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Arista's Cash Flow Momentum Builds: How Sustainable is it?
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Key Takeaways
Arista Networks' operating cash flow rose to $2.78 billion in the first half of 2026.
Free cash flow surged about 50% as revenue grew 37.7% and margins expanded to 49.9%.
Arista Networks' deferred revenues rose to $6.9 billion, supporting cash flow, but volatility remains.
Arista Networks Inc. (ANET - Free Report) is witnessing strong cash flow growth in recent quarters. During the first six months of 2026, operating cash flow increased to $2.78 billion from $1.84 billion in the same period of 2025. Free cash flow was approximately $2.69 billion, surging around 50% year over year.
The company’s strong second quarter 2026 results provided a solid foundation for cash generation. Revenues reached $3.04 billion, increasing 37.7% year over year, and profitability remains strong. Non-GAAP operating income was $1.51 billion, with the non-GAAP operating margin expanding to 49.9% from 48.8%. Despite additional investment in liquid cooling, high-Radix switching and AI optimization software are a major tailwind.
Arista's total deferred revenue balance increased to approximately $6.9 billion from $6.2 billion sequentially. These upfront cash payments from customers are a major driver of cash flow. The company has secured multiyear agreements with strategic suppliers, qualified new vendors, expanded manufacturing capacity and improved delivery terms. Its memory supply is secured for 2026. Supply-Chain improvements could support cash conversion.
Strong revenue growth, backed by continuous AI infrastructure spending, and improvements in profitability are expected to drive cash flow in upcoming quarters. However, investors should note that management has stated inventory fluctuations and deferred revenue volatility could affect operating cash flow.
Other Tech Firms With Solid Cash Flow Improvement
Jabil, Inc. (JBL - Free Report) continues to generate healthy free cash flow through disciplined execution and capital efficiency. Management now expects adjusted free cash flow of more than $1.4 billion in fiscal 2026, above its prior outlook, supported by higher profitability, expanding margins and efficient capital spending. Jabil’s strong cash generation enhances its financial flexibility for capacity expansion, shareholder returns and future growth investments. Net cash provided by operating activities totaled $535 million in the recent quarter.
For the six months ended June 30, 2026, Celestica, Inc. (CLS - Free Report) generated $767.2 million in cash from operating activities compared with $282.7 million in the prior-year period. That's an increase of approximately 171%. Higher cash earnings and favorable changes in working-capital requirements are driving Celestica’s cash flow. However, high capex is impacting free cash flow growth.
ANET’s Price Performance, Valuation & Estimates
Shares of Arista have gained 37.2% over the past year against the industry’s decline of 12.9%.
Image Source: Zacks Investment Research
From a valuation standpoint, Arista trades at a forward price-to-sales ratio of 16.97, above the industry average of 4.07.
Image Source: Zacks Investment Research
Earnings estimates for 2026 have increased 11.29% to $4.04 over the past 60 days, while the same for 2027 has also increased 13.7% to $4.98.
View the Zacks #1 Rank List
Image: Bigstock
Arista's Cash Flow Momentum Builds: How Sustainable is it?
Key Takeaways
Arista Networks Inc. (ANET - Free Report) is witnessing strong cash flow growth in recent quarters. During the first six months of 2026, operating cash flow increased to $2.78 billion from $1.84 billion in the same period of 2025. Free cash flow was approximately $2.69 billion, surging around 50% year over year.
The company’s strong second quarter 2026 results provided a solid foundation for cash generation. Revenues reached $3.04 billion, increasing 37.7% year over year, and profitability remains strong. Non-GAAP operating income was $1.51 billion, with the non-GAAP operating margin expanding to 49.9% from 48.8%. Despite additional investment in liquid cooling, high-Radix switching and AI optimization software are a major tailwind.
Arista's total deferred revenue balance increased to approximately $6.9 billion from $6.2 billion sequentially. These upfront cash payments from customers are a major driver of cash flow. The company has secured multiyear agreements with strategic suppliers, qualified new vendors, expanded manufacturing capacity and improved delivery terms. Its memory supply is secured for 2026. Supply-Chain improvements could support cash conversion.
Strong revenue growth, backed by continuous AI infrastructure spending, and improvements in profitability are expected to drive cash flow in upcoming quarters. However, investors should note that management has stated inventory fluctuations and deferred revenue volatility could affect operating cash flow.
Other Tech Firms With Solid Cash Flow Improvement
Jabil, Inc. (JBL - Free Report) continues to generate healthy free cash flow through disciplined execution and capital efficiency. Management now expects adjusted free cash flow of more than $1.4 billion in fiscal 2026, above its prior outlook, supported by higher profitability, expanding margins and efficient capital spending. Jabil’s strong cash generation enhances its financial flexibility for capacity expansion, shareholder returns and future growth investments. Net cash provided by operating activities totaled $535 million in the recent quarter.
For the six months ended June 30, 2026, Celestica, Inc. (CLS - Free Report) generated $767.2 million in cash from operating activities compared with $282.7 million in the prior-year period. That's an increase of approximately 171%. Higher cash earnings and favorable changes in working-capital requirements are driving Celestica’s cash flow. However, high capex is impacting free cash flow growth.
ANET’s Price Performance, Valuation & Estimates
Shares of Arista have gained 37.2% over the past year against the industry’s decline of 12.9%.
Image Source: Zacks Investment Research
From a valuation standpoint, Arista trades at a forward price-to-sales ratio of 16.97, above the industry average of 4.07.
Image Source: Zacks Investment Research
Earnings estimates for 2026 have increased 11.29% to $4.04 over the past 60 days, while the same for 2027 has also increased 13.7% to $4.98.
Image Source: Zacks Investment Research
Arista currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.