Arista Earnings: AI Keeps the Beats and Raises Coming and Gives Investors Opportunity

Key Morningstar Metrics for Arista Networks

• Fair Value Estimate: $175.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High

What We Thought of Arista Networks’ Earnings

Arista Networks’ ANET fourth-quarter results beat guidance, and the firm raised its 2026 sales outlook to $11.25 billion from $10.65 billion. Management also raised its 2026 artificial intelligence revenue guidance to $3.25 billion (more than 100% growth) from $2.75 billion.

Why it matters: Arista is enjoying immense AI infrastructure demand with its best-of-breed high-speed Ethernet portfolio. Shares have languished since the last earnings release due to a conservative outlook, and we agree with the market’s positive response to higher guidance in 2026.

• AI infrastructure demand is ballooning, and networking connectivity is a crucial driver of AI model performance. We see Arista as the technology leader in AI Ethernet, alongside Nvidia. Huge capital spending increases from large AI model builders are constructive for the firm’s results.
• The one nitpick in the results would be the implied slow growth for non-AI revenue in 2026. We aren’t concerned, as we’ve expected AI spending to drive growth. We actually view steady, low growth in other markets as positive, with continued investment needed alongside AI buildouts.

The bottom line: We raise our fair value estimate for wide-moat Arista to $175 per share from $140 as we bake in a higher AI spending forecast. Shares rose more than 10% after hours on the raised outlook, but we still see upside from here for this high-speed technology leader.

• Arista is conservative in its guidance, and we model well above its outlook for 2026 across AI, total sales, and operating margin. We acknowledge the firm’s low visibility into demand, but we see AI demand continuing to drive stellar growth in the medium term.
• Positively, Arista expects a low impact from higher memory prices on its profitability. 2026 gross margin guidance of 62%-64% is in the firm’s long-term range, and we see customer mix governing results in that range. Networking needs relatively little memory, helping Arista’s margin.