Morningstar

Arista Earnings: Supply Upside Drives a Big Raise to Guidance

We’ve raised our estimate for Arista stock, which now looks fairly valued.

Signage with logo at headquarters of Arista.
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Securities in This Article
Arista Networks Inc
(ANET)

Key Morningstar Metrics for Arista Networks

  • Fair Value Estimate
    : $230.00
  • Morningstar Rating
    : ★★★
  • Morningstar Economic Moat Rating
    : Wide
  • Morningstar Uncertainty Rating
    : High

What We Thought of Arista Networks’ Earnings

Arista Networks’ ANET second-quarter results handily beat guidance, and management raised its full-year revenue guide by 10%. Sales rose 38% year over year to $3.06 billion, and 2026 guidance now sits at $12.6 billion (up from $11.5 billion), representing 40% growth.

Why it matters: We see Arista as best-of-breed for high-speed connectivity for artificial intelligence and non-AI, and network speed is increasingly a driver of AI model performance. As a result, demand is robust, and we credit the firm for navigating supply constraints to generate such a significant increase in guidance.

  • Supply constraints abound across the AI supply chain, including with Arista’s peers. We don’t see any worsening in its competitive position as a result. Still, we like that this has become a strategic focus for management, headlined by rising purchase commitments for components.
  • Management pegs Arista’s “scale across” AI revenue, for connections between data centers, at $1.2 billion for 2026, and expects the market to rise above a 60% annualized clip through 2030. We expect Arista to maintain a strong share near 40% in this market, approaching $7 billion in 2030.

The bottom line: We raise our fair value estimate for wide-moat Arista to $230 per share from $190, behind a higher medium-term growth forecast. Shares rose 10% after-hours, on top of a longer rally since June. After recent strength, the market now looks closer in line with our bullish valuation.

  • Arista faced pressure after its first-quarter results amid bearish market narratives about the stock’s optics and market share. We’re focused on strong demand and execution, and see Arista agnostic to optics architectures. The market now appears to agree with us.
  • We model above management’s 40% growth guidance for 2026 (the firm guides conservatively) and expect strong growth to endure, at close to 30% in 2027 and 20% in 2028. Pending supply availability, we could see further upside in 2027, as we expect demand to be just as strong as in 2026.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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