The networking specialist looks expensive at a glance, but a patient investor is buying into future growth at a significant discount.

On the latest earnings call, Arista Networks (ANET) management described demand for its high-speed networking gear as the “best I’ve ever seen in my Arista tenure.” That demand, fueled by the buildout of AI infrastructure, is the engine behind the company’s growth. It is also the reason the stock can look expensive.

At today’s price of about $182, Arista trades at a price-to-earnings ratio of about 61.2 times its last twelve months of profit. For many, that multiple is a full stop. The valuation, however, is a function of future earnings, not past ones.

The…