Arista Networks
| CURRENT PRICE | PROBABILITY-WEIGHTED FAIR VALUE | FAIR VALUE RANGE |
|---|---|---|
| $142 | ~$150 | $100 – $200 |
| May 2026 | Bull 25% / Base 50% / Bear 25% | Approximately fair |
Verdict: ANET delivered Q1 2026 revenue of $2.71B (+35% YoY)[1] and raised FY26 guidance to $11.5B (+27.7%) with $3.5B AI fabric target — doubling AI sales YoY[2]. At 39x forward P/E, valuation is rich but supported by hyperscaler AI capex tailwind. The structural moat (EOS software, cloud-native customers) is the highest-quality in datacenter networking. Bull case requires sustained AI infra spend; bear case reflects multiple compression on any growth deceleration.
CURRENT SNAPSHOT
| Metric | Value | Notes / Source |
|---|---|---|
| Stock price | $141.97 | 5/15/26 [3] |
| Q1 2026 revenue | $2.71B (+35%) | [1] |
| Q1 2026 EPS | $0.87 | vs cons $0.82 [1] |
| FY26 revenue target | $11.5B (+27.7%) | Raised [2] |
| FY26 AI fabric target | $3.5B | Doubled YoY [2] |
| Forward P/E | 39.3x | Trailing 48x [4] |
BULL / BASE / BEAR SCENARIOS
| Scenario (weight) | Assumptions | Fair Value |
|---|---|---|
| Bull (25%) | AI fabric beats $4B, multi-year hyperscaler design wins, 50x forward P/E | $200 |
| Base (50%) | Hit FY26 target, AI fabric scales, multiple stays 38x | $150 |
| Bear (25%) | AI capex digestion, multiple compresses to 28x forward P/E | $100 |
| Probability-weighted | AI infra leader; valuation full but supported by execution. | ~$150 |
Key Risks
- Hyperscaler concentration: Top 3 customers ~50%+ of revenue; AI capex pause hits ANET directly.
- Whitebox competition: Hyperscalers experiment with in-house designs; share could erode.
- Supply chain: Component lead times and pricing impact margins.
- Cisco competition: Reinvigorated AI networking offering challenges enterprise share.
What Would Change Our View
- Upside: Q2 beat, AI fabric guide raise, large new design win.
- Downside: Hyperscaler capex pause, margin compression, customer loss.
Sources
[1] https://www.sec.gov/Archives/edgar/data/0001596532/000159653226000074/ex991q126-earningsrelease.htm
[3] https://finance.yahoo.com/quote/ANET/
[4] https://www.gurufocus.com/term/forward-pe-ratio/ANET
Disclaimer
This output is for informational and research-assistance purposes only. It does not constitute investment, legal, tax, accounting, or other professional advice, and it is not a recommendation to buy, sell, or hold any security. Verify material facts independently and consult qualified advisors before making decisions.