TLDR
- Evercore ISI added both Arista Networks and IBM to its tactical outperform list ahead of Q1 earnings
- IBM reports April 22; Evercore expects moderate upside on revenue of $15.6B and EPS of $1.81
- Arista Networks reports May 5; Evercore expects beats on $2.61B revenue and $0.81 EPS estimates
- Arista is winning new business at Anthropic and Google, with its XPO product launched in March
- Hyperscaler capital spending across the top five cloud providers is nearing $700 billion in 2026, up 65% year-on-year
Evercore ISI analyst Amit Daryanani has added Arista Networks and IBM to the firm’s tactical outperform list. Both additions come ahead of their first-quarter earnings reports.
Daryanani described each company as having a beat-and-raise setup, meaning he expects them to top analyst estimates and raise their own guidance.
IBM is set to report earnings on April 22. Evercore expects the company to beat consensus revenue estimates of $15.6 billion and EPS estimates of $1.81.
International Business Machines Corporation, IBM
Daryanani pointed out that current consensus revenue implies a 21% sequential decline from the prior quarter. That would be steeper than the mid-teens drop that has been typical for IBM in the first quarter historically.
IBM recently closed its acquisition of Confluent earlier than expected. Evercore says this should add modestly to software revenue growth.
The firm expects IBM to raise its 2026 constant-currency revenue outlook as a result. Evercore is forecasting constant-currency growth above 5% for the full year and software segment growth above 10%.
Arista Networks: AI Demand and New Wins
Arista Networks reports on May 5. Evercore expects the company to beat revenue estimates of $2.61 billion and EPS estimates of $0.81.
The firm credited stronger AI demand and continued momentum in the enterprise market for the expected outperformance.
Evercore also expects Arista to guide second-quarter revenue above the current consensus of $2.78 billion. The firm thinks Arista will at minimum raise its full-year revenue target of around $11.25 billion.
Arista has been winning new business at Anthropic and Google, expanding beyond its traditional customer base. Evercore flagged these as incremental wins that could support growth going forward.
In March, Arista launched a product called XPO. Evercore described this as a potential growth driver as network infrastructure moves from 800G to 1.6 terabit speeds.
Capital Spending Backdrop
Evercore’s Daryanani noted that total capital spending across the top five hyperscaler cloud providers is approaching $700 billion in 2026.
That figure represents roughly 65% growth year-on-year. The scale of this spending forms part of the backdrop for Arista’s growth expectations.
Evercore ISI has an Outperform rating on Arista Networks with a price target of $200 per share.
Arista Networks is scheduled to report its March quarter results on May 5, while IBM will report on April 22.
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