Investing.com -- Raymond James upgraded Arista Networks to Outperform with a price target of $164 per share in a note on Friday, citing improving growth prospects in 2027 and beyond as the networking company expands into new AI applications and gains market share in both the AI back-end and enterprise campus segments.

Analyst Simon Leopold told investors that the upgrade reflects a broadening AI market that plays directly to Arista's strengths.

Inference and reasoning workloads, mixture-of-experts models, and larger distributed AI clusters are increasing the volume and unpredictability of east-west network traffic, raising the value of Arista's network intelligence capabilities, including congestion management and high-frequency telemetry, according to the firm.

Arista currently derives approximately 40% of sales from AI applications, with cloud customers accounting for a further 40% of revenue. Meta and Microsoft together represent more than 40% of total sales, while Raymond James said Oracle may be the next company to join Arista's 10%-or-above customer ranks.

“Scale-across is among the bigger drivers. Scale across adds complexity to extend a cluster across a Wide Area Network (WAN) for a training cluster,” wrote Leopold. “We believe Arista has secured wins with Meta and Google. Management forecast $1B, or nearly a third of its AI sales from this new use-case, and we believe this could double in 2027.”

On supply chain, Raymond James noted that management's reference to "de-commits" referred to delays and not cancellations, adding that Broadcom chip availability may present a constraint in 2026 but could set up better growth in 2027.