TLDR
- Evercore ISI has elevated Arista Networks and IBM to tactical outperform status before their first-quarter earnings announcements
- IBM’s earnings are scheduled for April 22; Evercore projects revenue reaching $15.6B with EPS at $1.81, both above consensus
- Arista Networks will report May 5; analyst expects the company to surpass estimates of $2.61B in revenue and $0.81 EPS
- Arista has secured fresh contracts with Anthropic and Google, while debuting its XPO platform last month
- Combined capital expenditure from the five largest hyperscale cloud operators is projected to hit $700 billion by 2026, marking a 65% annual increase
An analyst at Evercore ISI, Amit Daryanani, has elevated both Arista Networks and IBM to the investment firm’s tactical outperform roster. The timing of these upgrades precedes the companies’ respective quarterly financial disclosures.
Daryanani characterized both technology firms as presenting beat-and-raise scenarios, indicating his forecast that they will surpass Wall Street projections and subsequently increase their forward guidance.
IBM has its earnings call scheduled for April 22. Evercore’s analysis suggests the technology giant will exceed the Street’s revenue forecast of $15.6 billion along with earnings per share expectations of $1.81.
International Business Machines Corporation, IBM
Daryanani observed that the prevailing consensus revenue figure implies a 21% sequential contraction from the previous quarter. This would represent a more pronounced decline compared to the mid-teens percentage drops IBM has historically experienced during first quarters.
IBM successfully finalized its Confluent acquisition ahead of the anticipated timeline. According to Evercore, this transaction should provide a modest boost to software revenue expansion.
The firm anticipates IBM will elevate its 2026 constant-currency revenue projection accordingly. Evercore’s internal models forecast constant-currency expansion exceeding 5% for the complete year, with the software division climbing above 10%.
Arista Networks: AI Demand and New Wins
Arista Networks has its earnings report slated for May 5. Evercore anticipates the networking equipment manufacturer will exceed revenue projections of $2.61 billion and earnings per share estimates of $0.81.
The investment firm attributed the anticipated outperformance to robust artificial intelligence infrastructure demand and sustained positive trends in the enterprise segment.
Evercore additionally forecasts that Arista will provide second-quarter revenue guidance surpassing the current Street consensus of $2.78 billion. The firm believes Arista will, at a minimum, increase its full-year revenue projection from approximately $11.25 billion.
Arista has successfully secured additional business from Anthropic and Google, broadening its footprint beyond its conventional client portfolio. Evercore highlighted these as supplementary victories that may bolster future expansion.
Last month, Arista introduced a new offering termed XPO. Evercore characterized this innovation as a prospective growth catalyst as networking infrastructure transitions from 800G to 1.6 terabit transmission rates.
Capital Spending Backdrop
Evercore’s Daryanani emphasized that aggregate capital investment from the five dominant hyperscale cloud service providers is nearing $700 billion in 2026.
This amount signifies approximately 65% expansion on a year-over-year basis. The magnitude of this infrastructure investment forms a significant element of the foundation supporting Arista’s growth trajectory.
Evercore ISI maintains an Outperform rating on Arista Networks accompanied by a $200 per share price objective.
Arista Networks is slated to disclose its March quarter financial performance on May 5, while IBM will announce results on April 22.
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