio is aiding Arista win customers on a regular basis, consequently boosting top-line growth.

Zacks Rank & Another Key Pick

Currently, Arista carries a Zacks Rank #2 (Buy).

Another top-ranked stock in the technology sector worth considering is Stamps.com Inc. STMP, sporting a Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Stamps is currently pegged at 15%.

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