US Open: US100 gains 0.4% ahead of the Fed decision🗽Arista Networks down 7% despite solid Q1 earnings report

US indices edge higher ahead of the Fed decision at 6 PM GMT (Powell's Press Conference at 6:30 PM GMT); US100 gains almost 0.45%

• Arista Networks shares are down over 7% despite strong results — the company pointed to uncertainty regarding tariffs and issued cautious guidance for the second half of the year.
• Declines are also seen in stocks like Uber, Alibaba, and CrowdStrike. Disney, on the other hand, is soaring with a euphoric 12% rebound after a report that beat Wall Street expectations.

Stock volatility in the US equity market. Source: xStation5

US100 (D1 Interval)

Futures on the US100 index once again bounced off the key resistance level, the 200-day EMA (red line), near the 20,000-point area. This will be a critical level that could be tested again during today’s Fed decision and Powell’s conference.

Source: xStation5

Arista’s record results, but conservative outlook for the second half of the 2025

Arista Networks, a provider of AI systems and services used by tech giants in the cloud computing and data center industry — including Meta Platforms, Alphabet (Google), and Oracle — has been closely watched as a growth stock thanks to its role in the AI boom.
The company exceeded revenue and earnings forecasts, but its outlook for the second half of the year was seen as overly conservative. Management cited uncertainty regarding trade tariffs, which could weigh on business momentum.
Overall, however, the report was very solid, and the company expects Q2 results to show growth compared to Q1.

• Revenue: $2.005 billion (up 3.9% quarter-over-quarter, 27.6% year-over-year)

• Earnings per share: $0.65 vs. $0.59 forecast and $0.50 in Q1 2024

• Gross margin (Non-GAAP): 64.1% vs. 64.2% in Q4 2024 and Q1 2024

• Net income (Non-GAAP): $826.2 million vs. $637.7 million in Q1 2024

The company expects revenue to grow to $2.1 billion in Q2 (approx. 5% q/q), and the Non-GAAP operating margin to reach about 46% vs. 47.6% in Q1 2025. Arista also raised its share buyback program to $1.5 billion, having already repurchased nearly $800 million in stock. Now, the Arista expects that overall YoY revenue growth in 2025 will be at 17% YoY. The company didn't lift the sales forecast, which signals that the second half of the year may be harder - if tariff risks will materialize.

Following the report, analysts at Needham downgraded Arista's price target to $130 per share from $145, though they raised earnings estimates for 2025, 2026, and 2027, citing increased business uncertainty if trade tariff issues persist.
Conversely, Citi raised its price target to $98 per share and maintained a "Buy" rating, pointing out that strong guidance from Microsoft and Meta (which account for 40% of Arista’s revenue) mitigates concerns about declining tech sector orders.

ANET.US Chart, D1 Interval

Arista Networks shares fell after approaching $90 per share, but demand “woke up” after the stock opened at $85. It’s possible the decline could be quickly erased if the market becomes confident that Trump’s “trade wars” are merely a negotiation tactic rather than a sign of a major policy shift. However, as long as uncertainty about economic impact persists, sentiments around Arista remain conservative, despite solid earnings and growth.

Source: xStation5