Arista Networks in 2026: The High-Stakes Tech Bet Wall Street Can’t Ignore
Cloud networking's quiet disruptor just got louder. Arista Networks—the stealth infrastructure backbone powering AI and hyperscale data centers—is poised for a make-or-break year as enterprise demand collides with chip supply chaos.
The Bull Case: Lightning in a Bottle
CEO Jayshree Ullal's laser focus on high-performance switches puts Arista in pole position as cloud providers scramble to upgrade aging infrastructure. Their secret sauce? Software-defined networking that actually works—unlike some blockchain 'solutions' still hunting for problems.
The Bear Trap: Cisco's Revenge
Don't count out the legacy players yet. With Cisco slashing prices and Juniper's AI-driven automation gaining traction, Arista's gross margins (currently hovering near Wall Street's favorite magic number: 60%) could face brutal compression.
The Wildcard: When GPUs Meet Ethernet
Nvidia's domination of AI chips creates both an existential threat and golden opportunity. If Arista can position its Ethernet fabric as the connective tissue between GPU clusters, they'll mint money. Fail, and they become another 'best-in-class' also-ran—the tech sector's favorite eulogy.
One year from now, Arista will either be the networking equivalent of Nvidia's 2023 breakout... or yet another proof that in tech, 'disruption' is just Latin for 'target on your back.'
Image source: Getty Images.
Understanding Arista's business
Arista controls a smaller slice of the networking market than, but it differentiates itself from its bigger competitor in several key ways. Arista's modular operating system, EOS, is compatible with a wider range of open networking protocols than Cisco's systems, which are often known for locking its customers into its "walled garden."
In addition, Arista focuses on selling lower-latency switches, which are optimized for hyperscale cloud networks, while Cisco bundles together a broader range of enterprise campus, branch, wide-area networking (WAN), and data center solutions.
Arista's flexibility and scalability made it the preferred networking hardware and software provider for cloud and AI giants like and. Its CloudVision platform also helps those clients easily monitor and analyze their data center deployments. So while Cisco is still considered a "one stop shop" for big enterprise networking deployments, Arista is emerging as a higher-growth play on the expanding cloud and AI markets.
From 2019 to 2024, Arista's revenue expanded at a compound annual growth rate (CAGR) of 24%. Its cloud and hyperscale markets continued to expand throughout the pandemic, and its tighter portfolio of products insulated it from the supply chain disruptions which impacted Cisco and other networking hardware companies.
What happened to Arista over the past year?
In 2025, Arista's revenue ROSE 19.5%, its adjusted gross margin rose 200 basis points to 64.6%, and its adjusted earnings per share (EPS) grew 31.2%. Here's how rapidly it grew over the past year.
|
Revenue Growth (YOY) |
16.3% |
15.9% |
20% |
25.3% |
27.6% |
|
Adjusted Gross Margin |
64.2% |
65.4% |
64.6% |
64.2% |
64.1% |
|
Adjusted EPS Growth (YOY) |
39.2% |
32.9% |
31.1% |
25% |
30% |
Data source: Arista Networks. YOY = Year over year.
Arista's recent growth was largely driven by the rapid expansion of the cloud and AI markets. However, its gross margins are declining as it sells a higher mix of lower-margin, high-volume routers and switches to those big customers. It doesn't have much pricing power against those cloud titans, which often demand higher-volume discounts.
At the same time, inflation, elevated interest rates, tariffs, and other macroheadwinds are driving its component and supply chain costs higher.
By comparison, Cisco's adjusted gross margin expanded 30 basis points year over year to 68.6% in its latest quarter. Those higher margins reflect Cisco's stronger pricing power, which it reinforces through its aggressive bundling strategies.
For the second quarter of 2025, Arista expects its revenue to rise 24.3% year over year as its adjusted gross margin dips to 63%. For the full year, analysts expect its revenue and adjusted EPS to grow 20% and 13%, respectively. Most of that growth should be driven by the growing adoption of its 800G Ethernet products for handling AI workloads.
Where will Arista's stock be in a year?
Arista is still growing rapidly, but it can't be considered a bargain at 50 times its trailing earnings. Cisco, which is growing at a much slower rate, trades at 28 times earnings.
For 2026, analysts expect Arista's revenue and adjusted EPS to grow 18% and 17%, respectively, as the AI boom continues. If Arista matches those estimates and still trades at 50 times earnings, its stock price could rise more than 20% to $150 over the next 12 months. But if it trades at 30 times earnings, its stock could drop more than 25% to $90.
Therefore, Arista's upside potential might be limited by its valuations over the next year as investors wait to see if its robust revenue growth can offset its declining gross margins. It might still eke out some modest gains, but it probably won't replicate its rally from the past 12 months.
