Key Takeaways
- Arista Networks (ANET) is down 14% in the past week in an AI hardware selloff that also hit Broadcom (AVGO), despite 58.5% revenue growth last quarter.
- Management guided 2027 revenue to about $18.5 billion, roughly $2 billion above analysts’ estimates, and gross margin cleared the bar that mattered.
- The stock trades below its five-year average multiple on estimates that should rise, so it looks like a buy.
Arista Networks stock is down 14% in the past week, and almost none of that was tied to company specifics. Its fastest crash since its IPO landed in the middle of an AI hardware selloff that also hit Broadcom.
Arista cleared the bar that mattered
Q3 revenue rose 58.5% to $3.66 billion, against a $3.3 billion guide.
On the call, management guided 2027 revenue to about $18.5 billion, up 38%-40%, with AI networking revenue doubling to about $7 billion. Here’s what analysts expected going in:
That’s $18.55 billion for 2027, so those estimates look set to rise.
Going in, the test was an adjusted gross margin of 63% or better, and Arista posted 64.0%.
The selloff came from outside
Both of the week’s big drops came with no Arista news, in a week when the Nasdaq 100 fell 5%.
On Oct. 30, AI hardware stocks fell after Intel’s Q4 guidance came in below expectations and Amazon reported a $42.4 billion trailing free cash outflow on AI spending.
On Thursday, they fell again, on a Morgan Stanley downgrade of Cisco and a plunge at Ciena.
Broadcom, down 16% over the week, was sold despite strong numbers too. Its AI chip revenue rose 221% to $16.7 billion in the quarter that ended Aug. 2, and it guided to $21.7 billion for the next.
Arista builds mostly on Broadcom’s chips, so its bigger 2027 plan is good news for Broadcom too.
TIKR tracks 30 analysts on Arista Networks. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Arista Networks, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Arista Networks’ Analyst Ratings
Is Arista stock a buy after the drop?
Before the report, Arista traded at 35x forward earnings, just under its 36x five-year average and far below its 55x peak in January 2025:
Thursday’s close leaves it cheaper still, before estimates catch up with the new guide.
The risk is concentration: Microsoft and Meta took 42% of Arista’s 2025 revenue.
The way I see it, Arista’s business got better this week while its stock got cheaper, and that’s a drop I’d buy.
Q4 results come around mid-February, and they’ll show whether gross margin holds and the 2027 guide stands. Of course, Arista will keep trading with the mood around AI spending, whatever it reports.
So what is Arista Networks stock actually worth?
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Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
