Evercore ISI analyst Amit Daryanani has placed Arista Networks and IBM on the firm's tactical outperform list in the run-up to their respective first-quarter earnings reports, pointing to what he describes as beat-and-raise setups for both companies.
On IBM, which is scheduled to report on April 22, Daryanani expects modest upside relative to consensus figures. The street currently looks for revenue of $15.6 billion and EPS of $1.81. Evercore highlighted that the consensus top-line assumes a roughly 21% sequential decline for the quarter - a drop steeper than the mid-teens contraction that has been more typical for the first quarter in the past.
Daryanani noted the earlier-than-expected close of IBM's Confluent acquisition, which he expects will provide a modest boost to software growth and lead to an upward revision in IBM's 2026 constant-currency revenue outlook. Evercore ISI projects full-year constant-currency growth above 5% and software segment growth in excess of 10%.
For Arista Networks, which reports on May 5, Evercore expects revenue and earnings to beat consensus. The street consensus that Evercore cites is $2.61 billion in revenue and $0.81 in EPS for the quarter. The bank also anticipates that Arista will guide second-quarter revenue above the consensus figure of $2.78 billion and will at minimum provide a qualitative increase to its full-year target of about $11.25 billion.
Evercore points to stronger AI-related demand and ongoing enterprise momentum as key drivers of Arista's expected outperformance. The firm said Arista is registering incremental wins at Anthropic and Google beyond its traditional customer base. Evercore also highlighted the March introduction of XPO as a potential accelerant, at a time when network clusters are migrating from 800G to 1.6 terabit infrastructure.
On broader industry spending, Daryanani noted that aggregate hyperscaler capital expenditure across the top five cloud providers is approaching $700 billion in 2026, representing roughly 65% year-on-year growth, a backdrop that underpins demand for networking and infrastructure equipment.
The analyst moves come ahead of the companies' earnings announcements and reflect Evercore ISI's view that both IBM and Arista have setups that could produce upside to consensus and the opportunity to raise forward guidance.
Key points
- Evercore added IBM and Arista to its tactical outperform list ahead of Q1 earnings due to expected beat-and-raise setups.
- IBM - consensus for Q1 is $15.6 billion in revenue and $1.81 EPS; Evercore expects modest upside and notes an earlier-than-expected close of the Confluent acquisition will modestly boost software growth.
- Arista - consensus for Q1 is $2.61 billion in revenue and $0.81 EPS; Evercore expects a beat, stronger Q2 guidance above $2.78 billion and at least a qualitative raise to a roughly $11.25 billion full-year target, driven by AI demand and new wins at Anthropic and Google.
Risks and uncertainties
- Execution risk - the anticipated beat-and-raise outcomes depend on quarterly results and guidance that may not materialize as expected for IBM or Arista, affecting technology and enterprise IT sectors.
- Magnitude of contribution - Evercore describes the Confluent acquisition's contribution to IBM's software growth as modest; the limited size of the lift could temper upside to software revenue expectations.
- Dependency on hyperscaler demand - Arista's outlook is tied in part to AI-driven spending from major cloud providers and the migration to higher-speed network infrastructure; changes in hyperscaler capex trajectories could impact networking equipment demand.