Arista NetworksNarrow moat

Arista sells the network that AI and cloud data centers run on: high-speed Ethernet switches and routers, all driven by one piece of software — EOS, the Extensible Operating System — that runs identically on every box the company has ever shipped. The model is deliberately lopsided: Arista designs no chips (the silicon is bought, mostly from Broadcom) and owns no fabs; what it owns is the software, the systems engineering and the relationships. It is a software company that invoices as a hardware company — which is why a box business carries gross margins around 64%.

The money map is short and top-heavy. Of fiscal 2025's $9.01 billion in revenue, up 29%¹, roughly $4.5 billion came from the Cloud & AI Titans — the handful of hyperscalers building the world's largest compute — about $3.2 billion from enterprises, Arista's fast-growing second act, and $1.4 billion from service providers. Two names dominate the first bucket: Microsoft alone was about 26% of revenue and Meta about 16% — a concentration that is simultaneously the proof of the product and the risk on the label.

The current numbers are what an inflection looks like. The second quarter of 2026 was the company's first three-billion-dollar quarter — $3.036 billion, up 37.7% — and full-year guidance has been raised three times to roughly $12.6 billion, a 40% growth year, with AI networking targeted at about $3.6 billion of it². The one soft note hides in the margin line: gross margin eased from 65.6% to 63.4% as the biggest customers extracted bigger discounts — the price of selling to giants.

The market grades all this as a franchise, not a vendor: roughly $255 billion of market value, about 63 times trailing earnings and 24 times sales³. That multiple prices two beliefs — that Ethernet keeps winning the AI-networking war against Nvidia's alternatives, and that the titans keep spending — and it is the frame for everything that follows. The Moat pages weigh EOS, the titan relationships, the merchant-silicon model and the balance sheet; the Future Bets follow the AI book, the 1.6-terabit generation, the scale-up push and the VeloCloud branch bet that must together earn the multiple. Its two revenue lines, product and service, are taken in turn in The Revenue Lines.