JPM: Nvidia read-through positive for Dell, Super Micro, HP Enterprise, concerns for Arista, Cisco

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JPM: Nvidia read-through positive for Dell, Super Micro, HP Enterprise, concerns for Arista, Cisco

JPMorgan assessed the implications of NVIDIA (NVDA) latest quarterly results and future guidance on the broader hardware and networking sector in a note Thursday.

Nvidia (NASDAQ: NVDA )'s impressive F1Q25 results and optimistic F2Q25 revenue forecast, driven by robust AI infrastructure investments from both cloud and enterprise segments, signal a positive outlook for several companies.

According to JPMorgan, companies involved in computing and optical components, such as Dell Technologies (NYSE: DELL ), Super Micro Computer (NASDAQ: SMCI ), HP Enterprise (HPE), Coherent , Inc. (NYSE: COHR ), Fabrinet (NYSE: FN ), and Lumentum Holdings (NASDAQ: LITE ), stand to benefit from Nvidia's momentum.

The anticipated boost in AI infrastructure investment underscores a growing demand for advanced computing solutions and optical components, positioning these companies for potential growth.

However, the analysis also raises competitive concerns for Ethernet networking companies, specifically Arista Networks (NYSE: ANET ) and Cisco Systems (NASDAQ: CSCO ).

JPMorgan notes that Nvidia's disclosure of targeting a multi-billion dollar opportunity in Ethernet offerings next year starkly contrasts with Arista's backend opportunity target of $750 million for 2025.

Analysts explained that with the AI switch market forecasted to reach approximately $7 billion in 2025, Nvidia's ambitions suggest a substantial market share, posing a competitive threat to Arista and Cisco.

"While on the headline the target for Spectrum-X is a competitive concern, the opportunity for Spectrum-X outside of a Nvidia full stack integrated solution and the portion of the revenue target attributed to NICs, Optics and other non-Switching components of Networking will be key in understanding better the full competitive impact," said JPMorgan.

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