Is Arista Networks Stock As Expensive As It Looks?

Arista Networks (ANET) stock trades at 58.3 times its last twelve months of adjusted earnings, which add back stock-based pay after tax. That is a high price for one year of profit, and it is why the stock looks expensive. The picture changes against the profit forecast for this year and next. Here is that same share price, set against the profit Arista is forecast to earn in fiscal 2026 and fiscal 2027.

What You Pay For Arista’s Forecast Profit

On the analyst consensus forecast, Arista Networks stock trades at 49.2 times its expected fiscal 2026 earnings. On the forecast for fiscal 2027, the same price is 38.9 times earnings. Set beside those, the trailing multiple is 58.3 times.

Those multiples hold only if the profit arrives. The consensus forecast puts Arista’s earnings at $5.3 billion for fiscal 2026, against $4.4 billion over the last twelve months. For fiscal 2027, the forecast is $6.6 billion.

Has Arista Grown As Fast As Its Forecast?

Over the last twelve months, yes, a little faster. Arista grew sales 33% in that period. The consensus forecast has sales rising 30% from fiscal 2026 to fiscal 2027.

In the forecast, margins do not widen. The consensus forecast has earnings growing more slowly than sales in fiscal 2027. So the forecast already has Arista keeping a slightly smaller share of its sales as earnings. Operating margin is the share of sales left as operating profit. Arista’s operating margin of 43% over the last twelve months is its highest in ten years.

Management has raised its own outlook too. In the fiscal Q2 2026 call, it lifted its fiscal 2026 sales outlook to about $12.6 billion, its third raise of 2026. The consensus forecast of $12.7 billion for fiscal 2026 is close to that guidance. On sales, Arista needs a year like the one it is having, not a better one.

Arista Could Miss The Forecast On Supply Or Costs

Supply is the likelier place for the forecast to fall short. In the fiscal Q2 2026 call, management said industry-wide supply tightness and rising component costs persist. Management expects the industry to have a two-year problem, lasting until 2028. If the shortage limits shipments more than it has so far, fiscal 2027 sales would come in below the consensus forecast.

Arista is buying ahead to limit that shortfall. Its purchase commitments were $9.7 billion at the end of fiscal Q2 2026, almost triple the $3.6 billion of a year earlier.

The second risk is to earnings rather than sales. That risk comes from the rising component costs management described. Management said price increases would help only toward the end of 2026 or in 2027. If component costs rise faster than those price increases, fiscal 2027 earnings would fall below the consensus forecast.

If the consensus forecast arrives, the fiscal 2027 multiple is a reasonable guide to what you pay for Arista stock today. Sales look within reach, given the pace Arista is already delivering. The likeliest shortfall is in supply, followed by costs. If the shortage holds back shipments more than it does today, Arista becomes a riskier bet. You would then be paying today for earnings that may come later.

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