Arista Networks (ANET) posted strong third-quarter results on Thursday, reporting earnings and revenue that exceeded analyst expectations.
Despite these positive figures, Arista’s stock dropped over 5% to $405.95 in extended trading, as investors considered the impact of the earnings beat and upcoming guidance amid a substantial year-to-date gain of nearly 83%.
For the quarter ending September 30, Arista’s earnings rose 31% to $2.40 per share, adjusted for one-time gains, surpassing analysts’ forecasts of $2.08 per share. Revenue also outperformed expectations, growing 21% year-over-year to $1.81 billion, compared to the $1.76 billion projected by analysts.
Looking ahead, Arista provided a revenue outlook for the December quarter between $1.85 billion and $1.90 billion, which was slightly above Wall Street’s estimate of $1.81 billion. Investors, however, appeared to be cautious regarding the degree of Arista’s earnings beat and its future growth expectations, contributing to the post-market decline.
In addition to its earnings, Arista announced a 4-for-1 stock split, a move often aimed at making shares more accessible to individual investors.
Arista Networks, a Santa Clara, California-based company, provides high-performance networking switches used by major cloud data centers to optimize communication speeds. It counts tech giants like Microsoft and Meta Platforms among its largest clients. Arista has also been expanding its presence in the enterprise market, catering to large businesses, government bodies, and educational institutions.
A key area of interest for Arista investors has been the company’s AI-related revenue, with projections of around $750 million in 2025. Much of this is expected to come from Ethernet networking technology that links AI server clusters within cloud-computing centers. Arista’s progress in artificial intelligence has positioned it as a top AI-related stock to watch.
Unlike last year, Arista is not holding an investor day in November, leaving some analysts and investors awaiting updates on anticipated AI-driven revenue and preliminary guidance for 2025. One metric of interest for investors is Arista’s product deferred revenue, which could give insights into upcoming AI-related orders.
Investor’s Business Daily and the Washington Post contributed to this report.
