Arista Stock Falls Amid Small Q3 Beat And Q4 Guidance Slightly Above Views

Arista Networks (ANET) reported third-quarter earnings and revenue that beat estimates amid a surge in AI-related capital spending by clients. Arista stock fell on Wednesday as revenue guidance frustrated investors.

The cloud computing networking equipment manufacturer reported earnings after the market closed on Tuesday.

“Q4 revenue guidance was $20 million ahead of consensus, calling for 2% sequential growth at the midpoint,” William Blair analyst Sebastian Nagy said in a report.

“At the same time, the cloud giant’s higher mix of revenues is expected to pressure non-GAAP gross margins — guidance calls for a decline of approximately 2 percentage points sequentially. Meanwhile, for 2026, management largely repeated its previous guidance for 20% growth. Arista expects to meet its $1.5 billion AI revenue target for 2025 and reiterated its $2.75 billion target for 2026. 2026.”

For the three months ended Sept. 30, Arista’s earnings rose 25% to 75 cents per share on an adjusted basis. Revenue also rose 27% to $2.308 billion.

Analysts estimate earnings per share at 72 cents on revenue of $2.26 billion.

For the current quarter ending in December, Arista forecast revenue of $2.35 billion at the midpoint of guidance versus estimates of $2.33 billion.

In an analysis day in September, Arista expected revenue to grow 20% in fiscal 2026 to $10.5 billion. It expects AI network revenue to grow 70% in 2026 to about $2.75 billion, up from $1.5 billion this year.

On the stock market today, Arista stock fell nearly 6% to 144.55 in early trading.

Heading into the earnings report, Arista stock is up 38% in 2025, according to IBD Stock Screener.

Arista sells computer network adapters that speed up connections in Internet data centers. Its main competitors are Cisco Systems (Cisco) and Hewlett-Packard companies(HPE) Juniper Networks.

Arista’s largest clients are Microsoft (MSFT) and parent Facebook Meta platforms (dead). Moreover, Arista is gaining ground in the so-called “enterprise” market – large corporations, government agencies and educational institutions.

Technical evaluation of Arista stock

Nvidia (NVDA) has emerged as a strong competitor in AI networking, with clients such as oracle (ORCL) and Meta.

Both Arista and Nvidia are targeting an emerging market for “back-end” Ethernet networking technology that connects clusters of AI servers in cloud computing data centers. Nvidia is bundling its Spectrum-X network hardware with AI accelerators, giving it an effective marketing strategy.

Meanwhile, Arista is among the top AI stocks to watch.

Also, Arista stock carries a composite rating of 99 out of a top 99, according to IBD Stock Screener. The IBD Composite Classification combines five separate special classifications into one easy-to-use classification. The best growth stocks have a Composite Rating of 90 or better.

Arista stock has an Accumulation/Distribution rating of C. This rating analyzes price and volume changes in the stock over the past 13 weeks of trading. A+ indicates heavy institutional buying; E means heavy selling. Think of C as neutral.

Follow Reinhart Krause on Twitter @reinhardtk_tech For updates on artificial intelligence, cybersecurity, and cloud computing.

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