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Is ANET Stock a Strong Buy Ahead of Q2 Earnings Release?

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Key Takeaways

  • ANET is set to report Q2 earnings on Aug. 5, with estimates of $2.11B revenue and $0.65 EPS.
  • The firm boasts a four-quarter earnings surprise average of 11.8%, beating estimates each time.
  • Strong AI-driven demand and software upgrades are expected to drive Q2 growth and long-term gains.

Arista Networks, Inc. (ANET - Free Report) is scheduled to report second-quarter 2025 earnings on Aug. 5. The Zacks Consensus Estimate for revenues and earnings is pegged at $2.11 billion and 65 cents per share, respectively. Earnings estimates for Arista for 2025 have increased 0.8% to $2.58 per share over the past 60 days and up 1% to $2.97 for 2026.

ANET Estimate Trend

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Image Source: Zacks Investment Research

Earnings Surprise History

The communications components provider delivered a four-quarter earnings surprise of 11.8%, on average, beating estimates on each occasion. In the last reported quarter, the company pulled off an earnings surprise of 10.2%.

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Earnings Whispers

Our proven model predicts an earnings beat for Arista for the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is perfectly the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

Arista currently has an ESP of +0.96% with a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Shaping the Upcoming Results

Arista holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. It is increasingly gaining market traction in 200- and 400-gig high-performance switching products. 

The company is witnessing solid demand trends among enterprise customers backed by its multi-domain modern software approach, which is built upon its unique and differentiating foundation, the single EOS (Extensible Operating System) and CloudVision stack. The versatility of Arista’s unified software stack across various use cases, including WAN routing and campus and data center infrastructure, sets it apart from other competitors in the industry. 

During the quarter, the company introduced innovative solutions to improve the performance and efficiency of AI (artificial intelligence)-driven enterprise products. These products boost operational ease through zero-touch operations, proactive monitoring and automated troubleshooting, facilitating seamless integration with existing systems. The new products include a compact fanless 12-port PoE switch for remote office and branch deployments, a ruggedized outdoor Wi-Fi 7 access point (the O-435) for harsh industrial and outdoor environments and an entry-level 2x2 tri-radio Wi-Fi 7 indoor access point (the C-400) for cost-effective service provider-managed branch environments.  

With these new upgrades, Arista continues to lead the way in optimizing AI networks, ensuring high-efficiency AI workload execution and supporting the ever-growing demands of modern AI infrastructures. As a result, the demand for Arista's solutions is expected to rise, potentially driving higher revenues.

Price Performance

Over the past year, Arista has gained 54.4% compared with the industry’s growth of 45.9%, outperforming peers like Hewlett Packard Enterprise Company (HPE - Free Report) and Cisco Systems, Inc. (CSCO - Free Report) . Hewlett Packard has gained 14.8% and Cisco soared 45.9% during this period. 

One-Year ANET Stock Price Performance

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Image Source: Zacks Investment Research

Key Valuation Metric

From a valuation standpoint, Arista appears to be trading at a premium compared to the industry and above its mean. Going by the price/earnings ratio, the company shares currently trade at 43.96 forward earnings, higher than 39.57 for the industry and the stock’s mean of 35.92. 

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Investment Considerations

Arista continues to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. It is well-positioned for growth in the data-driven cloud networking business with proactive platforms and predictive operations. It offers one of the broadest product lines of datacenter and campus Ethernet switches and routers in the industry. Arista provides routing and switching platforms with industry-leading capacity, low latency, port density and power efficiency.

In addition to high capacity and easy availability, its cloud networking solutions promise predictable performance and programmability, enabling integration with third-party applications for network management, automation and orchestration. The company also innovates in areas such as deep packet buffers, embedded optics and reversible cooling. With customers deploying transformative cloud networking solutions, the company has announced several additions to its multi-cloud and cloud-native software product family with CloudEOS Edge.

However, Arista is facing stiff competition in cloud networking solutions, particularly in the 10-gigabit Ethernet and above. Cisco is the dominant player in the data center networking market due to its diverse portfolio of IP-based networking products. Apart from Cisco, Arista faces significant competition from large network equipment and system vendors such as Brocade, Dell, Hewlett Packard, Extreme Networks and Mellanox Technologies.

End Note

With solid fundamentals and healthy revenue-generating potential driven by robust demand trends, Arista appears poised to benefit in the long run. Further, a strong emphasis on quality, diligent execution of operational plans and continuous portfolio enhancements are driving more value for customers. With improving earnings estimates, the stock is witnessing a positive investor perception. However, it looks a bit expensive relative to its valuation metrics.

Nevertheless, riding on a robust earnings surprise history and favorable Zacks Rank, it appears primed to record solid quarterly results in the ensuing earnings. Hence, investors are likely to profit if they bet on this high-flying stock now.


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