Arista Networks Inc (NASDAQ:ANET) has been on a pretty stunning ride in the past 12 months, up more than 120%. Investors might think that after a monster move like that, it may not be time to think about buying. But the amazing thing is, ANET stock is just starting its rise.
What’s happening now in cloud computing space is reminiscent of what was happening in the dotcom world in the mid- to late 1990s, especially in regard to the rise of router company Cisco Systems, Inc. (NASDAQ:CSCO), currently ANET’s most significant competitor.
Routers were the backbone of the internet and the web would not function as an invertebrate. To store, host and move the massive amounts of data that the internet almost-exponentially produced every quarter, you had to have fast, reliable and efficient routers. And CSCO became the go-to firm that committed its resources to building out the infrastructure of the internet.
Today, this analogy applies to cloud computing. And Arista is the change agent.
Go-To Cloud Server
Name a technology growth segment — internet of things (IoT), online gaming, virtual reality, big data, smartphones, smart cars, streaming video and music — and you’re looking at reliance on the cloud. ANET is becoming the go-to server company for cloud computing.
What’s the difference between the cloud and the internet? The cloud allows data to be stored remotely so we don’t have to lug around mobile devices with massive hard drives attached to them to run programs and store data.
It allows us to watch movies on our phones, or work on a presentation with your team while everyone is spread across the country.
One way to look at it is in data size and flow. An exabyte is 1 trillion bytes, or 1,000 gigabytes. Today, mobile data traffic is slightly less than 9 exabytes. In a recent article in Computerworld, telecommunications giant Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) predicted that by 2022, traffic will grow to 71 exabytes. That’s a nearly eight-fold increase in the next five years.
In essence, this is the next incarnation of computing. It is going mobile. And ANET is one of the leading companies of this incarnation.
Bottomline on ANET Stock
Recently, Arista has been embroiled with Cisco in a couple of lawsuits filed to hamstring ANET’s growth. But ANET continues to win in the courts, which does not help CSCO’s reputation or its ability to compete.
As big tech companies continue to switch to internal and external cloud networks, it plays directly to ANET’s strength. CSCO is operating off an old model of switching and is having an increasingly difficult time transitioning to the data center-focused switching side.
Also, ANET has focused on a software approach to deliver the performance that’s required where CSCO still relies on predominantly hardware solutions.
If you believe in the power of the cloud, then ANET stock is a play on the heart of that power.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.