Last month, analysts at Rosenblatt Securities downgraded shares of Arista Networks (NYSE:ANET) to Sell, raising concerns that Nvidia (NASDAQ:NVDA) would become a key Ethernet competitor to the networking company.
During its fiscal Q1 2024 earnings call, Arista said it still does not view NVDA as a direct Ethernet competitor.
However, analysts at Rosenblatt do not share this sentiment, saying that the AI chipmaker has “announced itself as a significant Ethernet player via comments on its 1Q25 earnings call.”
“Nvidia began shipping Spectrum X Ethernet Networking in 1Q25. The solution is optimized for AI and, like Infiniband, is designed for the network to be a key part of the AI compute fabric,” analysts said in a note.
“This is fundamentally different from what networks have been asked to do in the past, likely providing Nvidia with performance and competitive advantages over network-centric Ethernet players like ANET and Cisco,” they added.
Analysts also highlighted that Spectrum-X, Nvidia’s sophisticated networking platform designed to optimize data center performance for AI workloads, is ramping up in volume with multiple customers, including a 100,000 GPU cluster.
The firm expects that the platform will become a multibillion-dollar product line within a year.
“While ANET may say it does not see Nvidia as a competitor yet, we think Nvidia clearly has ANET in its sights,” analysts wrote.
“At Nvidia's rate of growth in the AI market, it looks like it could be just as large or larger in the Ethernet market vs. ANET within two or three years. We believe ANET should trade at a historical multiple, not an AI multiple.”