UBS predicts a strong start for U.S. hardware and networking companies, driven by increased demand for data center infrastructure through 2025. However, uncertainty surrounding tariff policies casts a shadow over the coming quarters. UBS expects companies like Arista Networks (ANET, Financial), Celestica (CLS), Lumentum Holdings (LITE), Juniper Networks (JNPR), and Extreme Networks (EXTR) to report impressive first-quarter results.
Analyst David Vogt notes that due to tariff uncertainties, the market's focus has shifted to the second quarter and beyond. Conversations with industry insiders reveal shaken confidence in future demand, leading to potentially more conservative guidance for Q2 and the full year. Revenue and earnings per share forecasts may widen to better reflect uncertainties.
UBS forecasts Arista Networks to achieve $2 billion in revenue for the March quarter, surpassing its guidance midpoint, driven by Meta Platforms' (META) data center investments. Thanks to infrastructure spending by clients like Google (GOOGL), Amazon (AMZN), and Meta, Celestica's revenue is also expected to exceed its $2.55 billion guidance midpoint. While Juniper Networks may exceed Q1 expectations, higher tariffs could dampen market demand later in the year.
Extreme Networks and Lumentum Holdings are likely to surpass March quarter expectations, but their future guidance may be conservative due to tariff concerns. Lumentum typically provides guidance for only one quarter. Vogt highlights the unexpected impact of the tariff proposal on imports from Southeast Asia, affecting more companies financially.
