Arista Networks Posts Fastest Growth Since IPO as Big Tech Moves Beyond Nvidia. Wall Street Still Sees 47% Upside in ANET Stock.
Arista Networks (ANET) reported its earnings on Nov. 3, and the stock jumped as much as 11% on Nov. 4 before closing up about 5% after a blowout quarter. The company did just about everything to earn this jump. Revenue grew 58.5% to $3.66 billion, beating the $3.33 billion estimate. This was Arista’s fastest growth since its IPO. EPS of $1.20 beat the $1.08 estimate too. CEO Jayshree Ullal said the performance was so strong that it beat even her own high expectations.
Add to this, the 2026 guidance was raised for the fourth time to $13.3 billion, implying 48% growth. Management also gave an early outlook of about $18.5 billion in revenue, or 38% to 40% growth. It expects AI networking revenue to double to about $7 billion. This falls in line with something I’ve pointed out before. Big Tech companies are now looking to build their own AI chips and want networking that works with any chip rather than staying dependent on Nvidia (NVDA). This is where Arista comes in. This quarter, it launched new open-standard AI networking designs with AMD (AMD), Broadcom (AVGO), Meta (META), Microsoft (MSFT), and others. Management sees its addressable market at over $200 billion by 2030.
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The Market Finally Got What It Wanted
Back in May, Arista beat estimates and reported solid numbers. But that wasn’t enough, and the stock fell 13% after earnings. This time, the strong guidance made the difference. That shows the market wants proof from Arista that its growth won’t just fade away. And I think the 2027 outlook is proof that it won’t, since management sees AI demand lasting well into next year.
Another reason ANET stock surged this time is that after reaching its 52-week high of $217.41 on Oct. 9, it had dropped nearly 25% by Nov. 2. But the rally didn’t last. On Nov. 5, chip and AI stocks sold off sharply after Democrats won control of Congress, raising fears that data center construction could slow down. ANET stock fell about 10%, and despite rallying some on Friday, it is now trading around where it was before earnings. The drop came on news that had little to do with Arista. Its own business remains strong, which makes the stock look even more attractive now.
About Arista Networks Stock
Arista Networks makes the high-speed switches and software that move data around large data centers, cloud networks, and corporate campuses. Its biggest growth driver is now AI networking, connecting the massive clusters of chips that Big Tech uses to train and run AI models. Founded in 2004, the company is headquartered in Santa Clara, California, and is led by CEO Jayshree Ullal.
The company’s stock is up roughly 30% this year, easily ahead of the S&P 500’s ($SPX) 8% gain during the same period. After reaching its all-time high in October, though, the stock got sold off sharply. No weakness in the business caused it. Instead, worries about how AI buildouts would be financed hit chip and hardware stocks, and investors took profits on a stock that reached a record high.
Arista’s stock looks surprisingly reasonable for a company growing this fast. At about 41x forward earnings, it trades just slightly above its five-year average, even though it just posted its fastest growth since going public over a decade ago. Its forward price-to-sales (P/S) ratio of 17.60x sits about 27% above its historical average, but I think that premium looks fair given the AI demand. The EPS outlook is decent. Analysts expect earnings to grow about 46% this year, then 24% each of the next two years. That would bring the earnings multiple down to 27x by 2028. The balance sheet is about as clean as it gets. Arista holds $14.36 billion in cash and no debt at all. The risk is that if customers slow down their AI spending, it will hit Arista’s orders. But still, that cash is a big positive, as it gives Arista plenty of room to keep investing in new products.
What Do Analysts Expect for ANET Stock?
Based on 28 Wall Street analysts, ANET stock holds a “Strong Buy” rating with a mean price target of $251.62, indicating 47% upside. Even the lowest price target of $205 is well ahead of where the stock currently sits. This shows that after the recent selloff, analysts believe the stock has a lot of room to run.
On the date of publication, Jabran Kundi did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com