Arista Networks (ANET 1.39%) may not be the most sought-after artificial intelligence (AI) stock. But Wall Street's consensus numbers suggest it may be one of the clearest AI bargains hiding in plain sight. Analysts have set a 12-month consensus target price of $175, implying an upside potential of nearly 23.6% from the last closing price as of Feb. 13.
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That optimism stems from Arista's critical role as a provider of high-performance Ethernet networking infrastructure that connects the servers and AI accelerators inside modern AI and cloud data centers.
Impressive revenue visibility
Arista's Ethernet-based AI networking solutions are transitioning from experimentation and pilot phases to production-level deployments. As AI data centers scale and models become more complex, the bottleneck shifts from just computing power to networking for efficiently moving data between GPUs. Subsequently, the company now expects its AI networking revenues to almost double year over year to $3.25 billion in 2026.
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Key Data Points
The growth momentum is expected to continue as several large customers are already operating AI deployments at massive GPU scale using Ethernet-based networking architectures, while additional customers are ramping up their AI infrastructure. However, in large AI data centers, networking investments typically lag the initial GPU and accelerator (AI chip) deployments. Hence, many of these customers may still require incremental networking infrastructure from Arista even after the compute infrastructure is in place.
Beyond AI, Arista is also expanding into campus, branch, and routing markets. The company expects $1.25 billion in campus and branch revenues in 2026. Campus and networking now account for 18% of the company's total revenues.
Management now estimates Arista's total addressable market to be over $100 billion. Arista seems to already be benefiting from these trends, as evidenced by its updated 25% year-over-year revenue growth guidance for 2026, up from the prior estimate of 20%.
Profitable growth
Arista's AI networking growth has not come at the expense of profits. The company is operating at gross margins in the low-to-mid-60% range and expects operating margins of 46% in 2026.
Arista has maintained impressive margins, despite rising supply chain costs associated with the additional memory needed to support high-speed networking switches in AI networks and increased fabrication costs for advanced networking chips.
Beyond hardware, Arista's software and subscriptions business is also strengthening its competitive moat. The company's network software and services business, anchored by its EOS operating system and CloudVision platform, enables customers to automate network operations and gain deep visibility into complex traffic patterns, including those created by large-scale AI workloads.
These software capabilities are tightly integrated into customer networks, helping build a sticky customer base for Arista. Arista has served over 10,000 cumulative customers to date, while CloudVision has been deployed across roughly 3,000 customers over the past decade. Software is a high-margin revenue stream, thereby improving the revenue mix.
Arista also exited fiscal 2025 with a cash balance of $10.7 billion and negligible debt. This balance sheet strength gives the company sufficient financial flexibility to invest in future growth initiatives.
Hence, given the evidence, Arista Networks seems well positioned to pleasantly surprise investors in the coming years.
