Arista Networks ANET
What does Arista Networks do?
Arista Networks develops and sells networking solutions for data centers, cloud environments, AI clusters, enterprise campuses and routing. The core of its offering is the network operating system Extensible Operating System (EOS), which runs on the company's high-performance switches and routers and is complemented by network applications for automation, analytics and security.
Revenue comes mainly from hardware and software, supplemented by recurring revenue from support services such as technical support, repair and replacement services, and software updates. Customers include large cloud and internet operators, financial services firms, telecommunications providers and other enterprises. Competitively, Arista faces Cisco, Juniper (now part of Hewlett Packard Enterprise), manufacturers of standard networking chips, and providers such as Nvidia. A recognized strength is the unified software architecture across all product lines, which eases the operation of large, automated networks.
Score profile
Rank vs. Computer Hardware (11 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Arista Networks ranks above average in the group Computer Hardware (7.0/10). On growth, the company ranks above average in the group Computer Hardware (6.7/10). On valuation (higher = cheaper), the stock ranks in the bottom fifth in the group Computer Hardware (1.9/10). On financial strength, Arista Networks ranks above average in the group Computer Hardware (6.6/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 30.9x | 10.0x | better than 15 % |
| Trailing P/E | 49.6x | 19.4x | better than 17 % |
| PEG ratio | 1.3x | 1.0x | better than 31 % |
| EV/EBITDA | 41.6x | 16.8x | better than 25 % |
| Price/sales | 19.7x | 1.4x | better than 5 % |
| Price/book | 14.2x | 6.8x | better than 28 % |
| Revenue growth | 58.5% | 55.5% | better than 68 % |
| Earnings growth | 82.1% | 50.5% | better than 65 % |
| Gross margin | 62.9% | 50.4% | better than 68 % |
| Operating margin | 44.9% | 9.6% | better than 68 % |
| Net margin | 40.0% | 6.8% | better than 77 % |
| Return on equity | 33.5% | 17.7% | better than 68 % |
| Debt/equity | 0.0% | 9.9% | better than 86 % |
| Current ratio | 3.3x | 1.6x | better than 86 % |
| Free cash flow yield | 1.3% | 2.6% | better than 25 % |
| Dividend yield | 0.0% | 0.7% | – |
| Payout ratio | 0.0% | 14.5% | – |
| Beta | 1.64 | 1.73 | – |
Valuation: what is Arista Networks worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Arista Networks a model range of 80.80 USD to 88.76 USD per share.
28 analysts, average rating “Strong buy”, average price target 249.07 USD (+34.7%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- Investments by large cloud operators in data centers and AI infrastructure largely determine demand for high-speed switches.
- Technology shifts to higher network speeds create replacement and expansion needs among existing customers.
- Software and support revenue improves predictability and supports profitability across the hardware cycle.
Risks
- High revenue concentration among a few large cloud customers makes the business vulnerable to budget cuts or vendor changes.
- Intense competition from established networking vendors, Nvidia and white-box solutions can put pressure on prices and market share.
- Dependence on a few chip and manufacturing partners creates supply chain, cost and availability risks.
What to look for with Arista Networks
Gross margin is particularly informative because it shows whether Arista retains pricing power and a favorable mix of hardware and software despite customer concentration and competition.