Artificial intelligence (AI) is Wall Street’s shiny new toy in 2023, with companies discussing the technology in a snowballing fashion. And following another blowout quarter from NVIDIA NVDA, it’s again jumped to the front of market headlines.
It’s easy to understand why, as the technology undoubtedly has a bright future, providing us a runway to achieve feats that otherwise felt impossible.
Interestingly enough, two companies – Arista Networks ANET, and Palo Alto Networks PANW – stand to be big beneficiaries.
For those interested in gaining exposure to the technology, let’s take a closer look at each and NVIDIA’s robust release.
NVIDIA Q2
Undoubtedly one of the most highly-awaited quarterly releases, NVIDIA’s quarterly results again blew away expectations. The company exceeded the Zacks Consensus EPS Estimate by nearly 30% and posted a 20% revenue beat.
Earnings improved 430% year-over-year, whereas revenue jumped 100% from the same period last year. Data Center revenue, which consists of AI chips, grew a remarkable 140% sequentially and 170% year-over-year, crushing expectations.
And to top it off, NVIDIA unveiled an additional sizable $25 billion share buyback, undoubtedly to the likes of investors. The stock is a Zacks Rank #1 (Strong Buy), with earnings estimate revisions hitting the tape nearly all year long.
Arista Networks
Arista Networks provides network switches to hyperscalers that speed up communication between computer servers. Analysts have taken their earnings expectations higher across the board, helping land the stock into a Zacks Rank #2 (Buy).
The company has been a consistent earnings performer, exceeding consensus revenue and earnings expectations in 15 consecutive quarters. Just in the latest release, ANET exceeded bottom line expectations by more than 3% and delivered a 5.7% revenue surprise.
Arista has seen a recent acceleration in top line growth.
Palo Alto Networks
Palo Alto Networks operates Cortex XSIAM, the company’s integrated suite of AI-driven, intelligent products for Security Operations Centers (SOCs). The stock sports the highly-coveted Zacks Rank #1 (Strong Buy), with earnings expectations rising following strong quarterly results.
Regarding the mentioned quarter, PANW exceeded the Zacks Consensus EPS Estimate by more than 12% and modestly fell short of revenue expectations. Earnings improved 80% from the year-ago period, whereas revenue climbed 26% year-over-year.
Like ANET, Palo Alto’s top line growth has remained strong.
The company sports a solid growth profile, with Zacks Consensus Estimates suggesting 19% earnings growth on 19% higher revenues in its current year. And peeking ahead to FY25, expectations allude to a further 20% bump in earnings paired with an 18% sales increase.
Bottom Line
NVIDIA’s NVDA blowout quarter has confirmed that the AI boom is here, with the company posting remarkably strong results. The stock has been on an absolute tear in 2023 thanks to its innovation, up more than 200%.
Still, there are other stocks out there that stand to benefit nicely from the AI wave, including Palo Alto Networks PANW and Arista Networks ANET.
Both companies have recently delivered positive quarterly results and sport favorable Zacks Ranks, with the latter reflecting optimism among analysts.
NVIDIA Corporation (NVDA): Free Stock Analysis Report
Palo Alto Networks, Inc. (PANW): Free Stock Analysis Report
Arista Networks, Inc. (ANET): Free Stock Analysis Report
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Zacks Investment Research
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