Arista Networks Rides AI Wave with Strong Q2 Results and Ethernet Push for AI Infrastructure

Arista pushes Ethernet for AI, downplays effect of tariffs

Thanks to LLMs, CEO expects to see networks 'back-end and front-end converge' Arista Networks is expecting the AI datacenter industry to be dominated by open standards such as Ethernet or UALink in the near future, and has upped financial forecasts on the back of those hopes. The California-based networking biz seems to have lost its angst over the potential effects of tariffs that saw its share price take a dip earlier this year, due to warnings that profits could be dented. Instead, chief exec Jayshree Ullal said that Arista's Q2 ended June 30 "was influenced by efficient supply chain and inventory benefit with a nonmaterial tariff impact in the quarter." She talked of a "conviction" that hyperscale and enterprise customers will buy more kit, and while Arista began the calendar year with a pragmatic estimate of 17 percent growth, it has raised this to 25 percent, targeting $8.75 billion in revenue. The rise is "due to our increased momentum that we are experiencing across AI, cloud and enterprise sectors." This could be premature, of course, as US President Donald Trump has signalled that his administration may unveil new tariffs on imported semiconductors next week, which would bump up the cost of many components used in IT kit such as Arista's network switches. Arista's strategy is made up of both a scale-out front-end and a scale-up, scale-out combination for back-end networks, said Ullal. Scale-up back-end networks consist of high-bandwidth, low-latency interconnects that link multiple accelerators within a single rack, and while this is predominantly constructed with NVlink today, "we do expect a move to open standards such as Ethernet or UALink in the next few years," she said. Similarly, scale-out back-end networks connecting accelerators across racks are often based on InfiniBand, but are rapidly migrating to Ethernet based on the Ultra Ethernet Consortium specification released in June, she claimed. This would benefit Arista, naturally, with Ullal promoting its 20-plus strong Etherlink portfolio. "We think that Ethernet as a transport protocol is going to favor Arista and Broadcom very much," she said. "As large language models continue to expand into distributed training and inference use cases, we expect to see the back-end and the front-end converge," Ulla added. "This will make it increasingly difficult to parse the back-end and the front-end precisely in the future, but we do expect an aggregate AI networking revenue to be ahead of $1.5 billion in 2025 and growing in many years to come." This is also the first time Arista has posted results since it bought the VeloCloud software-defined WAN business from Broadcom last month, but CFO & Senior VP Chantelle Breithaupt said it was expecting a minimal contribution from the VeloCloud acquisition during financial year 2025. Aritsa posted revenue of $2.2 billion, an increase of 30.4 percent compared with the same period last year, and 10 percent up on the first quarter of 2025, amid gains across all its product sectors. However, operating expenses and R&D spending were both up in the last quarter, reflecting higher new product introduction costs in the period. For the next quarter, Breithaupt forecasts a modest revenue increase to approximately $2.25 billion. ®

Arista Networks beats expectations and its profits rise, sending its stock higher - SiliconANGLE

Arista Networks beats expectations and its profits rise, sending its stock higher Shares of Arista Networks Inc. were flying high in late trading today after the company posted strong second-quarter results, beating expectations on earnings and revenue and seeing its adjusted operating income cross the $1 billion milestone for the first time. The company reported earnings before certain costs such as stock compensation of 65 cents per share, easing past the analyst consensus estimate of 59 cents. Revenue for the period came to exactly $2 billion, up 10% from a year earlier and surpassing the Street's forecast of $1.96 billion by a fairy comfortable margin. The results meant Arista was able to grow its bottom line, and it reported a net profit of $813.8 million in the quarter, up from $655.4 million one year earlier. Arista's business has been booming ever since the beginning of the artificial intelligence craze that kicked off with the emergence of ChatGPT in late 2022. The company benefits because it sells essential data center gear, such as premium network switches for cloud computing providers and high-performance routers and leaf and spine switches for data center operators. These components are in high demand, because AI data centers rely on enormous clusters of graphics processing units that work in tandem with one another, hence the need for the rapid data center communications infrastructure that Arista provides. Arista boasts an impressive customer base, serving major players in the AI industry such as Meta Platforms Inc., as well as stock exchange operators such as Deutsche Börse and the world's top racing league, Formula One. Arista Chairperson and Chief Executive Jayshree Ullal (pictured) said her company is well-positioned to carry on its momentum in data-driven AI networking. "Our customers are decisively standardizing on our best-of-breed platform to bring transformational innovation and impact to their technology endeavors," she added. Her confidence was backed up by strong guidance for the current quarter, with Arista targeting revenue of approximately $2.25 billion, well ahead of Wall Street's target of $2.12 billion. Arista was fairly busy in the prior quarter, swooping to make a key acquisition in the shape of VeloCloud SD-WAN from Broadcom Inc. in a deal that was reportedly worth around $1 billion. VeloCloud was one of the pioneers of software-defined wide-area networks, and sells industry-leading cloud-based SD-WAN products with integrated security, which are expected to complement Arista's high-end 7000 Series routers that run the Cloud EOS operating system. Most important, VeloCloud fills a gap in Arista's product portfolio, so it can now offer end-to-end networking solutions spanning high-end switches for data centers to Wi-Fi and now SD-WAN. Also in June, Arista announced that it had hired former Fastly Inc. CEO Todd Nightingale as its new President and Chief Operating Officer. He joins a deep bench of talented executives at Arista that includes Ken Duda, Mark Foss, John McCool and Ullal. In particular, Nightingale's prior experience at Meraki, an early cloud networking leader that was later acquired by Cisco Systems Inc., should be invaluable to the company as it looks to expand into new markets. Arista's stock has had a wild ride of late. With the announcement of U.S. President Donald Trump's "Liberation Day" tariffs in April, it fell by as much as 46%, only to rebound quickly, emerging as one of the biggest gainers on the S&P 500 in July. The stock jumped again, up more than 12% in extended trading on the back of today's results, and is now up just over 6% in the year to date.

Arista Networks beats the Street's expectations and its profits rise, sending its stock highe

Arista Networks beats the Street's expectations and its profits rise, sending its stock highe Shares of Arista Networks Inc. were flying high in late trading today after the company posted strong second-quarter results, beating expectations on earnings and revenue and seeing its adjusted operating income cross the $1 billion milestone for the first time. The company reported earnings before certain costs such as stock compensation of 65 cents per share, easing past the analyst consensus estimate of 59 cents. Revenue for the period came to exactly $2 billion, up 10% from a year earlier and surpassing the Street's forecast of $1.96 billion by a fairy comfortable margin. The results meant Arista was able to grow its bottom line, and it reported a net profit of $813.8 million in the quarter, up from $655.4 million one year earlier. Arista's business has been booming ever since the beginning of the artificial intelligence craze that kicked off with the emergence of ChatGPT in late 2022. The company benefits because it sells essential data center gear, such as premium network switches for cloud computing providers and high-performance routers and leaf and spine switches for data center operators. These components are in high demand, because AI data centers rely on enormous clusters of graphics processing units that work in tandem with one another, hence the need for the rapid data center communications infrastructure that Arista provides. Arista boasts an impressive customer base, serving major players in the AI industry such as Meta Platforms Inc., as well as stock exchange operators such as Deutsche Börse and the world's top racing league, Formula One. Arista Chairperson and Chief Executive Jayshree Ullal (pictured) said her company is well positioned to carry on its momentum in data-driven AI networking. "Our customers are decisively standardizing on our best of breed platform to bring transformational innovation and impact to their technology endeavors," she added. Her confidence was backed up by strong guidance for the current quarter, with Arista targeting revenue of approximately $2.25 billion, well ahead of Wall Street's target of $2.12 billion. Arista was fairly busy in the prior quarter, swooping to make a key acquisition in the shape of VeloCloud SD-WAN from Broadcom Inc. in a deal that was reportedly worth around $1 billion. VeloCloud was one of the pioneers of software-defined wide-area networks, and sells industry-leading cloud-based SD-WAN products with integrated security, which are expected to complement Arista's high-end 7000 Series routers that run the Cloud EOS operating system. Most importantly, VeloCloud fills a gap in Arista's product portfolio, so it can now offer end-to-end networking solutions spanning high-end switches for data centers to Wi-Fi and now SD-WAN. Also in June, Arista announced that it had hired former Fastly Inc. CEO Todd Nightingale as its new President and Chief Operating Officer. He joins a deep bench of talented executives at Arista that includes Ken Duda, Mark Foss, John McCool and Ullal. In particular, Nightingale's prior experience at Meraki, an early cloud networking leader that was later acquired by Cisco Systems Inc., should be invaluable to the company as it looks to expand into new markets. Arista's stock has had a wild ride of late. With the announcement of U.S. President Donald Trump's "Liberation Day" tariffs in April, it fell by as much as 46%, only to quickly rebound, emerging as one of the biggest gainers on the S&P 500 in July. The stock jumped again, up more than 12% in extended trading on the back of today's results, and is now up just over 6% in the year to date.

Why Arista Networks Stock Is Hopping Today

Growth stocks cost a lot. They can also go up a lot when they deliver on promised growth. Artificial intelligence (AI)-focused computer networking equipment manufacturer Arista Networks (ANET 17.07%) stock soared 15.7% through 10:10 a.m. Wednesday after the company beat soundly on earnings last night. Heading into the company's Q2 report, analysts forecast Arista would earn $0.65 per share, adjusted for one-time items, on $2.1 billion in sales. In fact, Arista earned $0.73 per share and its sales were $2.2 billion. Arista's Q2 earnings Revenue for the hardware maker surged 30% year over year, and gross profit margin improved about 30 basis points, to 65.2%. Adjusted earnings were fabulous, but Arista's performance wasn't too shabby even when calculated according to generally accepted accounting principles (GAAP). Net profit for the quarter hit $0.70 per share, up 35%, as better margins on growing sales helped earnings growth to outpace sales growth. Free cash flow for the year to date is now $1.79 billion, better than reported net income, and up 20% year over year. Is Arista Networks stock a buy? Arista predicted revenue will continue growing past $2.2 billion in Q3, but did not give specific guidance for earnings. Wall Street analysts on average have the company pegged for a $2.81-per-share profit this year, up 24% from last year. If they're right about that, then Arista stock at 50 times earnings today is selling for a pretty aggressive 2 price/earnings-to-growth (PEG) ratio -- much more than I'd like to pay, and toward the high end of what seems to be normal in this current bull market. Still, Arista just proved in Q2 that it can grow faster than 24% -- to be precise, that it can grow 30% in a good quarter. Priced at a 1.7 PEG ratio based on 30% growth, Arista stock may still have room to run.

Arista (ANET) Q2 Revenue Jumps 30% | The Motley Fool

Arista Networks (ANET -1.83%), known for its advanced data center networking hardware and software, delivered standout results in its earnings report released on August 5, 2025. The company posted GAAP revenue of $2.20 billion, a 30.4% increase over Q2 2024, surpassing analyst estimates by $97.8 million. Non-GAAP earnings per share (EPS) reached $0.73, beating the consensus non-GAAP estimate of $0.65 by 12.4%. Growth in high-speed cloud and artificial intelligence (AI) networking demand powered these results, along with margin expansion and record-breaking operational income. The period was highlighted by innovation in enterprise networking products and strong operating discipline. Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report. Arista Networks builds high-speed network switches and software that power the cloud, data centers, and large enterprise networks. Its core innovation is the Extensible Operating System (EOS), enabling programmability, reliability, and flexibility for customers who demand best-in-class performance. The company is known for serving major cloud providers and increasing its reach across sectors like financial services, healthcare, and government. Recent priorities for Arista include deepening its capabilities in AI-driven networking, broadening its enterprise offerings, and differentiating through innovation. Key success factors are centered on advancing switching hardware, providing software-enabled network management, and maintaining operational efficiency to help customers scale rapidly and reliably. Its focus remains on technological leadership, customer diversification, and expanding strategic partnerships. Arista reported a 30.4% rise in GAAP revenue compared to Q2 2024, driven by strong demand from cloud and AI clients. Product revenue climbed 31.8% year-over-year. Non-GAAP gross margin was 65.6%. The company delivered its first-ever quarter with over $1 billion in non-GAAP operating income, while non-GAAP operating margin reached 48.8%, up from 46.5% in Q2 2024, rising 45.5% compared to year end 2024. Innovation remained a central theme, highlighted by the introduction of new AI-driven networking products. These included enterprise switching solutions, Wi-Fi 7 wireless access points, and advanced Wide Area Network (WAN) offerings. The acquisition of the VeloCloud SD-WAN product line broadened Arista's reach into branch and edge networking, complementing its flagship CloudEOS routing and high-performance 7000-series data center routers. The Etherlink series, a family of high-speed network switches purpose-built for AI clusters and large data centers, drew strong customer interest and contributed to rising deferred revenue as large-scale deployments ramped up. Operational efficiency also stood out, with cash flow from operations rising to $1.84 billion in the first half of FY2025. Research and development (R&D) spending increased to $296.5 million, supporting ongoing product leadership. The company boosted inventory to $2.06 billion to buffer against potential trade disruptions, while also authorizing a new $1.5 billion share repurchase plan. Management projects revenue of approximately $2.25 billion for Q3 FY2025, with targeted non-GAAP gross margin around 64% and non-GAAP operating margin about 47%. No updates were made to the full-year outlook, as the company maintains a cautious, quarter-by-quarter approach due to uncertainty surrounding escalating tariffs and continued geopolitical volatility. Investors should keep an eye on factors like customer concentration, as a few top cloud providers such as Meta and Microsoft remain outsized contributors to sales. Other focal points include the size of inventory builds, which could pose a risk if demand moderates, and ongoing shifts in AI networking technologies and competitive dynamics. Management emphasized the importance of innovation and operational discipline to mitigate such risks.