Arista Networks Is Outgrowing The Market Fourfold: What To Watch Next
Arista Networks (ANET) stock trades at 55.1 times the company’s earnings over the last twelve months, compared with 22.9 times for the S&P 500. A price that high acts as a bet that Arista’s profits will keep growing fast for years. Anyone stepping in now is also buying after a recent decline. The shares fell 11.3% in the month to October 16, while the S&P 500 rose 0.35%. So what does that price buy you?
Arista Networks Is Outgrowing The S&P 500 Fourfold
At that price, buyers get a business whose sales are expanding well beyond the broader market. Arista’s revenue grew an average of 26.2% a year over the three years to June 30, 2026, against 5.9% for the S&P 500.
Management noted during the fiscal Q2 2026 call that growth for the quarter came from its AI and enterprise customers. Anyone holding the stock is largely paying to see how long those customers keep spending.
A move like this matters most when Arista Networks is a large share of what you own. See how to protect a concentrated position.
Is Arista Networks Still Speeding Up?
The latest results indicate the pace is still accelerating. Arista’s revenue growth against a year earlier rose every quarter, climbing from 27.5% in fiscal Q3 2025 to 37.7% in fiscal Q2 2026.
Management expects more. During the fiscal Q2 2026 call, executives raised their forecast for 2026 revenue to about $12.6 billion, up from $11.5 billion in May. While that figure remains a forecast rather than a final result, it marked the company’s third increase of 2026.
The company has also expanded its client base. Management said its Etherlink switches for AI networks now have more than 100 customers in total. That is up from the initial four or five the company spoke of in 2024, meaning Arista now sells its AI switches to far more than the handful of buyers it started with.
What Could Keep Arista Networks From Shipping More?
A shortage of parts presents an ongoing headwind, and management does not expect it to end soon. When asked about supply during the fiscal Q2 2026 call, executives said the industry would have a two-year problem and did not expect to get out of it until 2028. They also stated that supply stays tight across the industry while component costs rise.
Arista’s response has been to buy ahead. Its multiyear purchase commitments rose about 2.7-fold, rising from $3.6 billion a year earlier to about $9.7 billion at the end of fiscal Q2 2026.
Stock buyers may be betting that those commitments will let Arista keep shipping while parts stay short. The downside risk is just as specific: a shortage that lasts until 2028 may cap how much Arista can ship, and the company may earn less on what it does ship as component costs rise.
Arista’s next report is expected on or around November 3, 2026. The primary metric to watch will be its fiscal Q3 2026 revenue against management’s guide of about $3.3 billion.
Is Too Much Of Your Wealth Riding On One Stock?
A move like this makes Arista Networks holders ask whether to add or step back. When one position grows into a large part of your wealth, a sharp fall can hurt your whole plan, and selling to spread the money out can bring a large tax bill. Glenn Caldicott, CIO of our Boston-based partner firm Empirical Asset Management, an SEC-registered investment adviser, offers a free 15-minute strategy review of ways to protect a concentrated position and unwind it with less tax.