Networking equipment stocks including Arista Networks (ANET), Cisco Systems (CSCO) and Juniper Networks (JNPR) traded lower Friday after The Information reported that Amazon Web Services (AMZN) is considering selling its own networking switches for business customers, JPMorgan analyst Samik Chatterjee tells investors in a research note. The report also mentions that Amazon plans to launch commercial products for external customers within the next 18 months and would look to undercut competitors on price by working with white box manufacturers, the analyst adds. He believes the investor reaction to the report was "largely led by panic relative to Amazon's entry into any new market segment," while the overall financial implication of AWS' entry into the networking equipment market on branded switch manufacturers is limited. AWS' switching product will target data center capital spending from large enterprise customers, which is only a $2.5B opportunity relative to the $12B data center switching and $16B campus switching market, Chatterjee contends. As such, the analyst believes the Amazon threat is "relatively low" for Cisco, Arista, and Juniper.

Bullish option flow detected in Arista Networks with 2,900 calls trading, 1.7x expected, and implied vol increasing almost 2 points to 56.57%. Nov-24 270 calls and 4/26 weekly 275 calls are the most active options, with total volume in those strikes near 770 contracts. The Put/Call Ratio is 0.64. Earnings are expected on May 7th.