Arista Networks Inc (ANET): A Bull Case Theory

We came across a bullish thesis on Arista Networks Inc on Bullseye Investing’s Substack. In this article, we will summarize the bulls’ thesis on ANET. Arista Networks Inc's share was trading at $154.10 as of October 10th. ANET’s trailing and forward P/E were 56.65 and 44.05 respectively according to Yahoo Finance.

Arista Networks (ANET) has emerged as one of the clearest beneficiaries of the AI-driven cloud era, positioning itself as a critical enabler of AI infrastructure rather than just another AI company. While much attention has gone to AI chatbots, the real gains have accrued to companies that allow AI to scale, and Arista sits at the center of this opportunity.

Specializing in high-performance data center switches and its EOS software, Arista powers hyperscale cloud operations for major tech giants including Microsoft, Meta, and Amazon, connecting thousands of GPUs for modern AI workloads. Its networking solutions are crucial for low-latency, high-bandwidth data transfer, a requirement that underpins the explosive growth in AI applications. Management projects AI-related networking revenue to grow from $1.5 billion in 2025 to $2.75 billion by 2026, highlighting the company’s outsized growth potential.

Financially, Arista is exceptional, demonstrating robust revenue growth, operational efficiency, and a pristine balance sheet. The company has experienced 30% revenue growth, 41% operating income growth, and 144% growth in total assets over the past year while remaining debt-free for over five quarters. Its returns—ROIC of 53%, ROE of 33.6%, and ROA of 15.2%—far exceed industry averages and cost of capital, underscoring the strength of its competitive positioning. Despite a high forward P/E of 39x, the company’s consistent earnings beats and structural growth suggest that long-term investors are well compensated for this premium.

Risks include overdependence on hyperscalers, with Microsoft and Meta accounting for a significant portion of revenue, as well as competitive pressure from Cisco. Valuation remains elevated, making near-term pullbacks possible. Nonetheless, Arista’s entrenched role in AI infrastructure, consistent financial execution, and growth trajectory make it a compelling long-term buy-and-hold investment in the AI era.

Previously we covered a bullish thesis on Arista Networks Inc (ANET) by Charly AI in April 2025, which highlighted the company’s strong financials, AI-driven networking growth, and robust balance sheet despite near-term pressures. The company's stock price has appreciated approximately by 122% since our coverage. The thesis still stands as long-term prospects remain strong. Bullseye Investing shares a similar perspective but emphasizes Arista’s role in scaling AI workloads and hyperscaler partnerships.

Arista Networks Inc is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 81 hedge fund portfolios held ANET at the end of the second quarter which was 75 in the previous quarter. While we acknowledge the potential of ANET as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.