Arista Earnings: Our AI Growth Optimism Rises, While After-Hours SellOff Opens Entry Point

Key Morningstar Metrics for Arista Networks

• Fair Value Estimate: $140.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High

What We Thought of Arista Networks’ Earnings

Arista Networks’ ANET third-quarter earnings beat management guidance, with sales rising 28% year over year to $2.31 billion. Fourth-quarter guidance implies a deceleration of sequential revenue growth. Management raised its guidance for 2025 and 2026 to factor in the results and near-term guidance.

Why it matters: Arista is benefiting from strong data center and artificial intelligence networking demand, which is driving the majority of the firm’s growth this year. We expect AI infrastructure buildouts to keep Arista’s growth high in the medium term.

• We view Arista as a major share taker in high-speed networking for public clouds and AI. We see Arista and Nvidia as the best-of-breed Ethernet networking providers, and together leading the transition to Ethernet over Nvidia’s proprietary InfiniBand.
• Arista is gaining meaningful market share in campus networks, too. The firm’s guidance for more than 50% campus growth in 2026 is impressive and attainable, in our view. This is a minority contributor to total results, but we like Arista’s widening exposure and market share gains.

The bottom line: We raise our fair value estimate for wide-moat Arista to $140 per share from $120 after raising our data center forecast. Shares fell 10% after hours, likely due to missing lofty investor expectations despite meeting FactSet consensus expectations. Arista looks fairly valued.

• Arista raised its 2026 guidance, but only by the amount of its higher 2025 guidance. We continue to see the firm’s guidance as conservative, and model well above it. Our model comes in above $11 billion next year (24% growth), versus $10.65 billion guided (20%).
• In the longer term, we’re confident in Arista maintaining close to 20% growth through the end of the decade, above management’s mid-teens growth target. We see enduring AI infrastructure demand supporting our forecast, and Arista’s high earnings multiple looks justified against strong growth.