Investing.com -- Shares in Arista Networks (NYSE:ANET) fell sharply in premarket trading on Tuesday after the networking equipment company unveiled a first-quarter margin outlook that missed analysts' expectations.
For the current three-month period, the California-based firm forecast adjusted gross margin of around 62%, just under Wall Street projections of 62.7%, in a sign of the impact of elevated operating expenses.
However, Arista's guidance for quarterly revenue of $1.52B to $1.56B roughly met estimates of $1.53B, reflecting a resilient sales performance that has been supported by demand for its networking gear from big-name clients like Facebook-owner Meta Platforms (NASDAQ:META) and tech giant Microsoft (NASDAQ:MSFT).
Arista has also laid out plans to enhance the artificial intelligence capabilities of its cloud infrastructure in response to a growing clamor for the nascent technology.
"AI [is] in [the] early innings for Arista but promising," analysts at KeyBanc Capital Markets wrote in a note to clients.
In the fourth quarter, the group posted earnings per share of $2.08 on revenue of $1.54 billion, topping estimates for $1.70 a share and $1.53B, respectively.