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
Credit: © Reuters.

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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