Arista Networks, Inc. (ANET): A Bull Case Theory

We came across a bullish thesis on Arista Networks, Inc. on The Wealth Dynasty Report’s Substack. In this article, we will summarize the bulls’ thesis on ANET. Arista Networks, Inc.'s share was trading at $141.74 as of January 30th. ANET’s trailing and forward P/E were 56.33 and 44.64, respectively according to Yahoo Finance.

Arista Networks, Inc. engages in the development, marketing, and sale of data-driven, client to cloud networking solutions for AI, data center, campus, and routing environments in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. ANET stands out as one of the most financially secure companies in the technology sector, underpinned by an exceptionally strong balance sheet with zero long-term debt and a massive liquidity buffer.

At around $130 per share, investors are gaining exposure to a company that can fund operations, innovation, and growth for years without relying on external financing, all while benefiting directly from the accelerating AI infrastructure buildout.

Market concerns around competition and potential margin compression overlook the strategic advantage created by Arista’s financial fortress, which allows it to continue investing aggressively in next-generation AI networking even during industry downturns.

Operationally, Arista is a critical enabler of modern cloud and AI data centers, supplying high-performance switches and software to hyperscalers such as Meta and Microsoft, as well as enterprises and AI-focused cloud providers. While hardware drives the majority of revenue, the growing software component adds stickiness and recurring cash flows.

Financial performance has been robust, with revenue rising from $4.9 billion in 2022 to $7.0 billion in 2024, alongside net income more than doubling over the same period. Cash and marketable securities reached $8.3 billion by the end of 2024, supported by strong buybacks and extraordinary cash generation.

The company’s working capital position of roughly $10.5 billion highlights its liquidity dominance, with current, quick, and cash ratios far exceeding industry peers. Free cash flow of over $4.0 billion and margins that resemble software economics further justify a premium valuation. Trading at roughly 47x trailing earnings, the stock appears reasonable when viewed against its growth, balance sheet strength, and AI tailwinds.

With AI-related revenue expected to scale rapidly and expansion into adjacent networking markets underway, the long-term outlook remains compelling. At $130, with a price target of $163 implying roughly 25% upside, the risk-reward profile is decisively bullish, offering AI exposure backed by one of the strongest balance sheets in tech.

Previously, we covered a bullish thesis on Arista Networks Inc (ANET) by Charly AI in April 2025, which highlighted the company’s AI-driven networking demand, strong margins, fortress-like balance sheet, and near-term headwinds from customer concentration and macro volatility. ANET’s stock price has appreciated by approximately 103.94% since our coverage due to accelerating AI infrastructure spending. The Wealth Dynasty Report shares a similar view but emphasizes balance sheet resilience and valuation upside.

Arista Networks, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 92 hedge fund portfolios held ANET at the end of the third quarter which was 81 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.