Arista Networks Faces Significant Chip Shortages Amid AI Demand
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 44 minutes ago
0mins
Should l Buy ANET?
Source: stocktwits
- Revenue and Earnings Beat: Arista Networks reported first-quarter revenue of $2.70 billion, a 35% increase year-over-year, surpassing the $2.62 billion estimate, with adjusted earnings per share of $0.87 exceeding the $0.81 forecast, demonstrating resilience in a strong demand environment.
- Supply Chain Pressures: CEO Ullal highlighted significant wafer fab shortages due to rapid AI infrastructure buildout, resulting in lead times of 52 weeks for chip replenishment, which hampers the company's ability to fulfill commitments to customers.
- Cautious Future Outlook: While the second-quarter revenue is projected at $2.8 billion, slightly below the $2.81 billion estimate, and adjusted earnings per share at $0.88, just above the $0.87 estimate, the company anticipates near-term gross margin pressure due to higher procurement costs to meet demand.
- Market Sentiment Shift: On Stocktwits, retail sentiment for ANET shifted from 'bullish' to 'extremely bullish', with message volumes surging nearly 20 times in the last 24 hours, as some users view the current dip as a buying opportunity, reflecting confidence in the company's long-term growth prospects.
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Analyst Views on ANET
Wall Street analysts forecast ANET stock price to rise
10 Analyst Rating
9 Buy
1 Hold
0 Sell
Strong Buy
Current: 172.620
Low
159.00
Averages
172.88
High
200.00
Current: 172.620
Low
159.00
Averages
172.88
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 Faces Significant Chip Shortages Amid AI Demand
- Revenue and Earnings Beat: Arista Networks reported first-quarter revenue of $2.70 billion, a 35% increase year-over-year, surpassing the $2.62 billion estimate, with adjusted earnings per share of $0.87 exceeding the $0.81 forecast, demonstrating resilience in a strong demand environment.
- Supply Chain Pressures: CEO Ullal highlighted significant wafer fab shortages due to rapid AI infrastructure buildout, resulting in lead times of 52 weeks for chip replenishment, which hampers the company's ability to fulfill commitments to customers.
- Cautious Future Outlook: While the second-quarter revenue is projected at $2.8 billion, slightly below the $2.81 billion estimate, and adjusted earnings per share at $0.88, just above the $0.87 estimate, the company anticipates near-term gross margin pressure due to higher procurement costs to meet demand.
- Market Sentiment Shift: On Stocktwits, retail sentiment for ANET shifted from 'bullish' to 'extremely bullish', with message volumes surging nearly 20 times in the last 24 hours, as some users view the current dip as a buying opportunity, reflecting confidence in the company's long-term growth prospects.
See More
AMD Shares Surge 17% on Surge in Chip Demand
- Earnings Beat: AMD reported a 38% year-over-year revenue increase and a 43% rise in non-GAAP EPS for Q1 2026, exceeding market expectations and driving a 17% pre-market stock surge, highlighting the company's robust performance amid soaring AI infrastructure demand.
- Strategic Partnership: The collaboration with Meta is set to deploy 6 gigawatts of Instinct GPUs, which not only enhances AMD's competitive edge in the AI market but also lays a solid foundation for future revenue growth.
- Future Guidance: Management forecasts Q2 revenue to reach $11.2 billion, a 9% increase from Q1, translating to a 46% year-over-year growth, reflecting sustained growth potential and market confidence in AMD's AI initiatives.
- Market Reaction: Despite AMD's strong performance, Arista Networks saw a 9% drop in stock price due to cost pressures, indicating that supply chain challenges and rising costs in the semiconductor industry may affect overall market sentiment.
See More
Significant Stock Movements for AMD and Others
- AMD Strong Guidance: AMD shares surged 20% after issuing a second-quarter revenue forecast of $11.2 billion, exceeding the analyst estimate of $10.52 billion, with first-quarter results also surpassing expectations, indicating robust performance in the semiconductor market.
- Super Micro Earnings Beat: Super Micro's stock jumped nearly 15% as fourth-quarter profit expectations range from 65 to 79 cents per share, significantly above Wall Street's call for 55 cents, with third-quarter adjusted earnings of 84 cents per share showcasing its competitiveness in the server market.
- CVS Health Performance Boost: CVS Health shares gained 4% after reporting first-quarter adjusted earnings of $2.57 per share and revenue of $100.43 billion, both exceeding analyst expectations, while the company raised its full-year earnings outlook, reflecting strong performance in the pharmacy benefits sector.
- Lucid Group Worsening Losses: Lucid Group shares fell 3% as the company reported a first-quarter loss of $3.46 per share, significantly worse than the expected loss of $2.64, with revenue of $282.5 million missing the $440.4 million target, highlighting challenges in the electric vehicle market.
See More
ARISTA NETWORKS INC: PIPER SANDLER INCREASES TARGET PRICE TO $181, UP FROM $175
Price Increase Announcement: The price of Piper Sandler's target has been raised to $181 from $175.
Market Impact: This adjustment reflects changes in market conditions and expectations for the company's performance.
See More
Arista Networks Q1 2026 Earnings Call Insights
- Market Share Growth: Arista Networks has achieved the number one market share in the over 10G Ethernet category, as CEO Ullal noted, reflecting strong growth in high-speed switching, which is expected to further solidify its market leadership.
- Strong Financial Performance: Total revenues for Q1 reached $2.71 billion with a net income of $1.11 billion, demonstrating the company's ability to achieve substantial profitability despite facing supply chain challenges amid strong demand.
- Optimistic Future Outlook: Management raised the fiscal year 2026 revenue growth outlook to 27.7%, anticipating approximately $11.5 billion in revenue, while increasing the AI business target from $3.25 billion to $3.5 billion, indicating confidence in future growth.
- Ongoing Supply Chain Pressures: Ullal highlighted that industry-wide shortages are expected to persist for 1 to 2 years, and despite anticipated gross margin pressures, the company will prioritize ensuring supply continuity to meet customer demand, a strategy that may impact future profitability.
See More
Arista Networks Reports Strong Earnings but Stock Declines
- Strong Earnings Performance: Arista Networks reported Q1 revenue of $2.7 billion, a 35% year-over-year increase that surpassed analyst expectations of $2.62 billion, with adjusted EPS of $0.87, up 32%, highlighting robust demand in the data center sector.
- Customer Satisfaction Boost: With a Net Promoter Score (NPS) of 89 and a customer approval rating of 94%, Arista's strong customer loyalty not only underscores its industry leadership but also sets a solid foundation for future customer growth and market share expansion.
- Innovative Technology Launch: The introduction of eXtra-dense Pluggable Optics (XPO) offers an 8-fold bandwidth increase while reducing networking rack requirements by 75% and saving 44% in floor space, showcasing Arista's technological edge in meeting AI data center demands.
- Future Growth Outlook: Arista forecasts Q2 revenue of $2.8 billion and adjusted EPS of $0.88, with full-year revenue expectations raised to $11.5 billion, reflecting a 28% growth, and doubling its AI sales target, indicating a strong market outlook ahead.
See More
Arista Networks Faces Significant Chip Shortages Amid AI Demand
- Revenue and Earnings Beat: Arista Networks reported first-quarter revenue of $2.70 billion, a 35% increase year-over-year, surpassing the $2.62 billion estimate, with adjusted earnings per share of $0.87 exceeding the $0.81 forecast, demonstrating resilience in a strong demand environment.
- Supply Chain Pressures: CEO Ullal highlighted significant wafer fab shortages due to rapid AI infrastructure buildout, resulting in lead times of 52 weeks for chip replenishment, which hampers the company's ability to fulfill commitments to customers.
- Cautious Future Outlook: While the second-quarter revenue is projected at $2.8 billion, slightly below the $2.81 billion estimate, and adjusted earnings per share at $0.88, just above the $0.87 estimate, the company anticipates near-term gross margin pressure due to higher procurement costs to meet demand.
- Market Sentiment Shift: On Stocktwits, retail sentiment for ANET shifted from 'bullish' to 'extremely bullish', with message volumes surging nearly 20 times in the last 24 hours, as some users view the current dip as a buying opportunity, reflecting confidence in the company's long-term growth prospects.
See More
AMD Shares Surge 17% on Surge in Chip Demand
- Earnings Beat: AMD reported a 38% year-over-year revenue increase and a 43% rise in non-GAAP EPS for Q1 2026, exceeding market expectations and driving a 17% pre-market stock surge, highlighting the company's robust performance amid soaring AI infrastructure demand.
- Strategic Partnership: The collaboration with Meta is set to deploy 6 gigawatts of Instinct GPUs, which not only enhances AMD's competitive edge in the AI market but also lays a solid foundation for future revenue growth.
- Future Guidance: Management forecasts Q2 revenue to reach $11.2 billion, a 9% increase from Q1, translating to a 46% year-over-year growth, reflecting sustained growth potential and market confidence in AMD's AI initiatives.
- Market Reaction: Despite AMD's strong performance, Arista Networks saw a 9% drop in stock price due to cost pressures, indicating that supply chain challenges and rising costs in the semiconductor industry may affect overall market sentiment.
See More
Significant Stock Movements for AMD and Others
- AMD Strong Guidance: AMD shares surged 20% after issuing a second-quarter revenue forecast of $11.2 billion, exceeding the analyst estimate of $10.52 billion, with first-quarter results also surpassing expectations, indicating robust performance in the semiconductor market.
- Super Micro Earnings Beat: Super Micro's stock jumped nearly 15% as fourth-quarter profit expectations range from 65 to 79 cents per share, significantly above Wall Street's call for 55 cents, with third-quarter adjusted earnings of 84 cents per share showcasing its competitiveness in the server market.
- CVS Health Performance Boost: CVS Health shares gained 4% after reporting first-quarter adjusted earnings of $2.57 per share and revenue of $100.43 billion, both exceeding analyst expectations, while the company raised its full-year earnings outlook, reflecting strong performance in the pharmacy benefits sector.
- Lucid Group Worsening Losses: Lucid Group shares fell 3% as the company reported a first-quarter loss of $3.46 per share, significantly worse than the expected loss of $2.64, with revenue of $282.5 million missing the $440.4 million target, highlighting challenges in the electric vehicle market.
See More
ARISTA NETWORKS INC: PIPER SANDLER INCREASES TARGET PRICE TO $181, UP FROM $175
Price Increase Announcement: The price of Piper Sandler's target has been raised to $181 from $175.
Market Impact: This adjustment reflects changes in market conditions and expectations for the company's performance.
See More
Arista Networks Q1 2026 Earnings Call Insights
- Market Share Growth: Arista Networks has achieved the number one market share in the over 10G Ethernet category, as CEO Ullal noted, reflecting strong growth in high-speed switching, which is expected to further solidify its market leadership.
- Strong Financial Performance: Total revenues for Q1 reached $2.71 billion with a net income of $1.11 billion, demonstrating the company's ability to achieve substantial profitability despite facing supply chain challenges amid strong demand.
- Optimistic Future Outlook: Management raised the fiscal year 2026 revenue growth outlook to 27.7%, anticipating approximately $11.5 billion in revenue, while increasing the AI business target from $3.25 billion to $3.5 billion, indicating confidence in future growth.
- Ongoing Supply Chain Pressures: Ullal highlighted that industry-wide shortages are expected to persist for 1 to 2 years, and despite anticipated gross margin pressures, the company will prioritize ensuring supply continuity to meet customer demand, a strategy that may impact future profitability.
See More
Arista Networks Reports Strong Earnings but Stock Declines
- Strong Earnings Performance: Arista Networks reported Q1 revenue of $2.7 billion, a 35% year-over-year increase that surpassed analyst expectations of $2.62 billion, with adjusted EPS of $0.87, up 32%, highlighting robust demand in the data center sector.
- Customer Satisfaction Boost: With a Net Promoter Score (NPS) of 89 and a customer approval rating of 94%, Arista's strong customer loyalty not only underscores its industry leadership but also sets a solid foundation for future customer growth and market share expansion.
- Innovative Technology Launch: The introduction of eXtra-dense Pluggable Optics (XPO) offers an 8-fold bandwidth increase while reducing networking rack requirements by 75% and saving 44% in floor space, showcasing Arista's technological edge in meeting AI data center demands.
- Future Growth Outlook: Arista forecasts Q2 revenue of $2.8 billion and adjusted EPS of $0.88, with full-year revenue expectations raised to $11.5 billion, reflecting a 28% growth, and doubling its AI sales target, indicating a strong market outlook ahead.
See More
