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Arista Networks (ANET)
NYSE:ANET
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Arista Networks
(NYSE:ANET)
Select Model
Select Model
Rating:80Outperform
Price Target:
$154.00
▲(23.11% Upside)
The score is driven primarily by outstanding financial quality (elite margins, high ROE with zero debt, and strong free cash flow). Earnings call guidance supports a continued growth runway into 2026, though near-term signals (slowing sequential growth and margin pressure in guidance) temper enthusiasm. A high P/E and a mixed technical setup further cap the overall score.
Positive Factors
Revenue Growth
The increased revenue target reflects strong demand in AI, cloud, and enterprise sectors, indicating robust market positioning and growth potential.
Financial Stability
A debt-free balance sheet and high return on equity highlight financial stability and operational efficiency, providing a strong foundation for future growth.
Strategic Acquisitions
The acquisition of VeloCloud enhances Arista's enterprise offerings, strengthening its competitive position and expanding its market reach.
Negative Factors
Customer Loss
Losing a key AI customer could impact revenue projections and highlights potential vulnerabilities in customer concentration.
Deferred Revenue Volatility
Volatility in deferred revenue can lead to unpredictable cash flows, impacting financial planning and stability.
Leadership Changes
While potentially positive, leadership changes can introduce uncertainty and require time for strategic alignment and execution.
Arista Networks (ANET) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$157.52B
Dividend YieldN/A
Average Volume (3M)5.93M
Price to Earnings (P/E)47.6
Beta (1Y)2.29
Revenue Growth27.75%
EPS Growth25.42%
CountryUS
Employees4,412
SectorTechnology
Sector Strength88
IndustryComputer Hardware
Share Statistics
EPS (TTM)0.75
Shares Outstanding1,259,285,000
10 Day Avg. Volume6,458,631
30 Day Avg. Volume5,927,438
Financial Highlights & Ratios
PEG Ratio1.42
Price to Book (P/B)13.89
Price to Sales (P/S)19.83
P/FCF Ratio37.77
Enterprise Value/Market Cap1.15
Enterprise Value/Revenue21.42
Enterprise Value/Gross Profit33.29
Enterprise Value/Ebitda46.63
Forecast
1Y Price Target
$171.09Price Target Upside36.77% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering14
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Arista Networks Business Overview & Revenue Model
Company DescriptionArista 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.
How the Company Makes MoneyArista Networks generates revenue primarily through the sale of its networking hardware and software solutions. The company's key revenue streams include the sale of Ethernet switches, which are integral to data centers and cloud networking infrastructures. Additionally, Arista offers software solutions, primarily through its Extensible Operating System (EOS), which provides network management and automation capabilities. The company also earns revenue from customer support and services, which include maintenance and upgrades. Arista's strong relationships with large-scale cloud service providers, enterprise data centers, and financial institutions also contribute significantly to its earnings, as these sectors require robust and scalable networking solutions.
Arista Networks Key Performance Indicators (KPIs)
Any
Gross Margin by Segment
Indicates the efficiency and profitability of each business segment, providing insight into Arista Networks' cost management and pricing strategy.
Indicates the efficiency and profitability of each business segment, providing insight into Arista Networks' cost management and pricing strategy.
Data provided by:
The Fly
The FlyArista Networks Earnings Call Summary
Earnings Call Date:Sep 30, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 16, 2026
Earnings Call Sentiment Neutral
Arista Networks reported strong revenue growth and maintained robust gross margins despite challenges in international markets and supply chain constraints. The company is strategically expanding in AI and cloud segments with new leadership and partnerships, although shipment variability and deceleration in sequential growth are concerns.Q3-2025 Updates
Positive Updates
Record Revenue Achievement
Arista achieved a record $2.31 billion in Q3 2025 revenues, marking the 19th consecutive quarter of record growth, driven by strong performance in software and services.
Strong Gross Margin Performance
The company reported a non-GAAP gross margin of 65.2%, influenced by favorable mix and inventory benefits, surpassing guidance of 64%.
AI and Cloud Expansion
Arista's AI segment is on track with a $1.5 billion target for 2025 and aims for $2.75 billion in 2026 revenue, driven by partnerships with AI leaders like OpenAI and Anthropic.
New Leadership and Promotions
Promoted Ken Duda to President and CTO, and welcomed Tyson Lamoreaux as President and COO to strengthen cloud and AI strategic initiatives.
Positive Cash Flow and Investment Position
Generated approximately $1.3 billion in cash from operations and maintains a healthy $10.1 billion in cash, cash equivalents, and investments.
Negative Updates
International Revenue Decline
International revenues were down from 21.8% in the prior quarter to 20.2% in Q3 2025.
Supply Chain and Shipment Variability
Supply constraints and extended lead times from 38 to 52 weeks impacted the ability to meet demand, causing shipment variability.
Gross Margin Guidance Pressure
Q4 2025 gross margin guidance is lower at 62% to 63%, due to mix impact from AI and cloud titan products.
Deceleration in Sequential Quarterly Growth
Sequential quarterly growth rates have slowed from 10% in Q2 to 5% in Q3, with a Q4 guidance of only 1.6% growth.
Company Guidance
In the third quarter of 2025, Arista Networks reported revenue of approximately $2.31 billion, marking its 19th consecutive quarter of record growth. Their non-GAAP gross margin stood at 65.2%, influenced by a favorable mix and inventory benefits. The company saw strong performance in the Americas, contributing nearly 80% of the revenue, while international markets accounted for about 20%. Arista's software and services made up 18.7% of the revenue. Operating expenses were $383.3 million, representing 16.6% of revenue, with R&D spending at $251.4 million. The company's net income for the quarter was $962.3 million, equating to 41.7% of revenue, and diluted earnings per share were $0.75. Arista announced a revenue target of $10.65 billion for 2026, implying a 20% growth, with significant contributions expected from AI and campus segments. Their effective tax rate was 21.2%, and they ended the quarter with $10.1 billion in cash, cash equivalents, and investments.Arista Networks Financial Statement Overview
Summary
Exceptional profitability and capital structure: best-in-class margins (TTM gross ~64%, net ~40%, EBIT ~45%), very strong ROE (~31%) with zero debt, and robust free cash flow (~$4.05B) closely tracking net income (~0.98x). Primary risk is moderating TTM revenue growth (~6%) and slightly weaker cash conversion vs prior year (OCF/NI ~0.89).Income Statement
ANET shows exceptional profitability with TTM (Trailing-Twelve-Months) gross margin of ~64% and net margin of ~40%, alongside very strong operating profitability (EBIT margin ~45%). Revenue growth has moderated in the TTM period (~6%) versus the stronger growth seen in 2021–2024, but the company’s margin profile has remained consistently best-in-class and has generally improved over time—supporting a high-quality earnings picture. Key watch-out is the deceleration in top-line growth, which could pressure future operating leverage if it persists.93
Very Positive
Balance Sheet
The balance sheet is extremely strong with zero total debt in the most recent periods and a large equity base (TTM equity ~$11.9B on assets ~$18.0B). Returns on equity are consistently high (TTM ~31%), indicating strong profitability without relying on leverage. The main limitation is that this section doesn’t show liquidity details (like cash vs. current liabilities), but based on the provided leverage and equity metrics, financial risk appears very low.96
Very Positive
Cash Flow
Cash generation is robust: TTM (Trailing-Twelve-Months) operating cash flow is ~$4.14B and free cash flow is ~$4.05B, with free cash flow closely matching net income (TTM ~0.98x), suggesting earnings are translating well into cash. Free cash flow growth in the TTM period is positive (~1.8), and the business has produced strong free cash flow across years. A near-term watch item is that operating cash flow relative to net income in TTM is below 1 (~0.89), implying some working-capital or timing drag versus the prior year when cash conversion was stronger.90
Very Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 8.45B | 7.00B | 5.86B | 4.38B | 2.95B | 2.32B |
| Gross Profit | 5.44B | 4.49B | 3.63B | 2.68B | 1.88B | 1.48B |
| EBITDA | 3.88B | 3.01B | 2.33B | 1.59B | 975.07M | 734.84M |
| Net Income | 3.36B | 2.85B | 2.09B | 1.35B | 840.85M | 634.56M |
Balance Sheet | ||||||
| Total Assets | 18.05B | 14.04B | 9.96B | 6.78B | 5.73B | 4.74B |
| Cash, Cash Equivalents and Short-Term Investments | 10.11B | 8.30B | 5.01B | 3.02B | 3.41B | 2.87B |
| Total Debt | 0.00 | 0.00 | 0.00 | 43.96M | 56.53M | 72.40M |
| Total Liabilities | 6.14B | 4.05B | 2.74B | 1.89B | 1.76B | 1.42B |
| Stockholders Equity | 11.91B | 9.99B | 7.22B | 4.89B | 3.98B | 3.32B |
Cash Flow | ||||||
| Free Cash Flow | 4.05B | 3.68B | 2.00B | 448.17M | 951.12M | 719.73M |
| Operating Cash Flow | 4.14B | 3.71B | 2.03B | 492.81M | 1.02B | 735.11M |
| Investing Cash Flow | -3.89B | -2.46B | -687.45M | 216.33M | -925.56M | -608.80M |
| Financing Cash Flow | -1.10B | -421.81M | -83.75M | -654.60M | -360.88M | -346.34M |
Arista Networks Technical Analysis
Negative
125.09
Price Trends
130.18
Negative
137.91
Negative
118.26
Positive
Market Momentum
-1.23
Positive
44.26
Neutral
28.71
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ANET, the sentiment is Negative. The current price of 125.09 is below the 20-day moving average (MA) of 129.25, below the 50-day MA of 130.18, and above the 200-day MA of 118.26, indicating a neutral trend. The MACD of -1.23 indicates Positive momentum. The RSI at 44.26 is Neutral, neither overbought nor oversold. The STOCH value of 28.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ANET.
Arista Networks Risk Analysis
Arista Networks disclosed 60 risk factors in its most recent earnings report. Arista Networks reported the most risks in the "Ability to Sell" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Arista Networks Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $157.52B | 47.60 | 31.74% | ― | 27.75% | 25.42% | |
77 Outperform | $294.00B | 28.06 | 23.01% | 2.09% | 8.91% | 14.53% | |
68 Neutral | $29.48B | -289.90 | 0.23% | 2.17% | 14.17% | -102.25% | |
65 Neutral | $78.65B | 15.83 | ― | 1.45% | 10.81% | 31.67% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
59 Neutral | $2.15B | 252.91 | 17.08% | ― | 14.31% | ― |
* Technology Sector Average
ANET
Arista Networks
125.09
6.96
5.89%
CSCO
Cisco Systems
74.41
16.01
27.41%
EXTR
Extreme Networks
16.06
-1.20
-6.95%
HPE
Hewlett Packard Enterprise
22.09
-0.71
-3.11%
DELL
Dell Technologies
118.69
10.55
9.76%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.