Arista Networks Exceeds Earnings Expectations, Raises Full-Year Guidance
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy ANET?
Source: Benzinga
- Strong Earnings Report: Arista Networks reported revenue of $2.488 billion, gross margins of 63.4%, and earnings of $0.82 per share, all exceeding market expectations and demonstrating the company's robust performance in the AI investment cycle.
- Guidance Upgrade: The company raised its full-year revenue growth forecast from 20% to 25%, reflecting increased confidence in demand and deployments, with this adjustment occurring earlier than typical in its history, indicating strong management confidence.
- Robust Cash Flow: Free cash flow reached $1.23 billion, significantly surpassing the consensus estimate of $659 million, highlighting notable improvements in operational efficiency and profitability.
- Deferred Revenue Growth: Total deferred revenue grew by 92% year-on-year to $5.37 billion, while short-term deferred revenue surged by 132% to $4.0 billion, indicating strong potential for future revenue growth.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy ANET?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on ANET
Wall Street analysts forecast ANET stock price to rise
15 Analyst Rating
13 Buy
2 Hold
0 Sell
Strong Buy
Current: 135.120
Low
140.00
Averages
171.42
High
200.00
Current: 135.120
Low
140.00
Averages
171.42
High
200.00
About ANET
Arista Networks, Inc. is a provider of data-driven, client-to-cloud networking for large artificial intelligence (AI), data center, campus and routing environments. Its platforms deliver availability, agility, automation, analytics, and security through an advanced network operating stack. Its platform is its Extensible Operating System (EOS), a modernized publish-subscribe state-sharing networking operating system. Its portfolio of products, services and technologies is grouped into various categories: Core (Data Center, Cloud and AI Networking), Cognitive Adjacencies (Campus and Routing), and Cognitive Network (Software and Services). It offers product portfolios of data-driven, high-speed, cloud and data center Ethernet switches. Its Cognitive Adjacencies include Cognitive Campus Switching, Cloud-Grade Routing and WAN Routing. Its software and services are based on subscription-based models and include various offerings: CloudVision, Arista A-Care Services, CloudEOS and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Arista Networks Q4 Earnings Beat Expectations with Strong Guidance
- Strong Earnings Report: Arista Networks reported a Q4 non-GAAP EPS of $0.82, beating expectations by $0.06, which underscores the company's sustained profitability and reinforces its leadership position in the networking industry.
- Significant Revenue Growth: Q4 revenue reached $2.49 billion, a 29% year-over-year increase, exceeding market expectations by $100 million, reflecting strong demand and an increase in market share in the rapidly growing AI networking sector.
- Optimistic Guidance: For Q1 2026, revenue is expected to be approximately $2.6 billion, surpassing the consensus estimate of $2.46 billion, with non-GAAP gross margins projected between 62% and 63%, indicating strong confidence in future growth.
- Improved Operational Efficiency: The anticipated non-GAAP operating margin of approximately 46% demonstrates the company's success in cost control and operational efficiency, further enhancing its profitability in a competitive market.
See More
U.S. Stocks Close Higher as Software Stocks Recover
- Market Recovery: The S&P 500 index rose by 0.05%, the Dow Jones Industrial Average by 0.10%, and the Nasdaq 100 by 0.18% on Friday, indicating a recovery after early losses, reflecting cautious optimism among investors regarding future economic prospects.
- Inflation Data Impact: The U.S. January Consumer Price Index rose by 2.4% year-over-year, below the expected 2.5%, marking the smallest increase in seven months, which may prompt the Fed to continue cutting rates, thus providing support for the stock market and alleviating concerns over rate hikes.
- Strong Software Stock Performance: Software stocks like Crowdstrike Holdings and ServiceNow rose over 4% and 3%, respectively, lifting the broader market and indicating a rebound in investor confidence in tech stocks, particularly amid rapid advancements in AI technology.
- Metal Stocks Retreat: Reports of the Trump administration's plans to narrow tariffs on steel and aluminum products led to declines in metal companies, with Century Aluminum falling over 7%, reflecting the negative impact of policy changes on the sector.
See More
Nvidia Shares Drop as AMD Gains Amid Arista's Shift
- Market Share Shift: Arista Networks CEO Ullal indicated that Nvidia's market share has dropped from 99% to 20%-25% over the past year, suggesting a significant increase in AMD's acceptance as a preferred accelerator, which could threaten Nvidia's dominance.
- Stock Movements: Nvidia's shares fell nearly 3% while AMD's rose close to 1%, reflecting differing investor expectations regarding the future prospects of both companies, particularly amid intensifying competition in the AI processor market.
- Reduced Technology Dependency: Nvidia is gradually decreasing its reliance on Arista's technology as it has developed its own networking solutions to connect AI chips, which may lead to a decline in demand for Arista's offerings and negatively impact its stock performance.
- Industry Dynamics: Despite Nvidia holding approximately 90% of the AI chip market, increasing competition from AMD and Google could affect Nvidia's long-term growth potential, especially in the rapidly evolving AI infrastructure landscape.
See More
Arista Networks Stock Rises on Strong Q4 Earnings and Positive Inflation Data
- Stock Surge: Arista Networks' stock rose 5.4% on Friday, peaking at 10.1% earlier in the session, reflecting strong market confidence in the company's performance and boosting investor sentiment.
- Earnings Beat: The company reported Q4 results with adjusted earnings per share of $0.82 and revenue of $2.49 billion, surpassing Wall Street's expectations of $0.76 and $2.39 billion, indicating ongoing benefits from AI infrastructure investments.
- Positive Guidance: Arista targets approximately $2.6 billion in revenue for the current quarter, exceeding Wall Street's prior forecast of $2.46 billion, while management anticipates an adjusted gross margin between 62% and 63% and an operating margin around 46%, showcasing robust profitability.
- Favorable Inflation Data: The January consumer price index (CPI) came in at 2.4%, below the 2.5% forecasted by economists, reducing the likelihood of Federal Reserve rate hikes, which is expected to positively impact the stock market and growth stocks.
See More
Arista Networks CEO Reports Increased AMD Deployments
- Market Share Shift: Arista Networks CEO Ullal indicated that Nvidia's share in their deployments has dropped from 99% to 20%-25% over the past year, highlighting AMD's rise as a preferred accelerator, which could impact Nvidia's market dominance.
- Stock Price Movements: Following this news, Nvidia's stock fell nearly 3% while AMD's rose close to 1%, reflecting investor sensitivity to market dynamics despite the modest fluctuations.
- Technological Dependency: Nvidia's development of its own networking technology has reduced its reliance on Arista, leading to a 10% drop in Arista's stock over two days, indicating challenges in its role within AI infrastructure.
- Future Outlook: Although Arista's stock rebounded 19% over the past year, the fact that it lost more than half its value in 2023 suggests the company needs to reassess its partnership with Nvidia to adapt to market changes.
See More
Tech Stocks Rise on Friday Afternoon
- Market Recovery: Tech stocks broadly rose on Friday afternoon, reflecting a gradual restoration of investor confidence in the technology sector, which could drive stock prices of related companies higher.
- Strong ETF Performance: The State Street Technology Select Sector SPDR ETF (XPREMIUM) showed robust performance during trading, indicating positive sentiment towards the tech sector that may attract more capital inflows.
- Improved Investor Sentiment: With the rise in tech stocks, investor sentiment has improved, potentially leading more investors to reassess their portfolios and increase allocations to technology stocks.
- Optimistic Industry Outlook: The recovery in the tech sector may signal future economic recovery, especially against the backdrop of accelerated digital transformation, where demand for technology investments from businesses is expected to continue growing.
See More
Arista Networks Q4 Earnings Beat Expectations with Strong Guidance
- Strong Earnings Report: Arista Networks reported a Q4 non-GAAP EPS of $0.82, beating expectations by $0.06, which underscores the company's sustained profitability and reinforces its leadership position in the networking industry.
- Significant Revenue Growth: Q4 revenue reached $2.49 billion, a 29% year-over-year increase, exceeding market expectations by $100 million, reflecting strong demand and an increase in market share in the rapidly growing AI networking sector.
- Optimistic Guidance: For Q1 2026, revenue is expected to be approximately $2.6 billion, surpassing the consensus estimate of $2.46 billion, with non-GAAP gross margins projected between 62% and 63%, indicating strong confidence in future growth.
- Improved Operational Efficiency: The anticipated non-GAAP operating margin of approximately 46% demonstrates the company's success in cost control and operational efficiency, further enhancing its profitability in a competitive market.
See More
U.S. Stocks Close Higher as Software Stocks Recover
- Market Recovery: The S&P 500 index rose by 0.05%, the Dow Jones Industrial Average by 0.10%, and the Nasdaq 100 by 0.18% on Friday, indicating a recovery after early losses, reflecting cautious optimism among investors regarding future economic prospects.
- Inflation Data Impact: The U.S. January Consumer Price Index rose by 2.4% year-over-year, below the expected 2.5%, marking the smallest increase in seven months, which may prompt the Fed to continue cutting rates, thus providing support for the stock market and alleviating concerns over rate hikes.
- Strong Software Stock Performance: Software stocks like Crowdstrike Holdings and ServiceNow rose over 4% and 3%, respectively, lifting the broader market and indicating a rebound in investor confidence in tech stocks, particularly amid rapid advancements in AI technology.
- Metal Stocks Retreat: Reports of the Trump administration's plans to narrow tariffs on steel and aluminum products led to declines in metal companies, with Century Aluminum falling over 7%, reflecting the negative impact of policy changes on the sector.
See More
Nvidia Shares Drop as AMD Gains Amid Arista's Shift
- Market Share Shift: Arista Networks CEO Ullal indicated that Nvidia's market share has dropped from 99% to 20%-25% over the past year, suggesting a significant increase in AMD's acceptance as a preferred accelerator, which could threaten Nvidia's dominance.
- Stock Movements: Nvidia's shares fell nearly 3% while AMD's rose close to 1%, reflecting differing investor expectations regarding the future prospects of both companies, particularly amid intensifying competition in the AI processor market.
- Reduced Technology Dependency: Nvidia is gradually decreasing its reliance on Arista's technology as it has developed its own networking solutions to connect AI chips, which may lead to a decline in demand for Arista's offerings and negatively impact its stock performance.
- Industry Dynamics: Despite Nvidia holding approximately 90% of the AI chip market, increasing competition from AMD and Google could affect Nvidia's long-term growth potential, especially in the rapidly evolving AI infrastructure landscape.
See More
Arista Networks Stock Rises on Strong Q4 Earnings and Positive Inflation Data
- Stock Surge: Arista Networks' stock rose 5.4% on Friday, peaking at 10.1% earlier in the session, reflecting strong market confidence in the company's performance and boosting investor sentiment.
- Earnings Beat: The company reported Q4 results with adjusted earnings per share of $0.82 and revenue of $2.49 billion, surpassing Wall Street's expectations of $0.76 and $2.39 billion, indicating ongoing benefits from AI infrastructure investments.
- Positive Guidance: Arista targets approximately $2.6 billion in revenue for the current quarter, exceeding Wall Street's prior forecast of $2.46 billion, while management anticipates an adjusted gross margin between 62% and 63% and an operating margin around 46%, showcasing robust profitability.
- Favorable Inflation Data: The January consumer price index (CPI) came in at 2.4%, below the 2.5% forecasted by economists, reducing the likelihood of Federal Reserve rate hikes, which is expected to positively impact the stock market and growth stocks.
See More
Arista Networks CEO Reports Increased AMD Deployments
- Market Share Shift: Arista Networks CEO Ullal indicated that Nvidia's share in their deployments has dropped from 99% to 20%-25% over the past year, highlighting AMD's rise as a preferred accelerator, which could impact Nvidia's market dominance.
- Stock Price Movements: Following this news, Nvidia's stock fell nearly 3% while AMD's rose close to 1%, reflecting investor sensitivity to market dynamics despite the modest fluctuations.
- Technological Dependency: Nvidia's development of its own networking technology has reduced its reliance on Arista, leading to a 10% drop in Arista's stock over two days, indicating challenges in its role within AI infrastructure.
- Future Outlook: Although Arista's stock rebounded 19% over the past year, the fact that it lost more than half its value in 2023 suggests the company needs to reassess its partnership with Nvidia to adapt to market changes.
See More
Tech Stocks Rise on Friday Afternoon
- Market Recovery: Tech stocks broadly rose on Friday afternoon, reflecting a gradual restoration of investor confidence in the technology sector, which could drive stock prices of related companies higher.
- Strong ETF Performance: The State Street Technology Select Sector SPDR ETF (XPREMIUM) showed robust performance during trading, indicating positive sentiment towards the tech sector that may attract more capital inflows.
- Improved Investor Sentiment: With the rise in tech stocks, investor sentiment has improved, potentially leading more investors to reassess their portfolios and increase allocations to technology stocks.
- Optimistic Industry Outlook: The recovery in the tech sector may signal future economic recovery, especially against the backdrop of accelerated digital transformation, where demand for technology investments from businesses is expected to continue growing.
See More
