Arista Networks Keeps Executing, But The Stock Has Stalled

With AI networking demand accelerating and management consistently outpacing guidance, Arista looks like an AI beneficiary finally catching up, comparatively - if the stock can get out of its own way.

A Strong Business, A Stuck Stock

Arista Networks ANET 0.00%↑ has been pushing more and more into the AI build-out, with tangible success showing up on the P&L sheet. Management has been executing better than any other hardware company of its size when it comes to this transition. After all, it had a 48% operating margin in the recent quarter - for a mainly hardware business, that’s a feat. Moreover, it has set goals, worked to align supply chains to meet those goals, and sold into customer demand on schedule and with more wins than initially expected. But the stock has languished lately, hovering near all-time highs but not moving above prior highs. So let’s define the parameters and understand which side of the stock we can make money on.

I took note of Arista early on, well before AI began in earnest, and it has been working toward becoming meaningfully involved in the build-out of data centers. This has turned what was initially supposed to be a mid-teens revenue growth networking company into a solid 20%, pushing 30%, long-term execution machine.

This growth comes amid concerns of being able to supply its burgeoning demand, but this concern has existed for at least two years. Yet, the company continues to find room to increase guidance, as it has now brought 2026 yearly revenue guidance from 20% yearly growth to 25% ($10.65B to $11.25B), with the majority of the increase coming from the AI sector, as it upped AI revenue from $2.75B to $3.25B (accounting for $500M of the $600M increase).

So, how has this compared over the years? My first question is the trajectory of revenue, and whether it shows an accelerating trend - something fading out of many other companies’ reports at this juncture. Here’s what it looks like.