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1. Company Snapshot

1.a. Company Description

Arista Networks, Inc.develops, markets, and sells cloud networking solutions in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific.The company's cloud networking solutions consist of extensible operating systems, a set of network applications, as well as gigabit Ethernet switching and routing platforms.


It also provides post contract customer support services, such as technical support, hardware repair and parts replacement beyond standard warranty, bug fix, patch, and upgrade services.The company serves a range of industries comprising internet companies, service providers, financial services organizations, government agencies, media and entertainment companies, and others.It markets and sells its products through distributors, system integrators, value-added resellers, and original equipment manufacturer partners, as well as through its direct sales force.


The company was formerly known as Arastra, Inc.and changed its name to Arista Networks, Inc.in October 2008.


Arista Networks, Inc.was incorporated in 2004 and is headquartered in Santa Clara, California.

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1.b. Last Insights on ANET

Arista Networks' recent performance was negatively impacted by margin pressures and customer risks, despite strong Q3 earnings and revenue growth. The company's high-margin services and robust demand in cloud networking drove growth, but concerns over margin compression and customer concentration risks persist. A $1.21T combined backlog and RPO from hyperscalers positions the company for top-line expansion. However, a weaker-than-expected earnings announcement led to a 2.7% decline in shares. ANET is rated Buy with a $195 price target, reflecting confidence in long-term growth.

1.c. Company Highlights

2. Arista Networks' Q3 Earnings: Strong Revenue Growth and Expanding AI Opportunities

Arista Networks achieved a record third quarter with revenue of $2.3 billion, up 27.5% year-over-year, and non-GAAP gross margin of 65.2%. The company's operating income was $1.12 billion, or 48.6% of revenue, and net income was $962.3 million, or 41.7% of revenue. Diluted EPS was $0.75, beating analyst estimates of $0.718. The Americas region accounted for approximately 80% of revenue, while international revenue was $468.3 million. Software and services contributed 18.7% to revenue.

Publication Date: Nov -06

📋 Highlights
  • Record Revenue and Margin Growth:: Q3 revenue hit $2.3 billion (+27.5% YoY), with non-GAAP gross margin at 65.2%.
  • Regional and Product Mix:: Americas dominated revenue (80%), while software/services contributed 18.7% of total revenue.
  • Strong Profitability:: Operating income reached $1.12 billion (48.6% of revenue), with net income at $962.3 million (41.7%).
  • 2025-2026 Growth Targets:: Full-year 2025 revenue guidance of $8.87 billion (+26-27%) and 2026 target of $10.65 billion (+20%).
  • AI and Ethernet Strategy:: 800-gig Ethernet adoption, $2.75 billion AI center target, and blue box success in AI workloads.

Guidance and Outlook

The company provided guidance for Q4 with revenue expected to be between $2.3 billion and $2.4 billion, and gross margin in the range of 62% to 63%. For the full year 2025, Arista expects revenue growth of 26% to 27%, with a midpoint of $8.87 billion. The company also reaffirmed its outlook for 2026, with expected revenue growth of 20% to $10.65 billion, including AI center target of $2.75 billion.

Growth Drivers and Opportunities

Arista's growth rate has decelerated to 1.6% from 20% previously, but demand remains strong, with a 20% growth commitment for next year. The company attributes the deceleration to supply chain issues, with lead times for components ranging from 38 to 52 weeks. Arista is positioning itself for growth in full-rack solutions, with a partnership model and a focus on Ethernet. The company is involved in early designs with various accelerator options and expects standards to emerge in 2026.

Valuation and Metrics

With a P/E Ratio of 52.63 and an EV/EBITDA of 45.15, Arista's valuation suggests that the market is pricing in significant growth expectations. The company's ROE of 31.28% and ROIC of 22.71% indicate strong profitability. Analysts estimate next year's revenue growth at 22.1%, which is slightly lower than the company's guidance. The stock's high valuation multiples reflect the market's confidence in Arista's ability to drive growth through its AI and cloud offerings.

AI and Cloud Opportunities

Arista is seeing significant opportunities in AI and cloud, with a strong presence in large language model builds. The company's "blue box" offering is seeing success, particularly in AI mission-critical workloads, with a hybrid strategy emerging that combines open NOS with EOS. Arista's back-end and front-end businesses are converging, making it difficult to distinguish between the two.

Market Opportunity and Competitive Advantage

The market opportunity between disaggregated scheduled fabrics (DSF) and non-scheduled fabrics is significant, with Arista offering both. The DSF architecture was co-developed with Meta and provides a congestion-free advantage. Arista is the only successful vendor outside of China selling both front-end and back-end solutions, offering a consistent solution across customers' entire infrastructure.

3. NewsRoom

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Are Rising Earnings Estimates a Solid Reason to Bet on ANET Stock?

Dec -04

Source: zacks.com

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Prediction: This AI Infrastructure Stock Could Hit a $500 Billion Valuation by 2032

Dec -04

Source: fool.com

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Arista Networks Inc (ANET) Presents at UBS Global Technology and AI Conference 2025 Transcript

Dec -02

Source: seekingalpha.com

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Arista Networks Stock Has Soared, but Is the AI Networking Thesis Still Valid?

Nov -29

Source: fool.com

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Arista Networks, Inc. $ANET Shares Bought by Baltimore Washington Financial Advisors Inc.

Nov -27

Source: defenseworld.net

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Arista Networks, Inc. $ANET Shares Sold by Bell Asset Management Ltd

Nov -27

Source: defenseworld.net

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758 Shares in Arista Networks, Inc. $ANET Bought by AlphaCore Capital LLC

Nov -27

Source: defenseworld.net

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Advisors Asset Management Inc. Sells 2,479 Shares of Arista Networks, Inc. $ANET

Nov -26

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (15.00%)

6. Segments

Computer Networks

Expected Growth: 15.0%

Increasing demand for high-performance data center and campus networks driven by cloud computing, AI, and IoT adoption. Arista's software-driven solutions offer scalability, security, and efficiency, positioning the company for growth in the expanding market.

7. Detailed Products

CloudEOS

Arista's CloudEOS is a network operating system that enables customers to run Arista EOS on third-party hardware or in virtual environments.

Arista 7000 Series

The Arista 7000 Series is a line of high-density, low-latency data center switches designed for cloud, HPC, and storage applications.

Arista 5000 Series

The Arista 5000 Series is a family of high-performance, modular switches for data centers and enterprise networks.

Arista 3000 Series

The Arista 3000 Series is a range of fixed-configuration switches designed for enterprise networks, data centers, and campus environments.

Arista EOS

Arista EOS (Extensible Operating System) is a network operating system that provides a single, unified platform for data center and enterprise networks.

Arista Switches

Arista offers a range of switches, including 10/40/100GbE and 400GbE options, designed to support various applications and use cases.

Arista Routing Solutions

Arista provides a range of routing solutions, including the Arista 7000R Series, designed to support large-scale data center and enterprise networks.

Arista Network Management

Arista offers a range of network management solutions, including Arista CloudVision, designed to simplify network management and monitoring.

8. Arista Networks, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Arista Networks, Inc. operates in the networking equipment industry, where substitutes such as Cisco Systems and Juniper Networks exist. However, Arista's focus on cloud and data center networking has differentiated its offerings, reducing the threat of substitutes.

Bargaining Power Of Customers

Arista's customers are primarily large enterprises and cloud providers, which can be price-sensitive. However, Arista's strong reputation and product quality reduce customer bargaining power.

Bargaining Power Of Suppliers

Arista's suppliers are primarily component manufacturers, which are numerous and competitive. This reduces the bargaining power of suppliers.

Threat Of New Entrants

The networking equipment industry has high barriers to entry, including significant R&D investments and established relationships with customers. This reduces the threat of new entrants.

Intensity Of Rivalry

The networking equipment industry is highly competitive, with established players like Cisco Systems and Juniper Networks. Arista's growth and market share gains have increased rivalry in the industry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 0.00%
Debt Cost 4.30%
Equity Weight 100.00%
Equity Cost 10.94%
WACC 10.94%
Leverage 0.00%

11. Quality Control: Arista Networks, Inc. passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
HP

A-Score: 5.2/10

Value: 8.2

Growth: 3.7

Quality: 4.8

Yield: 7.0

Momentum: 1.5

Volatility: 6.3

1-Year Total Return ->

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NetApp

A-Score: 5.2/10

Value: 3.4

Growth: 5.8

Quality: 7.2

Yield: 4.0

Momentum: 4.0

Volatility: 7.0

1-Year Total Return ->

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Arista Networks

A-Score: 5.0/10

Value: 0.0

Growth: 9.4

Quality: 8.5

Yield: 0.0

Momentum: 8.5

Volatility: 3.7

1-Year Total Return ->

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Dell Technologies

A-Score: 4.7/10

Value: 5.3

Growth: 4.0

Quality: 4.6

Yield: 3.0

Momentum: 7.0

Volatility: 4.0

1-Year Total Return ->

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Western Digital

A-Score: 4.5/10

Value: 2.3

Growth: 3.4

Quality: 7.1

Yield: 0.0

Momentum: 10.0

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Super Micro Computer

A-Score: 4.4/10

Value: 3.3

Growth: 9.9

Quality: 5.6

Yield: 0.0

Momentum: 6.5

Volatility: 1.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

128.55$

Current Price

128.55$

Potential

-0.00%

Expected Cash-Flows