If You Had Put $10,000 into Arista Networks' Shares a Decade Ago, Here's Your Current Amount (Surprise: It's Quite Substantial.)
In the not-so-distant past, I may have confused Arista Networks (ANET 2.16%) with Arista Records, the music label known for champions like Whitney Houston and Aretha Franklin. But no, Arista Networks is a force in networking (think routers, network switches, et cetera) and cloud computing, amongst other things. These are essential products and services in our modern world, and as you might imagine, Arista stock has been an outstanding investor's delight.
If you'd thrown down a cool ten grand on Arista Networks a decade ago, you'd be sitting on roughly $293,000 today. That's an astounding compound annual growth rate of approximately 40%. And to put that in perspective, the SPDR S&P 500 exchange-traded fund (ETF) gained a mere 12.5% annually over the same decade, still impressive considering the S&P 500 index of 500 American giants usually averages around 10% annually.
Arista's current price-to-earnings ratio (P/E) of 49 is considerably higher than its five-year average of 30, leading some to question its value at present levels. But then again, with Arista's cloud computing needs and data center services in high demand—thanks in part to the boom in artificial intelligence (AI)—its prospects appear quite promising.
Arista Networks, valued at an impressive $150 billion, may not quite match the might of fellow networking titan Cisco Systems ($240 billion market cap), but it's been gaining ground—third-quarter revenue rose 20% vs. Cisco's 6% dip in the same quarter.
Enrichment data highlights the stock's exceptional historical performance, significant outperformance of the broader market—e.g., S&P 500 ETF—and its premium valuation, reflecting strong performance and growth prospects in the cloud networking sector. Despite the concerns over valuation, Arista's impressive revenue growth and consistent earnings beats make it a compelling investment option—a Watchlist addition or incremental investment strategy to consider.
Investing in Arista Networks a decade ago would have yielded an astonishing return, as a $10,000 investment would be worth approximately $293,000 today, indicating an impressive compound annual growth rate of around 40%. Managing one's finances wisely and considering investments in tech companies like Arista Networks can significantly impact one's money growth over time.
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