Arista Q4 Results Boost 2026 Outlook
Arista Q4 results beat estimates and raised FY 2026 revenue guidance, citing AI-driven demand and prompting traders to favor data-center networking.
KEY TAKEAWAYS
- Q4 revenue $2.5 billion and adjusted EPS $0.82 beat Street estimates.
- Management raised FY 2026 revenue outlook to about $11.3 billion citing AI-driven demand.
- FY 2026 gross-margin guidance 62%-64% reflects mix and higher memory and silicon costs.
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Arista Networks reported fourth-quarter and fiscal 2025 results on Feb. 12, 2026, with quarterly revenue and adjusted earnings per share (EPS) beating Street estimates. Management raised its 2026 revenue outlook on a post-release call, citing stronger AI-driven demand.
Q4 Results and Profitability
The company said in a press release at 4:05 p.m. ET that fourth-quarter revenue reached $2.5 billion, up 28.9% year over year and above the Street consensus of $2.4 billion. Product sales totaled $2.1 billion, rising 30.3%, while services revenue increased 21.6% to $392 million, reflecting strong demand for Arista’s networking hardware in large-scale deployments.
Adjusted EPS was $0.82, beating the consensus of $0.76 and rising 24.2% from a year earlier. Adjusted gross margin narrowed 50 basis points to 63.4%, even as adjusted operating income grew 30.1% to $1.2 billion and operating margin held steady at 47.5%. Net income rose 19.3% to $956 million.
For fiscal 2025, revenue totaled $9.0 billion, up 28.6% from 2024, while free cash flow increased 17.9% to $4.4 billion. CEO Jayshree Ullal said, “2025 was the year of validation of our Arista 2.0 momentum, as we hit the milestone of shipping a cumulative of 150 million ports.” The company’s strong cash generation provides flexibility to invest in product development and customer deployments.
Raised 2026 Outlook Citing AI Demand
On the post-release conference call, management raised full-year 2026 revenue guidance to about $11.3 billion, implying roughly 25% growth from 2025. The company increased its AI data-center target to $3.3 billion from $2.8 billion and set a campus revenue goal of $1.3 billion. First-quarter revenue guidance of $2.6 billion also exceeded Street estimates.
The company forecast full-year gross margin between 62% and 64%, with first-quarter margin expected at 62% to 63%. Management cited product mix and higher memory and silicon costs as factors affecting the margin range. Operating margin guidance rose to about 46%.
Management linked the raised outlook directly to AI-driven demand, expanding the portion of revenue tied to AI data centers while noting supply-cost pressures that could limit near-term margin expansion. This combination of stronger demand for data-center networking and elevated component costs shapes the company’s 2026 guidance.
By beating near-term expectations and raising full-year guidance, Arista positioned AI-focused customers as the main growth driver for the year ahead while highlighting cost dynamics that will influence margins.
