With Ethernet taking market share over InfiniBand, Arista Networks (ANET, Financials) has become an even bigger force in the cloud and data center networking space, Morgan Stanley notes. Firm analysts confirmed an Overweight rating on Arista while raising the company's price objective from $355 to $410.

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"ANET's valuation is not cheap at ~39x FY26 EPS," said Morgan Stanley analysts Meta Marshall and Mary Lenox in a report Thursday. Moreover, its important to note that these data points show multiple growth paths and Arista's potential to capture more market share in Ethernet.

Furthermore, its shares more than tripled over the past year, and Arista has posted a consistent increase so far this year. Additionally, on October 11, the stock reached a record high of $416.93 and has maintained momentum since then.

Backed by the rising need for data center configurations needed for AI applications, the networking provider has attracted multiple noteworthy cloud customers this year. Working on a 100,000 GPU cluster, Arista recently began tests with its sixth largest cloud client, Meta Platforms (META, Financials).

This article first appeared on GuruFocus.