◆ Inside the Latest Results (FY2025 & Q2 2026)

Arista's recent results are among the most impressive in technology, the numbers of a high-quality business compounding at extraordinary rates on the AI build-out. For the 2025 financial year, revenue grew 29% to $9.0 billion, net income reached $3.5 billion¹, and diluted earnings were $2.75 a share, at a gross margin around 64% — a combination of fast growth and rich profitability few companies achieve. The momentum then accelerated into 2026: the second quarter was the first-ever $3 billion quarter in Arista's history, at $3.036 billion, up 37.7% year over year², with product revenue of $2.61 billion and service revenue of $430 million, and diluted EPS up nearly 40% to $1.02. Trailing-twelve-month revenue reached $10.5 billion. These are the results of a company firing on all cylinders as AI-networking demand runs well ahead of supply.

The most striking feature is the repeatedly-raised guidance. Management lifted its full-year 2026 revenue target three times, to approximately $12.6 billion³ — roughly 40% growth — reflecting AI-networking demand that keeps exceeding expectations, and raised its target for AI back-end and front-end networking to around $3.6 billion for 2026, more than doubling year over year. For the third quarter, Arista guided to roughly $3.3 billion of revenue and a non-GAAP operating margin of 48–49%⁴. The raised guidance and the AI-networking targets are the clearest evidence that Arista is winning the shift of AI networking to Ethernet and that the tailwind remains strong.

Two honest footnotes belong in any reading of these numbers. First, the gross margin declined — to 63.4% in the second quarter from 65.6% a year earlier⁵ — attributed partly to larger customers receiving greater discounts, alongside supply-chain cost pressures. This is the customer concentration expressing itself: as the powerful titans grow as a share of revenue, their pricing power grinds on the margins, a structural pressure that the spectacular growth can mask but not erase. Second, the results confirm the concentration itself — Microsoft at ~26% and Meta at ~16% of 2025 revenue⁶ — so the very growth that thrills the market rides on the same two customers whose power compresses the margins and whose AI spending drives an untested cycle.

Read correctly, the latest results tell a consistent story: Arista is a genuinely superb business, executing brilliantly, winning the AI-networking market, and compounding at rates that justify real excitement — and its growth and margins are inseparable from a dangerous customer concentration and a competitive battle with Nvidia, all priced at a premium that assumes the winning continues. The first $3 billion quarter and the thrice-raised guidance are proof of the franchise's power and the AI tailwind's force; the margin dip on titan discounts and the naked concentration are the reminder that this excellent business carries a narrow moat and real risks. The results are a triumph and a caution at once — a company at the peak of its powers, winning a huge market, on a narrow base against a fearsome rival, at a price that leaves little room for the winning to pause.