Margins Like Software, Growth Like Cloud: Could Arista Stock Double?

Arista Networks Inc. (NYSE: ANET) doesn’t sell GPUs. It doesn’t build AI models. And it rarely grabs headlines like Nvidia (NASDAQ: NVDA) or Microsoft (NASDAQ: MSFT). Yet Arista has quietly become one of the most influential technology companies in the market.

Strong H1 2025 results and higher guidance pushed the stock to record high. Shares are up 60% over the past year, compared with an 18% gain for the S&P 500. But the question is bigger: could Arista stock double from here—going from $150 to $300? To answer that, let’s look at revenues, margins, and valuation. And if you’re after upside with a smoother ride than betting on a single stock, the Trefis High Quality Portfolio. is worth a look. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P MidCap indexes—and has achieved returns exceeding 91% since its inception. Separately, see – Buy or Sell AVGO Stock at $360?

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1. Revenue Growth — Fuel From the Cloud

Arista is no longer just a networking vendor. It’s a growth engine tied directly to the AI buildout.

In Q2 2025, the company posted revenue of $2.205 billion, up 30% year-over-year, and above Wall Street expectations. Over the past three years, Arista’s top line has grown at an average pace of 32%. In fact, revenue has climbed from $6.3 billion to $8.0 billion in just the past twelve months.

What’s driving it? The AI buildout. Hyperscalers and cloud giants—from Microsoft to Meta—are pouring money into data centers. High-performance networking is the connective tissue of those builds, and Arista is supplying the backbone.

Importantly, this isn’t a one-off. Management lifted Q3 guidance to $2.25 billion, underscoring that momentum continues. For a hardware company, this growth curve looks a lot like software.

2. Margins — The Software Inside the Box

Revenue growth is exciting. But margins tell the real story.

In Q2, Arista delivered a 40% net margin—higher than Apple (NASDAQ: AAPL), Alphabet (NASDAQ: GOOG), or Microsoft. Think about that for a second. A networking hardware company with software-level profitability. The secret is EOS (Extensible Operating System), Arista’s cloud-native platform. EOS turns switches and routers into programmable, software-defined gear that hyperscalers can’t live without.

That’s why nearly 54% of revenue turns into operating cash flow, among the best in the S&P 500. Over the last year, Arista generated nearly $4.0 billion in operating cash flow and $3.3 billion in net income, while keeping $8.1 billion in cash on the balance sheet with zero debt.

These margins aren’t cyclical. They’re structural. And they provide a cushion during downturns, as seen in the swift rebounds after the 2020 COVID crash and the 2022 inflation-driven selloff. Read ANET Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

3. Valuation — Expensive, But Deserved

Here’s where the debate heats up. Arista trades at 58.5x earnings, 23.9x sales, and nearly 48x free cash flow. On paper, that looks steep—more in line with SaaS companies than with traditional networking peers.

But context matters. Entrenched relationships with hyperscalers, AI-driven demand, and a pristine balance sheet all justify a premium. If revenue compounds at 25–30% annually while margins stay above 40%, today’s valuation could normalize quickly.

The Path to $300

So, can Arista double?

At $150 per share, Arista’s $190 billion market cap reflects about $3.2 billion in net income at its current ~59× P/E multiple. For the stock to hit $300 (a $380 billion valuation), earnings would need to roughly double. At today’s lofty multiple, that means about $6–7 billion in profits, which translates to roughly $16 billion in revenue assuming 40% net margins—a target that aligns with long-term forecasts. However, if the multiple compresses to a more reasonable 40×, Arista would need closer to $9–10 billion in earnings, or $24 billion in revenue, to justify the same valuation. In other words, the path to $300 is plausible in the next 3-4 years, but hinges on both sustained growth and the market’s willingness to keep awarding the stock a premium multiple.

The risks are real—cloud spending could slow, AI priorities might shift, and multiples could compress. Our analysis indicates that a positive outcome is likely, albeit one that may require investors and customers to take a long-term view.

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