Arista Networks Inc (ANET): A Bull Case Theory

We came across a bullish thesis on Arista Networks Inc. on Long Term Investing’s Substack by Sanjiv. In this article, we will summarize the bulls’ thesis on ANET. Arista Networks Inc 's share was trading at $96.31 as of June 25^th. ANET’s trailing and forward P/E were 40.64 and 37.31 respectively according to Yahoo Finance.

Arista Networks (ANET) has re-emerged as a compelling investment opportunity following a period of tactical repositioning. After selling the stock in January 2025 due to valuation concerns, the author re-entered with a 3.4% position when shares dropped below $90 amid tariff-related market weakness. Q1 2025 results reaffirmed ANET’s operational strength, with revenues reaching $2.0 billion, marking a 27.6% year-over-year increase.

Operating and net profits rose nearly 30%, driven by both products and services, and benefiting from significant economies of scale. With no long-term debt and a growing $8 billion cash balance, ANET remains capital-light, outsourcing manufacturing and maintaining high free cash flow. The company initiated its first major buyback program, repurchasing $1.2 billion in shares year-to-date, signaling prudent capital allocation. While tariffs present a near-term headwind—potentially compressing gross margins by 1–1.5%—management believes impacts are manageable through mitigation strategies.

ANET’s growth is powered by deep ties with cloud hyperscalers like Microsoft and Meta, accounting for over 40% of revenues, and continued AI and enterprise network upgrades. With a 10-year revenue CAGR of 26.6%, a 52% ROIC, and strong forecasts through 2027, ANET appears fairly valued at a 32.3x forward P/E. A DCF analysis supports the current valuation, with the stock trading slightly below intrinsic value.

The business model, marked by high-margin scalability, cash generation, and minimal capex, makes ANET a rare capital-efficient AI and cloud infrastructure play. Despite macro risks like tariffs, the risk/reward appears favorable, and the position is being maintained based on strong fundamentals and disciplined execution.

Previously we covered a bullish thesis on Arista Networks Inc (ANET) by Charly AI in April 2025, which highlighted its strong balance sheet, AI-driven growth, and long-term potential despite near-term pressures. The company’s stock price has appreciated approximately by 38.5% since our coverage. Sanjiv shares a similar view but emphasizes Q1 2025 execution and renewed capital allocation focus.

ANET isn't on our list of the 30 Most Popular Stocks Among Hedge Funds. While we acknowledge the risk and potential of ANET as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.