Arista Networks (ANET) Stock Forecast & Price Target

Arista Networks shows a robust financial outlook driven by increasing demand for Ethernet in AI data centers, as evidenced by a $600 million quarter-over-quarter increase in deferred revenues, reaching $4.7 billion. The company has also demonstrated strong product traction with a $625 million increase in deferred product builds, indicating a solid backlog with major cloud and AI clients. Furthermore, Arista's commitment to controlling spending while achieving promised revenue growth could enable the firm to maintain operating margins, positioning it to outperform future expectations despite a slight deceleration in top-line growth.

Arista Networks has faced a significant decline in its stock, dropping approximately 10% after-hours due to revenue and product billings deceleration, coupled with an unchanged outlook for 2026 despite high expectations. The company's gross margins, while strong at 65.2%, are projected to decrease by about 250 basis points sequentially, as higher proportions of AI Titan products compromise profitability, with product margins falling below 60%. Additionally, external economic factors, including shifts in customer spending priorities and potential slowdowns in Enterprise and Campus segments, could further jeopardize sales and overall financial performance.