Should ANET Stock Be Part of Your Portfolio Post Solid Q2 Earnings?

Arista Networks, Inc. ANET reported strong second-quarter 2025 results, with revenues and adjusted earnings soaring year over year, driven by robust demand trends. Innovative product launches and steady customer additions backed by the company’s best-in-class portfolio strength led to top-line expansion, while steady margin improvement contributed to earnings growth. Both the bottom and the top lines beat the respective Zacks Consensus Estimate.

ANET Rides on Portfolio Strength

Arista holds a leadership position in 100-gigabit Ethernet switches for the high-speed data center segment. The company is increasingly gaining market traction in 200- and 400-gig high-performance switching products. In addition, the company offers one of the broadest product lines of data center and campus Ethernet switches and routers in the industry. It provides routing and switching platforms with industry-leading capacity, low latency, port density and power efficiency. The company also innovates in areas such as deep packet buffers, embedded optics and reversible cooling.

Arista is witnessing solid demand trends among enterprise customers backed by its multi-domain modern software approach, which is built upon its unique and differentiating foundation, the single EOS (Extensible Operating System) and CloudVision stack. The versatility of Arista’s unified software stack across various use cases, including WAN routing and campus and data center infrastructure, has helped it to record steady top-line growth over the years.

Cognitive Wi-Fi Software, Cloud Networking Buoy ANET Growth

Driven by improved market demand on the back of a flexible business model and solid cash flow, Arista continues to benefit from strong momentum and diversification across its top verticals and product lines. As more business enterprises transition to the cloud, the company is well-positioned for growth in the data-driven cloud networking business with proactive platforms and predictive operations.

Arista is also benefiting from the expanding cloud networking market driven by the strong demand for scalable infrastructure. In addition to high capacity and easy availability, its cloud networking solutions promise predictable performance and programmability, enabling integration with third-party applications for network management, automation and orchestration.

With customers deploying transformative cloud networking solutions, the company has announced several additions to its multi-cloud and cloud-native software product family with CloudEOS Edge. It has introduced cognitive Wi-Fi software that delivers intelligent application identification, automated troubleshooting and location services. The acquisition of Awake Security has expanded its cognitive campus portfolio with new platforms. These include the 750 Series modular chassis and the 720 Series 96-port fixed switch. Arista has also announced unified edge innovations across wired and wireless networks for its Cognitive Campus Edge portfolio for Enterprise Workspaces and an enterprise-grade Software-as-a-Service offering for the flagship CloudVision platform.

ANET Offers Healthy Outlook

Arista expects healthy demand trends for the remainder of 2025, backed by the strength of its portfolio and new product introductions. For the third quarter, management expects revenues of approximately $2.25 billion owing to healthy growth momentum and solid demand trends. Non-GAAP gross margin is expected to be 64% and non-GAAP operating margin about 47%.

Price Performance

Buoyed by a holistic growth model, Arista has surged 64.6% over the past year compared with the industry’s growth of 50.8%. It has also outperformed its peers like Hewlett Packard Enterprise Company HPE and Cisco Systems, Inc. CSCO. Hewlett Packard has gained 21.1% and Cisco soared 60.1% during this period. 

One-Year ANET Stock Price Performance 

Estimate Revision Trend

Earnings estimates for Arista for 2025 have moved up 11 cents to $2.69 over the past seven days, while the same for 2026 has increased 3 cents to $3.00. The positive estimate revision depicts optimism about the stock’s growth potential.

End Note

With solid fundamentals and healthy revenue-generating potential driven by robust demand trends, Arista appears to be a solid investment proposition. Further, a strong emphasis on quality, diligent execution of operational plans and continuous portfolio enhancements are driving more value for customers. Steady improvement in lead times and easing of supply chain woes are major tailwinds. 

The stock delivered a trailing four-quarter average earnings surprise of 12.8%. Arista currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Riding on a robust earnings surprise history and favorable Zacks Rank, it appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock.

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This article originally published on Zacks Investment Research (zacks.com).

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