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Should You Add ANET Stock to Your Portfolio Post Solid Q3 Earnings?
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Key Takeaways
Arista's Q3 revenues and earnings rose sharply, beating estimates on robust demand trends.
New cloud networking and AI/ML-driven innovations fueled growth across enterprise customers.
Margin strain and customer concentration risk continue to challenge Arista's profitability.
Arista Networks, Inc. (ANET - Free Report) reported strong third-quarter 2025 results, with revenues and adjusted earnings soaring year over year, driven by robust demand trends. Innovative product launches and steady customer additions backed by the company’s best-in-class portfolio strength led to top-line expansion, while steady margin improvement contributed to earnings growth. Both the bottom and the top lines beat the respective Zacks Consensus Estimate.
Portfolio Strength Aids Arista
Arista holds a leadership position in 100-gigabit Ethernet switches for the high-speed data center segment. The company is increasingly gaining market traction in 200- and 400-gig high-performance switching products. In addition, the company offers one of the broadest product lines of data center and campus Ethernet switches and routers in the industry. It provides routing and switching platforms with industry-leading capacity, low latency, port density and power efficiency. The company also innovates in areas such as deep packet buffers, embedded optics and reversible cooling.
Over the years, the company has introduced various products to meet the rising demands of AI/ML-driven network architectures. These innovations have enabled Arista to deliver a superior customer experience and increase customer engagement. Arista 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, has helped it to record steady top-line growth.
Image Source: Zacks Investment Research
Rapid Transition to Cloud Networking Buoys ANET Growth
Arista is benefiting from the expanding cloud networking market driven by the strong demand for scalable infrastructure. 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.
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. It has introduced cognitive Wi-Fi software that delivers intelligent application identification, automated troubleshooting and location services. The acquisition of Awake Security has expanded its cognitive campus portfolio with new platforms. These include the 750 Series modular chassis and the 720 Series 96-port fixed switch. Arista has announced unified edge innovations across wired and wireless networks for its Cognitive Campus Edge portfolio for Enterprise Workspaces and an enterprise-grade Software-as-a-Service offering for the flagship CloudVision platform.
Margin Woes Deter ANET
Despite the positives, Arista continues to derive a substantial portion of its revenues from a limited number of large customers, leading to high customer concentration risk. In addition, efforts to develop new technologies and products that address emerging technological trends, evolving industry standards and changing end-customer needs increase operating costs. Moreover, the redesigning of products and their supply chain mechanism has eroded margins. The company is witnessing increased demand, but there are lingering supply bottlenecks for advanced products. As such, when Arista increases orders for these components and tries to build up inventory, it is blocking working capital.
Price Performance
Nevertheless, buoyed by a holistic growth model, Arista has surged 35.6% over the past year compared with the industry’s growth of 10.1%. It has also outperformed its peers like Hewlett Packard Enterprise Company (HPE - Free Report) and Cisco Systems, Inc. (CSCO - Free Report) . Hewlett Packard has gained 6.5% and Cisco soared 21.2% during this period.
One-Year ANET Stock Price Performance
Image Source: Zacks Investment Research
Estimate Revision Trend
Earnings estimates for Arista for 2025 and 2026 have moved up 1 cent each to $2.83 and $3.26 over the past seven days. The positive estimate revision depicts optimism about the stock’s growth potential.
Image Source: Zacks Investment Research
End Note
With healthy revenue-generating potential driven by robust demand trends, Arista appears poised for solid growth momentum. Further, a strong emphasis on quality, diligent execution of operational plans and continuous portfolio enhancements are driving more value for customers. Steady improvement in lead times and easing of supply-chain woes are major tailwinds. An uptrend in estimate revision further portrays positive investor sentiments.
However, margin woes amid high selling, general & administrative and R&D costs and elevated customer inventory levels weigh on its bottom line. With a Zacks Rank #3 (Hold), Arista appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Should You Add ANET Stock to Your Portfolio Post Solid Q3 Earnings?
Key Takeaways
Arista Networks, Inc. (ANET - Free Report) reported strong third-quarter 2025 results, with revenues and adjusted earnings soaring year over year, driven by robust demand trends. Innovative product launches and steady customer additions backed by the company’s best-in-class portfolio strength led to top-line expansion, while steady margin improvement contributed to earnings growth. Both the bottom and the top lines beat the respective Zacks Consensus Estimate.
Portfolio Strength Aids Arista
Arista holds a leadership position in 100-gigabit Ethernet switches for the high-speed data center segment. The company is increasingly gaining market traction in 200- and 400-gig high-performance switching products. In addition, the company offers one of the broadest product lines of data center and campus Ethernet switches and routers in the industry. It provides routing and switching platforms with industry-leading capacity, low latency, port density and power efficiency. The company also innovates in areas such as deep packet buffers, embedded optics and reversible cooling.
Over the years, the company has introduced various products to meet the rising demands of AI/ML-driven network architectures. These innovations have enabled Arista to deliver a superior customer experience and increase customer engagement. Arista 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, has helped it to record steady top-line growth.
Image Source: Zacks Investment Research
Rapid Transition to Cloud Networking Buoys ANET Growth
Arista is benefiting from the expanding cloud networking market driven by the strong demand for scalable infrastructure. 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.
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. It has introduced cognitive Wi-Fi software that delivers intelligent application identification, automated troubleshooting and location services. The acquisition of Awake Security has expanded its cognitive campus portfolio with new platforms. These include the 750 Series modular chassis and the 720 Series 96-port fixed switch. Arista has announced unified edge innovations across wired and wireless networks for its Cognitive Campus Edge portfolio for Enterprise Workspaces and an enterprise-grade Software-as-a-Service offering for the flagship CloudVision platform.
Margin Woes Deter ANET
Despite the positives, Arista continues to derive a substantial portion of its revenues from a limited number of large customers, leading to high customer concentration risk. In addition, efforts to develop new technologies and products that address emerging technological trends, evolving industry standards and changing end-customer needs increase operating costs. Moreover, the redesigning of products and their supply chain mechanism has eroded margins. The company is witnessing increased demand, but there are lingering supply bottlenecks for advanced products. As such, when Arista increases orders for these components and tries to build up inventory, it is blocking working capital.
Price Performance
Nevertheless, buoyed by a holistic growth model, Arista has surged 35.6% over the past year compared with the industry’s growth of 10.1%. It has also outperformed its peers like Hewlett Packard Enterprise Company (HPE - Free Report) and Cisco Systems, Inc. (CSCO - Free Report) . Hewlett Packard has gained 6.5% and Cisco soared 21.2% during this period.
One-Year ANET Stock Price Performance
Image Source: Zacks Investment Research
Estimate Revision Trend
Earnings estimates for Arista for 2025 and 2026 have moved up 1 cent each to $2.83 and $3.26 over the past seven days. The positive estimate revision depicts optimism about the stock’s growth potential.
Image Source: Zacks Investment Research
End Note
With healthy revenue-generating potential driven by robust demand trends, Arista appears poised for solid growth momentum. Further, a strong emphasis on quality, diligent execution of operational plans and continuous portfolio enhancements are driving more value for customers. Steady improvement in lead times and easing of supply-chain woes are major tailwinds. An uptrend in estimate revision further portrays positive investor sentiments.
However, margin woes amid high selling, general & administrative and R&D costs and elevated customer inventory levels weigh on its bottom line. With a Zacks Rank #3 (Hold), Arista appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.