Citi: Arista expects revenue growth of 38% to 40% in 2027, supported by AI and campus networking demand

What made the third-quarter results and 2027 guidance strong?

In the third quarter of 2026, Arista reported revenue of 3.658 billion dollars, up 58% year over year and above Citi’s estimate of 3.467 billion dollars. Earnings per share were 1.20 dollars, also above the bank’s estimate of 1.11 dollars. Demand from both AI and enterprise customers drove revenue growth.
The company expects 2027 revenue of 18.4 billion to 18.6 billion dollars, up 38% to 40% year over year. AI business is expected to grow about 40%, and campus networking about 60%. Citi considers the overall guidance above market consensus; relative to the company’s usually conservative initial guidance, it is also in line with or slightly above expectations.
Citi raised its earnings-per-share forecasts for 2026 and 2027 by 4% and 8%, respectively, to 4.39 dollars and 5.94 dollars. It maintained its Buy rating and 248-dollar price target; its valuation is based on a 36-times forward P/E for 2028.

Management believes AI workloads are expanding from large training clusters into inference, agents and enterprise deployments, creating demand for data-center, campus and edge networks. The growing variety of accelerators is also making customers place greater value on networks that can accommodate different chips and operating systems.
Regarding its expectation of about 7 billion dollars in AI networking revenue in 2027, management cited three drivers: expansion by existing customers, the addition of new customers, and higher revenue per deployment. Power and capacity constraints are also prompting data centers to connect across facilities, creating more opportunities for inter-data-center networking.
The company said it could be involved in connecting more than 10 gigawatts of data-center capacity by 2027, including existing inter-data-center connections. This figure describes potential network-connection opportunities; revenue from network deployments at scale has also not yet been included in substantial amounts in current discussions of the market opportunity.

Arista has 11.4 billion dollars in purchase commitments, mainly for semiconductors with lead times of about a year; approximately 80% are expected to be short-term commitments. Management said these commitments provide relatively ample supply assurance for anticipated 2027 demand, and it plans to increase purchasing further in the fourth quarter.
The company expects price increases to customers to help support the lower end of its 62% to 64% gross-margin framework, but their specific contribution in 2027 is difficult to quantify. Because revenue recognition is deferred by about 18 months, price increases, existing orders and higher supplier costs will be reflected at different points in 2027 and 2028. Management also does not view price increases as a major standalone driver of revenue growth in 2027.

Management expects its addressable market to exceed 200 billion dollars by 2030, implying a five-year CAGR of about 24%. The company aims to gain share through its AI, enterprise and campus product mix and achieve faster growth. It also noted that the five-year market CAGR should not be directly compared with revenue growth in a single year.
In scale-up networks connecting accelerators, customers may not need all the features of Arista’s network operating system. Management believes diagnostics, telemetry and link reliability remain valuable, but proprietary solutions and lower-cost white-box products may also emerge in the market. Reduced demand for features is more likely to affect pricing.
Citi also noted that spending cuts by large cloud customers or customer losses, switch competition, supply-chain disruptions and higher logistics costs could all weigh on sales or gross margins.