ANET · Arista Networks
Conviction · Medium · more likely to lead the S&P 500 over the next three months, by a modest margin
Wrong if: a daily close below $159
Note written ·
Price against the kill line
24.1% clear of its kill line on the 13 November 2026 close.
How to read this
The red mark is the price level of the published kill line: a close through it (a weekly close, on a weekly line) would prove the research note wrong on price. The dot is where the stock closed on 13 November 2026; a dot left of the mark has closed through its line.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close below $159.00, on record since 10 November 2026. The shares are down 2.2% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close below $159, under the $159.16 close of the 5 November 2026 AI hardware sell-off, which would erase the whole rebound and leave the shares under their 200-day average. A cut to the 38–40% 2027 growth target or fourth-quarter revenue below $3.9 billion would also break the case.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Technology
Quarter to 30 September 2026, filed 4 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 3,658
- Revenue, change on a year (%)
- +58.5
- Gross margin (%)
- 63.6
- Operating margin (%)
- 44.9
- Net cash, cash less debt ($M)
- 14,359
- Price to earnings (×)
- 52.5
- Enterprise value to sales (×)
- 19.8
- Enterprise value to operating income (×)
- 45.1
All filed numbers
What Arista Networks reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 3,658 | +58.5 | 63.6 | 44.9 |
| first filed | 3,036 | +37.7 | 62.9 | 45.4 |
| first filed | 2,709 | +35.1 | 61.9 | 42.7 |
| first filed | 2,488 | +28.9 | 62.9 | 41.5 |
| first filed | 2,308 | +27.5 | 64.6 | 42.4 |
| first filed | 2,205 | +30.4 | 65.2 | 44.7 |
| Pre-tax income ($M) | 1,916 |
| Net income ($M) four quarters: 4,752 | 1,560 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +0.1 |
| Operating cash flow ($M) | 5,239 |
| Capital spending ($M) | Not available |
| Free cash flow ($M) | Not available |
| Cash and short-term investments ($M) | 14,359 |
| Debt ($M) | None reported |
| Net cash, cash less debt ($M) no debt reported | 14,359 |
| Deferred revenue ($M) +45.9% on a year | 6,840 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 2,328 |
| Inventory ($M) | 3,210 |
| Shareholders' equity ($M) | 16,447 |
| Market value ($M) | 249,257 |
| Enterprise value, market value plus net debt ($M) no debt reported | 234,898 |
| Enterprise value to sales (×) no debt reported | 19.8 |
| Enterprise value to operating income (×) no debt reported | 45.1 |
| Price to earnings (×) | 52.5 |
| Price to book value (×) | 15.2 |
| Free-cash-flow yield (%) | Not available |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 1.0% of shares outstanding sold short, 2.2 days of average trading to cover, +2.3% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $450.3M |
| 12 monthsfrom | $0 | $1.6B |
The thesis
Arista Networks has guided 2027 revenue to about $18.5 billion, near 40% growth, and the evidence modestly favors the shares over the S&P 500 for the next three months. Nvidia's results on 17 November 2026 set the tone for AI hardware first. Arista's fourth-quarter report, estimated for mid-February 2027, settles whether revenue, deferred revenue and gross margin confirm the guide.
The shares closed at $206.63 on 12 November 2026, up from $159.16 on 5 November 2026, the low close of the AI hardware sell-off that followed the midterm vote. The gains came in two strong sessions. They rose 6.3% to $196.68 on 11 November 2026 after CoreWeave raised its outlook and reported a $132.5 billion backlog, according to GuruFocus. They rose another 5.1% on 12 November 2026, and MarketBeat counted 9.25 million shares traded by mid-session, about 17% above average.
The rating is medium because Arista has issued no new results or guidance since its 3 November 2026 report. The rally adds no new fact about the business. At the 12 November 2026 close, the shares price in most of the 2027 guide: MarketBeat put the price-to-earnings ratio at 52.91 on 11 November 2026. The consensus target of $240.24 (MarketBeat, 12 November 2026) still sits above the price.
Bullish and bearish views on Arista Networks, Inc.
The bull case on Arista Networks, Inc. (ANET), in brief: third-quarter revenue beat by nearly 10%. The bear case: deferred revenue fell for the first time since June 2023.
Bull case
- Third-quarter revenue beat by nearly 10%. Revenue was $3.66 billion, up 58.5% year on year, against a $3.33 billion consensus. Non-GAAP earnings per share (EPS) were $1.20 against $1.08 expected (Arista 8-K and XTB, 3 November 2026).
- The 2027 guide sits above expectations. Management guided 2027 growth of 38–40%, about $18.5 billion at the midpoint. Analysts had expected roughly $16.4 billion (earnings call, 3 November 2026).
- The fourth-quarter guide cleared consensus. Arista guided revenue of $3.9–$4.0 billion and non-GAAP EPS of $1.26–$1.30, against about $3.6 billion and $1.15 expected (Arista 8-K and XTB, 3 November 2026).
- AI networking is set to double. Management targets about $7 billion of AI networking revenue in 2027, against $3.5 billion in 2026. It targets campus revenue of about $2 billion, up from $1.25 billion (earnings call, 3 November 2026).
- Supply commitments are growing with demand. Purchase commitments reached $11.4 billion at 30 September 2026, up from $9.7 billion a quarter earlier (earnings call, 3 November 2026).
- AI-infrastructure customers are reporting growth. CoreWeave's raised outlook lifted AI data-center suppliers on 11 November 2026 (GuruFocus). Cisco reported fiscal first-quarter 2027 revenue of $18.5 billion, up 24%, on 12 November 2026, and cited demand for AI networking (Crypto Briefing).
- Analysts stayed positive after the report. MarketBeat counted 4 Strong Buy, 20 Buy and 1 Hold rating on 12 November 2026. UBS raised its target to $291, JPMorgan to $270 and Piper Sandler to $261 on 4 November 2026 (Benzinga), and Needham reiterated $260 the same day (MarketBeat).
Bear case
- Deferred revenue fell for the first time since June 2023. The balance was $6.84 billion at 30 September 2026, down $26 million in the quarter after 12 straight increases (Arista release; XTB, 3 November 2026). Management expects the year-end balance to exceed the prior year-end's but does not guide the figure.
- Some targets fell even after the beat. Barclays cut its target to $236 from $289 on 4 November 2026 (MarketBeat), and Weiss Ratings downgraded the shares to hold the same day.
- The largest holder keeps selling. SEC Form 4 filings show co-founder Andreas Bechtolsheim sold 267,892 shares on 30 October 2026, 260,000 on 5 November 2026 at an average of $165.45 and 260,000 on 6 November 2026 at an average of $168.96, all under a Rule 10b5-1 plan. MarketBeat counted 2,067,489 shares, worth $406.34 million, sold by insiders over the three months to 12 November 2026.
- The valuation leaves little room for a miss. MarketBeat put the price-to-earnings ratio at 52.91 and beta at 1.61 on 11 November 2026.
- Doubts about data-center spending have not gone away. Benzinga reported on 6 November 2026 that Oracle's AI troubles were raising questions about the data-center buildout, the spending that drives Arista's cloud orders.
Price setup
The shares closed at $206.63 on 12 November 2026, 5.0% below the 52-week intraday high of $217.41 set on 9 October 2026. They are up 3.9% over three months, against a $198.82 close on 14 August 2026. The 52-week closing low is $116.13, from 30 March 2026.
From adjusted daily closes, the 50-day moving average stands at $192.81 and the 200-day at $167.10 as of 12 November 2026. The 12 November 2026 close is above both. The $159.16 close of 5 November 2026 was below the 200-day average, and the rebound recovered it within two sessions. It moved back above the 50-day average on 11 November 2026.
The 9 October 2026 high is the next level the case turns on. CEO Jayshree Ullal sold 158,543 shares at about $217.09 on 8 October 2026 and 9 October 2026 under a 10b5-1 plan (SEC Form 4). Those sales sat right at that peak. A close back under the 50-day average would put the shares back inside the range of the early-November sell-off.
Catalysts ahead
- 17 November 2026: Nvidia fiscal third-quarter 2027 results, after the US market close. Arista fell with Nvidia and other AI hardware stocks on 5 November 2026 and rallied with them on 11 November 2026, so Nvidia's data-center outlook sets the tone for the group.
- 1 December 2026: CFO Chantelle Breithaupt presents at the UBS Global AI and Tech Conference. This is management's first public appearance since the report. Comments on deferred revenue, supply and the 2027 guide can move the shares.
- 10 December 2026: President and COO Todd Nightingale presents at the Barclays Global Technology Conference. This gives an update on cloud and AI customer demand ahead of the fourth-quarter report.
- ~16 February 2027 (est.): Arista fourth-quarter 2026 results. This tests the $3.9–$4.0 billion revenue guide and the 63–64% gross margin guide. It also shows whether deferred revenue resumes growth after its third-quarter decline.
What would change the view
A daily close below $159, under the $159.16 close of the 5 November 2026 AI hardware sell-off, which would erase the whole rebound and leave the shares under their 200-day average. A cut to the 38–40% 2027 growth target or fourth-quarter revenue below $3.9 billion would also break the case.
The risks this note tracks, each with what would confirm it:
- Deferred revenue keeps falling, which would undercut the 2027 growth guide. Confirmed by: a year-end deferred revenue balance below the $6.84 billion of 30 September 2026, or management narrowing the 38–40% 2027 growth target.
- Memory and component costs push gross margin below the long-term range. Confirmed by: Non-GAAP gross margin under 62%, or a first-quarter 2027 margin guide below the 63–64% guided for the fourth quarter.
- The post-midterm sell-off in AI hardware resumes on doubts about data-center buildouts. Confirmed by: a weak Nvidia data-center outlook on 17 November 2026, or another sector-wide decline like that of 5 November 2026.
- Delayed data-center capacity at large customers pushes networking orders later in 2027. Confirmed by: Microsoft, Meta or Alphabet signaling slower 2027 capital spending, or Arista citing customer deployment timing at its December conferences.
- Persistent insider selling weighs on the shares. Confirmed by: further Form 144 and Form 4 filings adding to the 2,067,489 shares MarketBeat counted as sold by insiders over the three months to 12 November 2026.
What it trades with
Arista trades with AI hardware. On 5 November 2026 it fell 10%, alongside a 15% drop in Ciena and a 7% drop in Cisco (24/7 Wall St.). It rallied with the group on 11 November 2026 after CoreWeave's results (GuruFocus). Nvidia's report on 17 November 2026 is the next shared test for the group.
Its results depend on a few cloud customers. Management expects three, possibly four, customers at 10% or more of revenue, so capital-spending comments from Microsoft, Meta or Alphabet move the shares. MarketBeat's beta of 1.61 on 11 November 2026 means the shares have moved more than the market in both directions. Cisco competes with Arista in data-center switching, so its results on 12 November 2026 also bear on the group.
The evidence, claim by claim (8)
- Third-quarter 2026 revenue was $3.66 billion, up 58.5% year on year; non-GAAP gross margin was 64.0%, non-GAAP operating margin 49.1% and non-GAAP diluted EPS $1.20. Arista Q3 2026 earnings release (Form 8-K exhibit 99.1) · as of
- Fourth-quarter 2026 guidance: revenue of $3.9–$4.0 billion, gross margin of 63–64%, non-GAAP operating margin of 48–49% and non-GAAP EPS of $1.26–$1.30. Arista Q3 2026 earnings release and earnings call · as of
- Management guided 2027 revenue growth of 38–40%, about $18.5 billion at the midpoint, with AI networking targeted at about $7 billion against $3.5 billion in 2026. Arista Q3 2026 earnings call · as of
- Deferred revenue was $6.84 billion, down $26 million in the quarter, the first decline since June 2023 after 12 straight increases. Arista Q3 2026 earnings release; XTB, 3 November 2026 · as of
- Purchase commitments were $11.4 billion, up from $9.7 billion in the second quarter; inventory was about $3.2 billion. Arista Q3 2026 earnings call and release · as of
- Andreas Bechtolsheim sold 260,000 shares on 6 November 2026 at an average of $168.96 under a Rule 10b5-1 plan, after 260,000 on 5 November 2026 at an average of $165.45. SEC Form 4 filings dated 9 November 2026 and 10 November 2026 · as of
- Shares rose 5.1% from a $196.68 prior close on 9.25 million shares by mid-session, about 17% above the 7.94 million average; consensus 4 Strong Buy, 20 Buy, 1 Hold, average target $240.24. MarketBeat, 12 November 2026 · as of
- Cisco reported fiscal first-quarter 2027 revenue of $18.5 billion, up 24% year on year, and adjusted EPS of $1.40, citing AI networking demand. Cisco fiscal Q1 2027 results, reported by Crypto Briefing · as of
Sources
- SEC EDGAR
- Arista (ANET) Q3 2026 Earnings Call Transcript · fool.com ·
- Arista Networks (NYSE:ANET) Shares Climb 5.1% - What's Next? · marketbeat.com ·
- Arista Networks (NYSE:ANET) Stock Jumps 6.4% - Here's Why · marketbeat.com ·
- Arista Networks Stocks Climb 5.68% as AI Cloud Rebound Lifts Networking Leader · gurufocus.com
- Cisco revenue jumps 24% to record $18.5B on AI networking demand · cryptobriefing.com
- XTB ·
- Cisco Falls 7% on Morgan Stanley Downgrade; Ciena Plunges 15%, Arista Networks Tumbles 10% · 247wallst.com ·
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