Arista Networks (ANET) Stock Jumps 10% on Q4 Beat and Raised 2026 Guidance

TLDR

• Arista Networks (ANET) shares jumped 10% after posting Q4 earnings of $0.82 per share, beating estimates of $0.76, with revenue of $2.49 billion versus expected $2.38 billion.
• The company reported 28.9% year-over-year revenue growth and achieved over $1 billion in quarterly net income for the first time, with full-year 2025 revenue reaching $9 billion.
• Management doubled its AI networking revenue target for 2026 to $3.25 billion and guided Q1 2026 revenue to $2.6 billion, above analyst expectations of $2.46 billion.
• Arista raised its full-year 2026 revenue outlook to approximately $11.25 billion, representing 25% growth, driven by strong demand across cloud, AI, and campus networking.
• The company warned of worsening memory supply constraints and indicated a one-time price increase on memory-intensive products may be necessary in 2026.

Arista Networks delivered a strong finish to fiscal 2025. The networking equipment maker posted fourth-quarter earnings that sailed past Wall Street expectations and issued guidance that has investors buzzing.

The company reported adjusted earnings of $0.82 per share for Q4. That beat analyst estimates of $0.76 per share handily.

Revenue hit $2.49 billion, crushing the consensus of $2.38 billion. The 28.9% year-over-year growth shows the company’s momentum isn’t slowing down anytime soon.

Arista Networks, Inc., ANET

Shares responded by jumping roughly 10% in after-hours trading. The market clearly liked what it saw.

CEO Jayshree Ullal called 2025 a “defining year” for the company. Full-year revenue reached $9 billion, up 28.6% from 2024.

Record Profitability Marks Milestone Quarter

The company hit a notable milestone in Q4. Arista surpassed $1 billion in quarterly net income for the first time ever.

Non-GAAP net income climbed to $1.05 billion, or $0.82 per diluted share. That’s a serious jump from $801 million a year earlier.

Gross margins came in at 63.4% on a non-GAAP basis. That’s slightly down from 64.2% a year ago, which CFO Chantelle Breithaupt attributed to a higher mix of sales to large cloud and AI customers.

Operating margin hit 47.5% for the quarter. The company paired nearly 29% revenue growth with over $1 billion in net income, demonstrating strong operating leverage.

Full-year 2025 saw non-GAAP gross margin of 64.6% and operating margin of 48.2%. Those are the kinds of numbers that make investors sit up and take notice.

AI Networking Revenue Outlook Doubles

Arista’s AI business is taking off faster than expected. The company now expects to double its AI networking revenue from 2025 to 2026.

Management raised its AI networking revenue target to $3.25 billion for 2026. That’s up from a previous goal of $2.75 billion.

Ullal said Arista gained more than 100 cumulative customers for its Etherlink AI products. The company is co-designing AI rack systems where 1.6T switching is expected to emerge during 2026.

The networking giant shipped a cumulative 150 million ports by the end of Q4. International growth in Asia and Europe rose over 40% annually.

For Q1 2026, Arista guided revenue to approximately $2.6 billion. That’s well above analyst expectations of $2.46 billion.

Customer Mix and Revenue Breakdown

Arista’s customer base showed interesting dynamics in 2025. Cloud and AI titans accounted for 48% of revenue, while enterprise and financials made up 32%.

AI and specialty providers, including Apple and Oracle, contributed 20% of revenue. The company had two customers above 10% of total revenue in 2025, representing 16% and 26% respectively.

Ullal expects a more diversified customer base in 2026. The company may add one or two additional 10% customers, though she cautioned that timing depends on acceptance criteria and shipment schedules.

Campus and routing business contributed approximately 18% of revenue. Software and services, including subscriptions like A-Care and CloudVision, made up 17% of revenue.

The company added about 350 CloudVision customers in the quarter. Arista has deployed 3,000 CloudVision customers over the past decade.

Supply Chain Pressures Emerge

Not everything is smooth sailing. Arista warned of worsening supply chain constraints, particularly around memory.

Ullal said memory pricing deteriorated entering 2026. The company indicated it may implement a one-time price increase on selected memory-intensive products.

Purchase commitments jumped to $6.8 billion from $4.8 billion in the prior quarter. Ullal said current commitments are “not enough” and that the company needs more memory supply.

Inventory stood at $2.25 billion with turns of 1.5x. Days sales outstanding rose to 70 days from 59 days in Q3.

Total deferred revenue increased to $5.4 billion from $4.7 billion. Product deferred revenue grew by approximately $469 million versus the prior quarter.

Management emphasized that deferred revenue remains lumpy due to customer acceptance timing for large AI deployments. Acceptance timelines can range from six months to 12-18 months.

For full-year 2026, Arista raised its revenue outlook to approximately $11.25 billion, representing 25% growth. The company expects non-GAAP gross margin of 62% to 64% and operating margin of approximately 46%, with Q1 2026 operating margin guided to about 46% and an effective tax rate of roughly 21.5%.

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