Will ANET's Growing Prowess in AI Networking Continue to Drive Growth?

Arista Networks, Inc. ANET is witnessing solid market traction across its comprehensive data-driven network platforms. The company’s innovation strategy is focused on improving compute capabilities and GPU utilization through improved Etherlink architecture. Its solution combines zero-touch automation, trusted security, traffic engineering and telemetry to a single point of network control. 

In this domain, Arista is actively collaborating with the worldwide market leader in GPU, NVIDIA. By combining Arista’s network platforms with NVIDIA’s compute platforms, the collaboration aims to develop a streamlined AI data center ecosystem that delivers effective coordination between AI networking and AI compute infrastructure.

However, Arista has emphasized creating a broad and open ecosystem which will include other major players in this domain, such as AMD, Anthropic, Arm, Broadcom, OpenAI, Pure Storage and VAST Data. AI networking has shifted from 400G to 800G and is expected to shift from 800G to 1.6G going forward. Surging AI workloads in data centers are driving this movement. 

Per a Precedence Research report, the AI in networks market size is projected to grow from $15.28 billion in 2025 to $192.42 billion in 2034, with a compound annual growth rate of 32.51%. The company has reaffirmed its $1.5 billion in revenues from AI for 2025 and $2.75 billion in 2026. Solid traction among cloud and AI titans, neocloud providers and the campus enterprise will likely drive this growth.

How Are Competitors Faring?

In the AI networking space, Arista faces competition from Hewlett Packard Enterprise Company HPE and Cisco Systems, Inc. CSCO. Cisco is utilizing its vast partner base to expand into the AI networking vertical. The company has been actively collaborating with NVIDIA. Cisco Secure AI Factory with NVIDIA is founded on the NVIDIA Spectrum-X Ethernet networking platform. The company’s data center switching orders surged double digits year over year in the fiscal third quarter.

Hewlett Packard Enterprise is also witnessing solid momentum in its Networking division with a 150% year-over-year surge in net sales in this segment in the fiscal fourth quarter. The integration of Juniper’s deep expertise in AI networking has significantly strengthened HPE's networking arm. Recently, the company added new AIOps capabilities and unified hardware across Aruba and Juniper platforms to advance self-driving network operations. Such innovation will further strengthen its competitive edge in AI networking.

ANET’s Price Performance, Valuation & Estimates

Shares of Arista have risen 8% over the past year compared with the industry’s growth of 0.8%.

From a valuation standpoint, Arista trades at a forward price-to-sales ratio of 14.88, above the industry average of 4.75.

Earnings estimates for 2025 have increased 3.23% to $2.88 over the past 60 days, while the same for 2026 have increased 3.44% to $3.31.

Arista currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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