Photo by Mohamed Nohassi on UnsplashThe AI story continues to grip investors, with many seeking exposure over the last year.Two stocks involved in the frenzy, Arista Networks (ANET – Free Report) and Arm Holdings (ARM – Free Report), are on the reporting docket for this week. Both stocks have enjoyed bullish price action year-to-date, widely outperforming relative to the S&P 500.Image Source: Zacks Investment ResearchLet’s take a closer look at expectations for each heading into their respective releases.

Arista Sees Profitability Boost 
 Arista Networks, a Zacks Rank #1 (Strong Buy), is an industry leader in data-driven, client-to-cloud networking for large data centers, campus, and routing environments. Analysts have been bullish across all timeframes, with the $2.09 Zacks Consensus EPS estimate suggesting 14% growth from the year-ago period.
Image Source: Zacks Investment ResearchRevenue revisions have also ticked higher over recent months, with the $1.8 billion expected reflecting 16% growth year-over-year. The company’s top line strength has been remarkable, posting sequential growth in each of its last ten periods.Below is a chart illustrating the company’s sales on a quarterly basis.Image Source: Zacks Investment ResearchThe company’s margin recovery has been a big focal point over recent periods, as we can see illustrated below. Higher profitability has provided a nice boost to the company’s results, helping lead to 33% EPS growth throughout its latest period.For the upcoming print, ANET has guided for a non-GAAP gross margin in a band of 63 – 64%. Please keep in mind that the chart below is on a trailing twelve-month basis.
Image Source: Zacks Investment Research

Arm Posts Record Results 
 Arm architects, develops, and licenses high-performance, low-cost, and energy-efficient CPU products and related technology, on which many of the world’s leading semiconductor companies and OEMs rely to develop their products.The company’s quarterly results in its short public history have been notably positive, exceeding our consensus EPS estimates by an average of 22% across its four releases. Earnings and revenue expectations haven’t budged much at all over recent months, with ARM expected to post a 30% EPS decline alongside a marginal 0.4% sales improvement.Below is a chart illustrating the company’s sales on a quarterly basis.
Image Source: Zacks Investment ResearchIts latest set of results saw a boost from record royalty revenue, with Armv9 (its most advanced technology) penetration growing rapidly. Notably, revenue from chips based on Armv9 technology contributed around 25% of royalty revenue in the period, up from roughly 20% in the period before and 15% in the period prior to that.Royalty revenue will again be a focal point in the release, particularly as the penetration of its Armv9-based chips continues to grow. Adoption of the technology in the mobile market helped lead to a 50% jump in smartphone royalty revenue throughout its latest period, another key aspect to watch in the release.Simply put, increasing chip complexity paired with the rapid deployment of AI will continue to provide bullish tailwinds for the company, particularly thanks to its cutting-edge technology and energy-efficient solutions.

Bottom Line
 Earnings season continues to roll along, with a wide variety of companies unveiling quarterly results daily.And this week, we’ll hear from two companies – Arista Networks and Arm Holdings – that have benefited from Wall Street’s obsession with artificial intelligence.Concerning ANET, margins will be key in the release, with big growth expected in both earnings and revenue. The company’s quarterly releases have regularly brought post-earnings positivity in 2024, with shares up big year-to-date.Regarding Arm, royalty revenue will likely be a key factor driving sentiment surrounding the release, with increasing penetration of its Armv9 technology providing big tailwinds over recent periods. Penetration of the technology has continued to grow sequentially, with the mobile market picking up considerable steam.More By This Author:Top Stocks To Buy For Artificial Intelligence Exposure Amazon Earnings Loom: Are Shares A Buy? 3 Key Quarterly Reports To Watch This Week