The network is what maintains the cluster productive in AI data centers, even though the GPUs receive most of the attention. The AI job lags and idle computing costs if there are network bottlenecks. Because of this, "AI networking" has evolved from a trendy term to a useful spending category.

Arista is squarely within that budget. As businesses and hyperscalers expand their AI infrastructure, the company promotes itself as a leader in client-to-cloud networking for large AI, data center, campus, and routing environments. This is precisely where budgets are changing.

What happened: a clean earnings beat + strong profitability

Arista made $2.488 billion in Q4 2025, a 28.9% increase from the previous year. Non-GAAP profitability remained robust, with non-GAAP EPS of $0.82 and non-GAAP gross margin of 63.4%.

Two specifics are important for "quality of earnings":

• There is actual operating leverage. The management pointed out that a 47.5% non-GAAP operating margin, along with about 29% revenue growth, meant that costs didn't increase nearly as quickly as revenue.
• With Q4 product revenue of $2.096B and service revenue of $392M, the revenue mix remains product-led, as is typical for a hardware + software + support strategy.

For this reason, the market frequently views ANET earnings as a "signal" for capital expenditures for AI data centers: it's not only growth, but high-margin growth.

The scenario for 2026: growth persists, but the main "watch item" is margins.

For Q1 2026, Arista expects:

• Revenue ~ $2.6B
• Non-GAAP gross margin ~62–63%
• Non-GAAP operating margin ~46%.

The following guidelines outline the company's priorities:

• Continuing to develop rapidly (revenue projection is high),
• Continuing to be quite profitable, but
• There is no guarantee that margins will remain at their highest levels (the gross margin guide is just below the Q4 non-GAAP level of 63.4%).

Because AI infrastructure demand can be high and still face cost pressures (components, memory, lead times, supply chain), margin sensitivity is important.

Cash and balance sheet: Financial flexibility remains a key benefit.

Arista's balance sheet was extremely liquid at the end of 2025:

• Cash & cash equivalents: $1.964B
• Marketable securities: $8.779B
• Total assets: $19.449B

It also brought in a sizable sum of money for the company:

• Net cash provided by operating activities: $4.372B (FY 2025)

And returned capital aggressively:

• Share repurchases: $1.603B (FY 2025)

To put it simply, Arista can continue investing in product cycles without requiring additional funding while still providing stockholders with a profit.

Shariah compliance snapshot (business & financial screens).

At the moment, Arista's Shariah screening profile is favorable. The majority of business activity (95.88%) is Halal, with only 4.12% being Not Halal. With interest-bearing securities and assets at 10.71% and interest-bearing debt at 0.00% (both passing the financial screenings), interest-related financial exposure also remains below standard screening criteria.

Near future Catalyst to watch.

This is the thread you should follow if you only follow one ANET thread in 2026:

• Is it possible for Arista to continue turning demand for AI networking into increased revenue while maintaining profit margins?

The Q4 and full-year figures already show growth (FY 2025 revenue: $9.006B, up 28.6% YoY).

The margin side is where expectations can swing:

• Arista's business strategy may remain "best-in-class" as long as component costs and supply shortages are kept under control.
• Even with high revenue, margins may compress if costs rise faster than pricing or mix.

Because of this, the Q1 margin projection (62–63% gross margin; around 46% operating margin) is just as important as the revenue.

Conclusion

Arista Networks is not regarded as a sluggish networking supplier. It is regarded as benefiting from superior AI infrastructure, as Q4 demonstrated the capacity to deliver rapid growth and strong profitability (28.9% YoY sales growth and $0.82 non-GAAP EPS).

The next checkpoint for investors is simple: observe whether margins hold up near guidance and whether AI-driven demand remains robust.

Sources

• ARISTA - (Press Release)
• Arista Networks - (Gurufocus)
• Arista Networks Inc. Stock Analysis - (Musaffa)

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