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Arista vs. Nokia: Which Networking Stock is the Better Buy Right Now?
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Key Takeaways
Arista raised its 2026 AI networking revenue target to $3.5 billion amid growing deployments.
Nokia reported 49% AI & Cloud net sales growth and about 1 billion euro of related orders in Q1.
ANET and NOK are benefiting from AI networking demand while expanding infrastructure offerings.
Arista Networks, Inc. (ANET - Free Report) and Nokia Corporation (NOK - Free Report) are both major players in networking infrastructure. Arista Networks focuses on high-performance Ethernet networking for AI and cloud data centers, while Nokia provides telecom, mobile, fixed and cloud networking solutions globally.
The networking industry is being reshaped by several secular trends. AI infrastructure buildout, expansion of cloud computing, hyperscaler data center investments, rising data traffic owing to growing usage of AI applications, and telecom network modernization are the primary factors driving this industry. Owing to these factors, the networking market is expected to grow at a substantial rate in the upcoming years.
With deep industry expertise, both ANET and NOK are strategically positioned in this growing market. Let us analyze in depth the competitive strengths and weaknesses of the companies to understand who is in a better position to maximize gains from the emerging market trends.
The Case for Arista
Arista is witnessing strong growth in AI-related revenues. The company's Ethernet-based AI fabrics are gaining traction as customers increasingly move away from proprietary networking architectures. It has deployed more than 100 customer networks running 800G Ethernet. ANET expects 1.6T networking adoption from the beginning of 2027. It is benefiting from growing AI training and inference deployments. Backed by solid momentum, the company raised its 2026 AI networking revenue target to $3.5 billion, up from the prior $3.25 billion target, implying more than 100% year-over-year growth.
Neo cloud and sovereign AI customers are another expanding user base for Arista. These customers often lack in-house networking expertise and rely heavily on Arista's hardware, EOS software, design services and automation tools. Arista’s competitive strength is in scale-out AI networking, which connects thousands of GPUs and AI accelerators across clusters. Scale across networking, which implies connecting AI clusters across multiple data centers and locations, is another emerging opportunity for the company. Per a Precedence Research report, the AI in networks market size is projected to grow from $15.28 billion in 2025 to $192.42 billion in 2034, with a compound annual growth rate of 32.51%
Beyond AI, data center and campus networking remain major growth drivers for the company. The company continues to gain from increasing adoption of Arista's Cognitive Campus architecture, CloudVision network management platform, campus switching solutions and next-generation WiFi 7 products. Management has reiterated its target of generating approximately $1.25 billion in campus networking revenues in 2026.
It has been benefiting from robust cash flow generation, supported by strong demand for its cloud and AI networking solutions. In the first quarter of 2026, Arista generated operating cash flow of $1.69 billion, a substantial increase from $641.7 million reported in the year-ago quarter. This improvement was primarily driven by higher profit, strong growth in the deferred revenues and efficient working capital management.
Arista’s strong liquidity position is a major advantage. Its debt-to-capital ratio is 0.0% while its current ratio stands at 2.83. A current ratio of more than unity suggests that the company is well-positioned to fulfill its short-term debt obligations.
The Case for Nokia
AI and cloud networking are becoming Nokia’s most important growth engine. Net sales from AI & Cloud customers surged 49% year over year during the first quarter of 2026. The company booked approximately €1 billion of AI & Cloud orders during the quarter. NOK raised its estimate for the AI & Cloud market CAGR from 16% to 27% for 2025-2028, reflecting accelerating demand. In the optical networking vertical, Nokia continues to win AI data-center networking opportunities. The company is also expanding its manufacturing capacities to meet the growing demand.
However, it is to be noted that despite the strong growth, only 8% of the total net sales came from AI and cloud in the first quarter. In this market, Nokia faces competition from major players such as Arista and Cisco. To capture the AI networking demand, the company is increasing investments in optical manufacturing capacity and network infrastructure expansion. The company expects capital expenditures of €900 million to €1 billion in 2026. This growing capex could limit near-term margin expansion.
The legacy telecommunication business still accounts for 73% of total net sales. Revenues from this customer group declined 2% year over year in the first quarter on a constant-currency basis. Weakness in the consumer-premise fiber products is also impacting the top-line growth. Moreover, Nokia faces fierce competition from Ericsson (ERIC - Free Report) across mobile network infrastructure, radio access networks (RAN), core networks and 5G deployments. Ericsson boasts a comprehensive portfolio of 60,000 granted patents. A highly-skilled team makes this possible while the close collaboration with customers ensures quick uptake, driving sustainable growth. Around 50% of the world’s mobile 5G traffic runs on Ericsson’s radio networks.
Nokia continues to incur significant restructuring expenses. During the first quarter, the company reported €156 million of restructuring and associated charges. These expenses will continue to impact profitability and cash flow in the near term. As of the first quarter of 2026, Nokia’s debt-to-capital ratio stands at 10.1%, while its current ratio stands at 1.57.
How Do Zacks Estimates Compare for ANET & NOK?
The Zacks Consensus Estimate for ANET’s 2026 sales implies year-over-year growth of 28.44%, while that for EPS suggests growth of 21.81%. The EPS estimate has been trending northward (up 2.83%) over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NOK’s 2026 sales implies year-over-year growth of 7.44%, while that for EPS suggests an increase of 21.21%. The EPS estimate has remained unchanged over the past 60 days.
Image Source: Zacks Investment Research
Price Performance & Valuation of ANET & NOK
Over the past year, ANET has gained 61.6%, while NOK has gained 168.7% over the same period.
Image Source: Zacks Investment Research
Nokia looks more attractive than Arista from a valuation standpoint. Going by the price/earnings ratio, NOK’s shares currently trade at 33.26 forward earnings, lower than 39.48 for ANET.
Both Nokia and Arista are taking several initiatives to drive revenue growth and improve profitability in the upcoming quarters. However, it is to be considered that Arista remains in a better position to capitalize on the AI infrastructure boom worldwide, while Nokia is heavily exposed to a telecom market that is growing much slower than AI infrastructure. Gaining a competitive edge in the AI networking space against giants like Arista, Cisco and HPE seems like an uphill task for NOK at the moment. Moreover, it is also facing stiff competition in the legacy telecom business. AI infrastructure spending, hyperscaler capex, high-speed Ethernet adoption, enterprise network modernization, and a software-driven networking approach are major growth drivers for Arista. Owing to these factors, ANET is a better investment option at the moment.
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Arista vs. Nokia: Which Networking Stock is the Better Buy Right Now?
Key Takeaways
Arista Networks, Inc. (ANET - Free Report) and Nokia Corporation (NOK - Free Report) are both major players in networking infrastructure. Arista Networks focuses on high-performance Ethernet networking for AI and cloud data centers, while Nokia provides telecom, mobile, fixed and cloud networking solutions globally.
The networking industry is being reshaped by several secular trends. AI infrastructure buildout, expansion of cloud computing, hyperscaler data center investments, rising data traffic owing to growing usage of AI applications, and telecom network modernization are the primary factors driving this industry. Owing to these factors, the networking market is expected to grow at a substantial rate in the upcoming years.
With deep industry expertise, both ANET and NOK are strategically positioned in this growing market. Let us analyze in depth the competitive strengths and weaknesses of the companies to understand who is in a better position to maximize gains from the emerging market trends.
The Case for Arista
Arista is witnessing strong growth in AI-related revenues. The company's Ethernet-based AI fabrics are gaining traction as customers increasingly move away from proprietary networking architectures. It has deployed more than 100 customer networks running 800G Ethernet. ANET expects 1.6T networking adoption from the beginning of 2027. It is benefiting from growing AI training and inference deployments. Backed by solid momentum, the company raised its 2026 AI networking revenue target to $3.5 billion, up from the prior $3.25 billion target, implying more than 100% year-over-year growth.
Neo cloud and sovereign AI customers are another expanding user base for Arista. These customers often lack in-house networking expertise and rely heavily on Arista's hardware, EOS software, design services and automation tools. Arista’s competitive strength is in scale-out AI networking, which connects thousands of GPUs and AI accelerators across clusters. Scale across networking, which implies connecting AI clusters across multiple data centers and locations, is another emerging opportunity for the company. Per a Precedence Research report, the AI in networks market size is projected to grow from $15.28 billion in 2025 to $192.42 billion in 2034, with a compound annual growth rate of 32.51%
Beyond AI, data center and campus networking remain major growth drivers for the company. The company continues to gain from increasing adoption of Arista's Cognitive Campus architecture, CloudVision network management platform, campus switching solutions and next-generation WiFi 7 products. Management has reiterated its target of generating approximately $1.25 billion in campus networking revenues in 2026.
It has been benefiting from robust cash flow generation, supported by strong demand for its cloud and AI networking solutions. In the first quarter of 2026, Arista generated operating cash flow of $1.69 billion, a substantial increase from $641.7 million reported in the year-ago quarter. This improvement was primarily driven by higher profit, strong growth in the deferred revenues and efficient working capital management.
Arista’s strong liquidity position is a major advantage. Its debt-to-capital ratio is 0.0% while its current ratio stands at 2.83. A current ratio of more than unity suggests that the company is well-positioned to fulfill its short-term debt obligations.
The Case for Nokia
AI and cloud networking are becoming Nokia’s most important growth engine. Net sales from AI & Cloud customers surged 49% year over year during the first quarter of 2026. The company booked approximately €1 billion of AI & Cloud orders during the quarter. NOK raised its estimate for the AI & Cloud market CAGR from 16% to 27% for 2025-2028, reflecting accelerating demand. In the optical networking vertical, Nokia continues to win AI data-center networking opportunities. The company is also expanding its manufacturing capacities to meet the growing demand.
However, it is to be noted that despite the strong growth, only 8% of the total net sales came from AI and cloud in the first quarter. In this market, Nokia faces competition from major players such as Arista and Cisco. To capture the AI networking demand, the company is increasing investments in optical manufacturing capacity and network infrastructure expansion. The company expects capital expenditures of €900 million to €1 billion in 2026. This growing capex could limit near-term margin expansion.
The legacy telecommunication business still accounts for 73% of total net sales. Revenues from this customer group declined 2% year over year in the first quarter on a constant-currency basis. Weakness in the consumer-premise fiber products is also impacting the top-line growth. Moreover, Nokia faces fierce competition from Ericsson (ERIC - Free Report) across mobile network infrastructure, radio access networks (RAN), core networks and 5G deployments. Ericsson boasts a comprehensive portfolio of 60,000 granted patents. A highly-skilled team makes this possible while the close collaboration with customers ensures quick uptake, driving sustainable growth. Around 50% of the world’s mobile 5G traffic runs on Ericsson’s radio networks.
Nokia continues to incur significant restructuring expenses. During the first quarter, the company reported €156 million of restructuring and associated charges. These expenses will continue to impact profitability and cash flow in the near term. As of the first quarter of 2026, Nokia’s debt-to-capital ratio stands at 10.1%, while its current ratio stands at 1.57.
How Do Zacks Estimates Compare for ANET & NOK?
The Zacks Consensus Estimate for ANET’s 2026 sales implies year-over-year growth of 28.44%, while that for EPS suggests growth of 21.81%. The EPS estimate has been trending northward (up 2.83%) over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NOK’s 2026 sales implies year-over-year growth of 7.44%, while that for EPS suggests an increase of 21.21%. The EPS estimate has remained unchanged over the past 60 days.
Image Source: Zacks Investment Research
Price Performance & Valuation of ANET & NOK
Over the past year, ANET has gained 61.6%, while NOK has gained 168.7% over the same period.
Image Source: Zacks Investment Research
Nokia looks more attractive than Arista from a valuation standpoint. Going by the price/earnings ratio, NOK’s shares currently trade at 33.26 forward earnings, lower than 39.48 for ANET.
Image Source: Zacks Investment Research
ANET or NOK: Which is a Better Pick?
Arista and Nokia carry a Zacks Rank 3 (Hold) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Both Nokia and Arista are taking several initiatives to drive revenue growth and improve profitability in the upcoming quarters. However, it is to be considered that Arista remains in a better position to capitalize on the AI infrastructure boom worldwide, while Nokia is heavily exposed to a telecom market that is growing much slower than AI infrastructure. Gaining a competitive edge in the AI networking space against giants like Arista, Cisco and HPE seems like an uphill task for NOK at the moment. Moreover, it is also facing stiff competition in the legacy telecom business. AI infrastructure spending, hyperscaler capex, high-speed Ethernet adoption, enterprise network modernization, and a software-driven networking approach are major growth drivers for Arista. Owing to these factors, ANET is a better investment option at the moment.