Bernstein: Arista beats third-quarter expectations, guides fourth-quarter revenue to 3.9 billion–4 billion dollars

How much did third-quarter results exceed expectations?

Arista’s revenue in the third quarter of 2026 was 3.658 billion dollars, approximately 10% above both Bernstein’s estimate of 3.324 billion dollars and market consensus of 3.334 billion dollars.
Earnings per share were 1.20 dollars, above the Bernstein and market consensus estimate of 1.08 dollars; the operating margin was 49.1%, slightly above the firm’s estimate of 49.0% and market consensus of 48.8%.

The company expects fourth-quarter 2026 revenue of 3.9 billion–4 billion dollars, with a midpoint of 3.95 billion dollars, above Bernstein’s estimate of 3.607 billion dollars and market consensus of 3.573 billion dollars.
The company expects fourth-quarter earnings per share of 1.26–1.30 dollars, also above the Bernstein and market consensus estimate of 1.14 dollars; its operating margin guidance is 48%–49%, with the midpoint slightly below both estimates of 49%.

The earnings announcement did not provide preliminary revenue guidance for 2027. Bernstein forecasts full-year revenue of 17.87 billion dollars, above market consensus of 16.39 billion dollars; the firm will focus on the company’s outlook on the earnings call and whether its guidance retains its traditionally conservative style.
In AI networking, Bernstein believes the industry is expanding its use of scale-up architectures for interconnections within racks, which could displace demand for scale-out architectures that connect more devices. Arista has made progress on its new rack-level architecture, but the timing of new projects and its ability to gain share are greater areas of focus.
Outside AI, Arista previously indicated that enterprise campus spending offered revenue upside; Bernstein will also watch enterprise end customers’ willingness to spend on IT.

Bernstein assigns Arista an outperform rating and a 250-dollar price target, derived by applying a price-to-earnings multiple of approximately 35 to its forecast of 7.14 dollars in earnings per share for 2028.
The constraints listed by the firm include supply of Broadcom Tomahawk chips, the effect of competition from white-box switches on pricing power, and a potential decline in infrastructure investment if AI adoption slows.