ANET Stock Rises 5% After Arista Reports $3.66B Quarter

Arista Networks' stock rose about 5.2% to $178.81 in late-morning New York trading Wednesday after the company reported third-quarter revenue of $3.66 billion and forecast fourth-quarter revenue of $3.9 billion to $4.0 billion.

The stock reached $188.53 after the open, nearly 11% above Tuesday's close of $169.91, after gaining about 9.5% to 9.75% in premarket trading.

Wednesday's move tested levels set out by FinanceFeeds before the earnings release. In its October 28 Arista stock prediction, FinanceFeeds used the October 27 close of $187.00 as its reference price and calculated a year-end base case of $196.32, a bull case of $277.11 and a bear case of $156.01.

Arista briefly moved above the $187 reference level before giving back part of its opening gain. It remained below the $196.32 base case, while the earnings figures changed some of the operating assumptions behind those levels.

Arista beats its revenue guide

Arista reported third-quarter revenue of $3,657.6 million, up 58.5% from $2,308.3 million a year earlier and 20.5% from the previous quarter.

The company had forecast revenue of approximately $3.3 billion three months earlier. The actual result was about $357.6 million above that forecast. Revenue also exceeded the roughly $3.33 billion Wall Street consensus.

Non-GAAP diluted earnings per share were $1.20, compared with analyst consensus of about $1.08. Generally accepted accounting principles, or GAAP, diluted earnings per share were $1.22.

GAAP gross margin was 63.6%, non-GAAP gross margin was 64.0% and non-GAAP operating margin reached 49.1%.

Arista Chairperson and Chief Executive Officer Jayshree Ullal said the quarter produced the company's highest year-over-year revenue growth since its initial public offering and record profitability, with demand across artificial intelligence, cloud and enterprise networking.

The full figures were included in Arista's November 3 earnings release filed with the U.S. Securities and Exchange Commission.

Fourth-quarter revenue forecast approaches $4 billion

Arista expects fourth-quarter revenue of $3.9 billion to $4.0 billion. The midpoint of $3.95 billion is above the roughly $3.6 billion analyst consensus cited before Wednesday's session.

The company also forecast a non-GAAP operating margin of 48% to 49% and non-GAAP diluted earnings per share of $1.26 to $1.30.

On Tuesday's earnings call, management raised its full-year 2026 revenue outlook for the fourth time this year. Arista now expects revenue of just over $13.3 billion at the midpoint, compared with its previous target of about $12.6 billion.

Management's initial 2027 outlook was also higher than the fourth-quarter forecast alone would suggest. It expects revenue growth of 38% to 40% next year, equivalent to approximately $18.5 billion at the midpoint.

Arista expects artificial intelligence fabric revenue to roughly double to $7 billion in 2027 from its $3.5 billion 2026 target. The company also said its Etherlink customer base has grown beyond 100 customers as artificial intelligence networking deployments expand beyond the small group of large customers that initially drove the cycle.

Stock remains below FinanceFeeds base case

FinanceFeeds' October 28 analysis was cautious about treating Arista's artificial intelligence partnerships as booked revenue. It said Meta and Microsoft appeared alongside AMD, Arm, Broadcom, d-Matrix and Qualcomm in Arista's October rack-scale networking announcement. Arista's regulatory filing did not identify the two customers that accounted for 26% and 16% of 2025 revenue.

The earnings report provided a new revenue test for that analysis. Arista exceeded the $3.3 billion third-quarter guide by about 10.8% while raising its next quarterly revenue forecast toward $4 billion.

At $178.81 in late-morning trading, ANET was about 8.8% below the $196.32 FinanceFeeds base case. Reaching the $277.11 bull case would require a gain of roughly 55% from that level, while the $156.01 bear case was about 13% below it.

The stock's early move above $188 also mattered because $187 was the original reference price used for the forecast. Wednesday's trading showed that the earnings report could recover that level, while the later decline meant the stock had not moved directly toward the base case.

Arista recorded no common-stock repurchases during the first nine months of 2026. In the same period of 2025, it spent $983.0 million buying back shares.

This year's earnings growth therefore did not receive comparable support from a repurchase program. Third-quarter earnings per share growth came alongside a 58.5% increase in revenue and higher operating profit.

FinanceFeeds also recently examined Ciena's artificial intelligence networking rally and its bull-and-bear valuation range, another example of investors assigning higher values to infrastructure connecting artificial intelligence computing rather than only to chips.

Before earnings, the FinanceFeeds Arista forecast asked whether customer orders would support the valuation implied by the $277.11 bull case. The third quarter provided part of the answer, with revenue almost $360 million above Arista's own forecast, fourth-quarter revenue approaching $4 billion and expected 2027 revenue of about $18.5 billion, while artificial intelligence fabric sales may double.

ANET initially surged toward $189 before retreating toward $179. The immediate price test is whether the rally can reclaim and hold the original $187 reference price before moving toward the $196.32 base case. The $277.11 bull case remains much further away.