Arista Networks (ANET) Stock Forecast & Price Target

Arista Networks is experiencing strong demand for Ethernet solutions in the burgeoning AI data center market, reflected in its substantial increase in deferred revenues, which rose by $600 million quarter-over-quarter to reach $4.7 billion. The firm has also secured over $7 billion in purchase commitments, indicating robust traction with large cloud and AI customers, while its capacity to manage spending and drive revenue growth could enable it to maintain strong operating margins. Additionally, the potential acceleration of enterprise sales may further compensate for any deceleration observed in data center customer growth, bolstering the overall financial outlook for the company.

Arista Networks recently experienced a decline of approximately 10% in after-hours trading, attributed to decelerating revenue and product billings, coupled with an unchanged 2026 outlook despite previous high expectations. Although the company reported strong gross margins of 65.2% in Q3, guidance for a decline of around 250 basis points in product margins reveals increasing pressure from the higher AI Titan product mix, indicating potential challenges in maintaining profitability. Additionally, economic uncertainties may lead to reduced sales as customers reassess spending priorities, alongside potential share loss in a competitive market influenced by changing demand dynamics within the Enterprise and Campus sectors.