While millions of investors were making New Year’s resolutions like losing weight or exercising more, a Silicon Valley leader was quietly planning for massive earnings growth in 2022.

This leader in data-driven cloud computing is predicting that its sales this year will rise 30% to $3.7 billion – despite Covid headwinds.

And it’s not stopping there. By 2025, demand for computer networking could push its sales up to $5 billion, up another 35% in three years.

Here’s the thing; As aggressive as this plan sounds, it leaves out two other big catalysts that could really propel the stock this year.

The company I have in mind not only raised forecasts after an earnings beat but it also recently split the stock 4-to-1. Not only that, but it announced a $1 billion share buyback.

No wonder the stock is more than tripling the broader market’s returns.

Let me show you why there’s still so much upside ahead…

The Cloud Opportunity

Now then, I hope you don’t think this is a stock I suddenly stumbled onto.

Nothing could be further from the truth. The fact is, I first recommend this computing networking leader back on July 28, 2017.

Since that time, the stock is up 249.5% with more on the way.

Let me set the stage for you by giving you some details about the firm’s sector before I drill down on what promises to make this a big winner for 2022.

See, Grand View Research pins the cloud computing market as being worth USD 274.79 billion in 2020, and expects that number to grow by a whopping 19.1% compound annual growth rate from 2021 to 2028.

This massive growth is being driven by the digital transformation of the economy, as businesses move to work-from-home and the hybrid world sets in.

That’s why we need to talk about Arista Networks Inc. (ANET), a leading provider of networking hardware and software for large data centers and cloud providers.

Network Expertise

Founded in 2004 in the heart of Silicon Valley, Arista’s network switches are the devices that allow several different computers and networks to be connected together.

For large data centers, having these network switches be efficient and not introduce any delays in the signals they reroute is crucial. And Arista’s switches have a history of being the fastest on the market.

No wonder that the company’s main clients for years have been Internet and cloud companies, as well as Wall Street trading firms.

But Arista does more than just make network switches for data centers. The company also makes the smaller switches for use on “the edge” of networks – in offices, stores, and so on.

It even makes its own enterprise-level WiFi routers.

Arista offers a whole suite of software tools to help monitor, protect, and extend networks. That includes software that gives companies granular data on what exactly is sending how much data and when, which integrates into a machine learning system.

This allows companies to use AI to optimize their networks and apps, for increased security, speed, and stability. For cloud companies with massive data centers, that’s absolutely crucial.

There’s simply no way for any human to be able to grasp the immense data flows even a single cloud center handles daily. To optimize this flow across several cloud centers all over the globe, AI is indispensable.

Arista’s switches can even come with a built-in AI right on the switch’s chips. In fact, Arista works very closely with its clients to provide them with packages of exactly the right hardware and software, integrated to the client’s specifications.

That’s a big upgrade from the “buy and build it yourself” model data centers used to be built with.

All-Star Clients

No wonder, then, that one of Arista’s big cloud clients is none other than Meta Platforms Inc. (FB), formerly Facebook. That means Arista gives us another hook on investing in the metaverse we been talking about of late.

Other leading clients include Microsoft Corp. (MSFT), VMware Inc. (VMW), Zoom Video Communications Inc. (ZM), and Slack.

With clients like that, it’s no surprise Arista predicts its sales this year will rise 30% – and another 35% through 2025, as I mentioned above.

After all, both Meta and Microsoft are planning huge spending sprees on their data centers in 2022 and beyond. Meanwhile, the increased demand for video streaming, remote work, and the hybrid world will push Arista’s other cloud clients to expand as well.

And with Arista’s announcement of a $1 billion share buyback and a 4-to-1 stock split, now is the perfect time to get in.

By making the price of shares more affordable, the stock split promises to widen the investor base. That’s going to increase demand, pushing shares up.

Together with the share buyback, this is a pretty aggressive one-two punch on top of a beat-and-raise quarter.

No wonder the stock has been crushing the market of late. Last year the stock was up 79%, more than tripling the S&P 500’s 22% gain.

And I see more upside ahead.

In its recent investor deck, Arista says it has been growing adjusted earnings by 25% a year.

At that rate, they will double again in less than three years, with stock price likely to follow.

This is the kind of stock you want to buy in 2022. It should outperform the market this year and for the long haul.

Cheers and good investing,

— Michael A. Robinson

We Could Be Less Than 3 Months Out from an AI Superevent [sponsor]
According to one of the world's top AI scientists, there's a major event coming as soon as three months from today that could cause expensive tech stocks like Microsoft, Google, and NVIDIA to double or triple in price in the months ahead... but whatever you do, don't go all in on big tech before you have all the details. Click here.

Source: Strategic Tech Investor