Arista Networks (ANET) AI Stock Analysis

• Market Cap: $81.18B
• Dividend Yield: N/A
• Average Volume (3M): 12.04M
• Price to Earnings (P/E): 28.9
• Beta (1Y): 2.02
• Revenue Growth: 19.50%
• EPS Growth: 34.64%
• Country: US
• Employees: 4,412
• Sector: Technology
• Sector Strength: 40
• Industry: Computer Hardware
• EPS (TTM): 2.23
• Shares Outstanding: 1,261,122,600
• 10 Day Avg. Volume: 12,105,606
• 30 Day Avg. Volume: 12,036,801
• PEG Ratio: 0.83
• Price to Book (P/B): N/A
• Price to Sales (P/S): 14.97
• Price to Cash Flow (P/CF): 25.40
• P/FCF Ratio: 25.40
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $122.91
• Price Target Upside: 90.94% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14

Arista Networks' strong financial performance and promising earnings outlook are significant positives, driving the stock's potential. However, technical indicators suggest caution due to bearish momentum, and the high P/E ratio indicates potential overvaluation. The absence of corporate events keeps the focus on core financial and operational strength.

Positive Factors

AI Adoption

ANET shares have potential for upside driven by higher adoption of Ethernet in AI Datacenters.

Growth Strategy

Arista is added to the Analyst Focus List due to growth strategy with potential upside to the price target.

Hyperscaler Investments

Revenue from major customers like Microsoft and Meta is substantial, and aggressive investments by hyperscalers in AI capacity should positively impact Arista's revenue.

Negative Factors

Competitive Pressure

Concern that white-box vendors have made inroads into parts of the network has pressured the shares.

Inventory Write-downs

ANET disclosed inventory write-downs in cost of product totaling approximately $267.2 million in 2024, showing an increase from previous years.

Share Loss Concerns

There is a concern that white-box vendors are making inroads into areas where Arista has been strong, which has pressured the company's shares.

Arista Networks Business Overview & Revenue Model

Company Description

Arista Networks, Inc. is a prominent player in the cloud networking sector, specializing in providing high-performance networking solutions for data centers, cloud computing environments, and enterprise networks. The company's core products include switches, routers, and software that optimize network performance and enhance efficiency. Arista's solutions are designed to meet the needs of large-scale internet companies, cloud service providers, and other data-intensive industries, leveraging cutting-edge technology to deliver scalable and secure networking solutions.

How the Company Makes Money

Arista Networks generates revenue primarily through the sale of its networking hardware and software products. The company's key revenue streams include the sale of its Ethernet switches and routers, which are integral to building high-speed, scalable networks. Additionally, Arista offers software products and services that enhance network functionality and management capabilities, providing a recurring revenue stream. The company has established significant partnerships with major cloud providers and tech companies, which contribute to its earnings by expanding its market reach and enhancing its product offerings through integrations. Arista's focus on innovation and customer-driven solutions ensures a competitive edge in the rapidly evolving networking industry.

Arista Networks Financial Statement Overview

Summary

Arista Networks displays an excellent financial profile across all key verticals. Strong revenue growth, high profit margins, and a solid balance sheet with no debt underscore the company's financial strength and competitive positioning.

Income Statement

Arista Networks has demonstrated impressive revenue growth with a robust revenue increase of 19.5% from 2023 to 2024. The company maintains a strong gross profit margin of 64.1%, and a net profit margin of 40.7%, showcasing effective cost management and profitability. Both EBIT and EBITDA margins are healthy at 42.1%, reflecting operational efficiency. These metrics highlight Arista Networks' strong financial performance and competitive positioning in the market.

Balance Sheet

The company has a solid balance sheet with no debt and a strong equity standing, resulting in a favorable debt-to-equity ratio of 0.0. The return on equity is remarkable at 28.5%, indicating efficient use of equity capital to generate profits. The equity ratio of 71.2% further underlines financial stability and low leverage risk, making Arista Networks a financially sound company.

Cash Flow

Arista Networks exhibits strong cash flow management with a significant free cash flow growth rate of 83.8%. The operating cash flow to net income ratio is robust at 1.3, demonstrating effective cash generation relative to net income. The free cash flow to net income ratio is also strong at 1.3, indicating efficient conversion of income to cash. These metrics highlight the company’s ability to generate and manage cash effectively.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
7.00B	5.86B	4.38B	2.95B	2.32B
	Gross Profit
4.49B	3.63B	2.68B	1.88B	1.48B
	EBIT
2.94B	2.26B	1.53B	924.74M	699.68M
	EBITDA
3.01B	2.33B	1.59B	975.07M	734.84M
	Net Income Common Stockholders
2.85B	2.09B	1.35B	840.85M	634.56M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
8.30B	5.01B	3.02B	3.41B	2.87B
	Total Assets
14.04B	9.95B	6.78B	5.73B	4.74B
	Total Debt
0.00	0.00	43.96M	56.53M	72.40M
	Net Debt
-2.76B	-1.94B	-627.74M	-564.29M	-820.82M
	Total Liabilities
4.05B	2.73B	1.89B	1.76B	1.42B
	Stockholders Equity
9.99B	7.22B	4.89B	3.98B	3.32B
Cash Flow		Free Cash Flow
3.68B	2.00B	448.17M	951.12M	719.73M
	Operating Cash Flow
3.71B	2.03B	492.81M	1.02B	735.11M
	Investing Cash Flow
-2.46B	-687.45M	216.33M	-925.56M	-608.80M
	Financing Cash Flow
-421.81M	-83.75M	-654.60M	-360.88M	-346.34M

Arista Networks Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 64.37
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ANET, the sentiment is Negative. The current price of 64.37 is below the 20-day moving average (MA) of 80.25, below the 50-day MA of 94.49, and below the 200-day MA of 96.07, indicating a bearish trend. The MACD of -4.70 indicates Negative momentum. The RSI at 35.85 is Neutral, neither overbought nor oversold. The STOCH value of 19.21 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ANET.

Arista Networks Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ANET	75 Outperform	$81.18B	28.92	33.14%	―	19.50%	34.64%
NTAP	69 Neutral	$15.71B	14.08	114.33%	2.71%	5.46%	23.49%
SMCI	69 Neutral	$17.70B	13.01	32.21%	―	124.51%	87.78%
DELL	63 Neutral	$49.99B	11.23	-179.12%	2.48%	7.84%	42.63%
HPQ	61 Neutral	$21.31B	8.12	84.33%	5.00%	1.03%	-18.56%
PSTG	60 Neutral	$12.12B	121.54	8.29%	―	11.92%	74.08%
Sector *	57 Neutral	$18.54B	9.84	-14.38%	2.71%	5.07%	-23.65%

Arista Networks Corporate Events

Arista Networks Appoints Greg Lavender to Board

On March 14, 2025, Arista Networks, Inc. announced the appointment of Greg Lavender as an independent member of its Board of Directors, expanding the board to nine members. Dr. Lavender, currently the Chief Technology Officer at Intel Corporation, brings extensive experience from previous roles at VMware, Citigroup, Cisco Systems, and Sun Microsystems. His appointment includes a position on the Audit Committee and standard non-employee director compensation. Additionally, John McCool, Arista’s Chief Platform Officer, Senior Vice President of Engineering and Operations, announced his resignation effective April 7, 2025, to take a personal leave of absence, though he will remain a senior advisor to the CEO. His responsibilities will be managed by Alex Rose and Mike Kappus during his absence.