Arista: The Rival That Took the Data CentreNarrow moat

Cisco Systems (CSCO) — moat facet

Arista is still marginally ahead of Cisco in data-centre Ethernet revenue, $2.3 billion to $2.24 billion in a quarter, but Cisco is growing twice as fast.

Arista is the rival Cisco most needs to beat and has not. Arista's pages in this collection tell how it overtook Cisco in the data centre, and there is no need to retell that here. What is new is how close the two now are.

Data-centre Ethernet revenue, Q2 2026 ($bn)2.30 (+37.9%)Arista2.24 (+77.3%)CiscoThe Next Platform on IDC Q2 2026 Ethernet data
Almost level.

In the second quarter of 2026 IDC data showed Cisco's data-centre Ethernet revenue up 77.3% to $2.24 billion, while Arista grew 37.9% to $2.3 billion1. Arista remains marginally larger. In the first quarter IDC put Arista's data-centre share at 20.7% against Cisco's 17.8%2.

The gap is narrowing because Cisco is winning hyperscaler business again, on its own Silicon One chips. The Next Platform notes that IDC's switching figures do not include Cisco's sales of Silicon One chips to hyperscalers3, so Cisco's real presence in those data centres is somewhat larger.

Arista also wants Cisco's ground. Its pages describe enterprise and campus networking as its next market, which is where Cisco's installed base is deepest.

Arista's lead is small in money terms. At $2.3 billion against $2.24 billion in the second quarter of 20264, the difference was about $60 million in a quarter5. At the growth rates IDC reported, 77.3% for Cisco and 37.9% for Arista6, the order would reverse within a few quarters if both held.

The pace of change is worth noting. Arista's pages in this collection recorded Cisco's data-centre business growing about 16.9% in a market near 40%, a picture of steady share loss. IDC's first-quarter 2026 figure for Cisco's data-centre switching was 43.0% growth7, and the second quarter 77.3%8. The relationship has moved within a year from retreat to pursuit.

This relationship is a straight contest for the same buyers. The figure that decides it is data-centre Ethernet revenue by vendor; Cisco passing Arista in a quarter would be the first sign it has regained what it lost, while the gap widening again would show the fiscal 2026 surge was a single wave.

Moat trajectory: Widening

Cisco DC Ethernet +77.3% vs Arista +37.9% in Q2 2026.

The number that tests this moat
Third-party estimate
Data-centre Ethernet revenue vs Arista, latest quarter
$2.24bn vs $2.3bn (Q2 2026)

The head-to-head contest; Cisco passing Arista would show the lost ground regained.

Source: The Next Platform on IDC Q2 2026 Ethernet ↗
References
  1. Third-party estimateIn the second quarter of 2026 IDC data showed Cisco's data-centre Ethernet revenue up 77.3% to $2.24 billion, while Arista grew 37.9% to $2.3 billion.
    The Next Platform on IDC's Q2 2026 Ethernet data - Cisco Ethernet $5.43bn (+36.2%), data-centre $2.24bn (+77.3%), Arista $2.3bn, Nvidia $3.86bn. — Q2 2026 · publ. 20 September 2026 · source ↗
  2. Third-party estimateIn the first quarter IDC put Arista's data-centre share at 20.7% against Cisco's 17.8%.
    DataCenterKnowledge on IDC 1Q26 - data-centre Ethernet switching shares: Nvidia 21.5%, Arista 20.7%, Cisco 17.8%. — 1Q26 · publ. 2026 · source ↗
  3. Third-party estimateThe Next Platform notes that IDC's switching figures do not include Cisco's sales of Silicon One chips to hyperscalers, so Cisco's real presence in those data centres is somewhat larger.
    The Next Platform on IDC's Q2 2026 Ethernet data - Cisco Ethernet $5.43bn (+36.2%), data-centre $2.24bn (+77.3%), Arista $2.3bn, Nvidia $3.86bn. — Q2 2026 · publ. 20 September 2026 · source ↗
  4. Third-party estimateAt $2.3 billion against $2.24 billion in the second quarter of 2026, the difference was about $60 million in a quarter.
    The Next Platform on IDC's Q2 2026 Ethernet data - Cisco Ethernet $5.43bn (+36.2%), data-centre $2.24bn (+77.3%), Arista $2.3bn, Nvidia $3.86bn. — Q2 2026 · publ. 20 September 2026 · source ↗
  5. Moat Explorer calcAt $2.3 billion against $2.24 billion in the second quarter of 2026, the difference was about $60 million in a quarter.
    Moat Explorer calculation from Cisco's reported revenue, margins and financial statements ($ millions unless stated). Revenue growth FY2026 63,325 / 56,654 - 1 = 11.8%; increase 63,325 - 56,654 = 6,671. Networking share 34,668 / 63,325 = 54.7%; of product revenue 34,668 / 48,295 = 71.8%; networking increase 34,668 - 28,304 = 6,364, 6,364 / 6,671 = 95.4% of the revenue increase. Networking against FY2023 34,668 / 34,570 - 1 = 0.3%; FY2024 29,229 / 34,570 - 1 = -15.4% (a fall of 5,341); FY2025 28,304 / 29,229 - 1 = -3.2% (a fall of 925); FY2023 34,570 - 29,265 = +5,305. Other lines FY2026 changes: security 8,232 - 8,094 = +138 (+1.7%); collaboration 4,300 - 4,154 = +146 (+3.5%); observability 1,095 - 1,055 = +40 (+3.8%); services 15,030 - 15,046 = -16 (-0.1%). Product revenue 48,295 / 41,608 - 1 = 16.1%. Shares of FY2026 revenue: services 15,030 / 63,325 = 23.7%; security 8,232 / 63,325 = 13.0%; collaboration 4,300 / 63,325 = 6.8%; observability 1,095 / 63,325 = 1.7%. Observability shares: 581 / 51,557 = 1.1% (FY2022); 661 / 56,998 = 1.2%; 837 / 53,803 = 1.6%; 1,055 / 56,654 = 1.9%. Observability growth 661 / 581 - 1 = 13.8%; 837 / 661 - 1 = 26.6%; 1,055 / 837 - 1 = 26.0%; 1,095 / 1,055 - 1 = 3.8%; 1,095 / 581 = 1.88 times. Services growth 13,856 / 13,539 - 1 = 2.3% (FY2023); 14,550 / 13,856 - 1 = 5.0%; 15,046 / 14,550 - 1 = 3.4%; FY2016 to FY2026 15,030 / 11,993 - 1 = 25.3%. Services gross profit 10,346 / 40,860 = 25.3% of gross margin. Subscription services 13,663 / 15,030 = 90.9% of services. Non-subscription product 48,295 - 18,314 = 29,981; non-subscription services 15,030 - 13,663 = 1,367. Subscription share 31,977 / 63,325 = 50.5% (FY2026); 31,526 / 56,654 = 55.6% (FY2025); 27,380 / 53,803 = 50.9% (FY2024); subscription growth 31,977 / 31,526 - 1 = 1.4%. Security: 3,382 / 1,969 - 1 = 71.8% (FY2016 to FY2021, older basis); 8,094 / 3,859 = 2.1 times (FY2023 to FY2025); 8,232 / 3,699 = 2.2 times (FY2022 to FY2026). Collaboration 4,300 / 4,823 - 1 = -10.8% against FY2020. Segments: Americas revenue 37,799 / 33,656 - 1 = 12.3%; Americas gross margin 68.2% - 65.1% = 3.1 points (310 basis points); EMEA 16,613 / 14,824 - 1 = 12.1%; APJC 8,914 / 8,174 - 1 = 9.1%. United States revenue 34.4 / 63.3 = 54.3%; outside the United States 63.3 - 34.4 = 28.9 bn; United States growth 34.4 / 30.4 - 1 = 13.2%. AI and orders: Q3 FY2026 hyperscaler orders 5.3 - 1.3 - 2.1 = 1.9 bn; Acacia about 1,000 / 9,791 networking = 10.2%; FY2027 revenue guidance midpoint (72.2 + 73.4) / 2 = 72.8 bn, 72.8 / 63.325 - 1 = 15.0%; AI revenue target 7.5 / 72.8 = 10.3%; price increases 4.5 points / 15 = about a third; Q1 FY2027 gross margin guidance midpoint (65 + 66) / 2 = 65.5%; Q1 FY2027 operating margin guidance midpoint (35.5 + 36.5) / 2 = 36.0%. Security plus observability Q4 FY2026 2,226 + 275 = 2,501. Backlog: remaining performance obligations 46,734 / 63,325 = 73.8% of revenue; short-term 22,776 / 21,723 - 1 = 4.8%; long-term 23,958 / 21,810 - 1 = 9.8%. Purchase commitments 17,165 / 7,599 - 1 = 125.9%; 17,165 / 63,325 = 27.1% of revenue. Inventory 5,694 / 3,164 - 1 = 80.0%. Competitors named in the FY2026 10-K: 18 (Amazon Web Services, Arista, Broadcom, Ciena, CrowdStrike, Datadog, Dell, Dynatrace, Fortinet, Hewlett Packard Enterprise, Huawei, Microsoft, Nokia, Nvidia, Palo Alto Networks, RingCentral, Zoom, Zscaler). Balance sheet, cash flow and market data: Net income 13,267 / 10,180 - 1 = 30.3%; free cash flow 12,767 / 13,288 - 1 = -3.9%; capital spending 1,410 / 905 - 1 = 55.8%; capital spending 1,410 / 63,325 = 2.2% of revenue; free cash flow margin 12,767 / 63,325 = 20.2%; returned 12,659 / 12,767 = 99.2% of free cash flow. Dividends / free cash flow: 6,384 / 10,210 = 62.5% (FY2024); 6,437 / 13,288 = 48.4% (FY2025); 6,553 / 12,767 = 51.3% (FY2026). Dividends per share 1.66 / 0.72 = 2.3 times (FY2014 to FY2026). Buybacks: 117 - 76 = 41 million fewer shares than FY2024; average price 80.26 / 49.45 - 1 = 62.3%; FY2018-FY2026 17,661 + 20,577 + 2,619 + 2,902 + 7,734 + 4,271 + 5,764 + 5,995 + 6,106 = 73,629. Diluted shares 3,987 / 5,146 - 1 = -22.5%. Net income 13,267 / 8,981 - 1 = 47.7%; diluted EPS 3.33 / 1.75 - 1 = 90.3% (FY2015 to FY2026). Net debt 29,533 - 15,918 (cash and investments, about 15.9 bn) = 13,615, about 13.6 bn. Net interest 1,365 - 1,006 = +359 (FY2024); 1,001 - 1,593 = -592 (FY2025); 866 - 1,470 = -604 (FY2026). Goodwill 59,477 / 129,637 = 45.9% of total assets; Splunk goodwill 19,301 / 27,090 = 71.2% of consideration. Employees 82,400 / 90,400 - 1 = -8.8%; R&D 9,563 - 9,300 = +263; sales and marketing 11,559 - 10,966 = +593; R&D 9,563 / 63,325 = 15.1% of revenue; restructuring 693 / 63,325 = 1.1% of revenue. FY2025 net income as released about 10,500 - 10,180 as filed = about 320 (about 0.3 bn); EPS 2.61 - 2.55 = 0.06. Free cash flow yield 12,767 / 421,740 = 3.0%. Price against the 52-week high 106.97 / 130.37 - 1 = -17.9%. P/E 421,740 / 13,267 = 31.8; P/S 421,740 / 63,325 = 6.66. Further: revenue FY2023 to FY2026 63,325 / 56,998 - 1 = 11.1%; HPE and Juniper Ethernet 1.15 / 5.43 = 21.2% of Cisco Ethernet; non-GAAP EPS 4.33 / 3.81 - 1 = 13.6%; FY2026 order forecast 9 / 5 - 1 = 80%; FY2025 AI orders 2.0 / 56.654 = 3.5% of revenue; FY2026 9.3 / 63.325 = 14.7%; product subscription 18,314 / 17,783 - 1 = 3.0%; FY2018 buyback 17,661 / 80.26 = 220 million shares; 76 / 3,946 = 1.9% of shares; revenue FY2024 to FY2026 63,325 / 53,803 - 1 = 17.7%; Arista 2.30 - 2.24 = 0.06 bn; R&D 9,300 / 7,983 - 1 = 16.5% and revenue 56,654 / 53,803 - 1 = 5.3% (FY2025); R&D 9,563 / 9,300 - 1 = 2.8% (FY2026); Q1 FY2027 guidance midpoint 18.1 / 14.883 - 1 = 21.6%; FY2028 consensus P/E 106.97 / 5.62 = 19.0; cash 15.9 / 6.553 = 2.4 years of dividends; services obligations 23,298 / 46,734 = 49.9% and 23,298 / 15,030 = 1.55 years; short-term debt 10,161 / 29,533 = 34.4%; authorisation 8.1 / 6.1 = 1.3 years; product-services margin spread 68.8 - 63.2 = 5.6 points; FY2024 returns (6,384 + 5,764) / 10,210 = 119%; diluted shares 4,254 / 4,881 - 1 = -12.8% (FY2018 to FY2020); buybacks FY2018 and FY2019 17,661 + 20,577 = 38,238; AI revenue 7.5 / 3.8 = 1.97 times; FY2027 GAAP EPS guidance midpoint (4.00 + 4.06) / 2 = 4.03, 4.03 / 3.33 - 1 = 21.0%; G&A 2,761 / 2,992 - 1 = -7.7%; Q4 security 2,226 / 8,232 = 27.0% of the year - revenue mix, shares and concentration. — FY2015-FY2027 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Cisco's Forms 10-K, quarterly results releases, the Q4 FY2026 call and market data; operands shown in the source line.
  6. Third-party estimateAt the growth rates IDC reported, 77.3% for Cisco and 37.9% for Arista, the order would reverse within a few quarters if both held.
    The Next Platform on IDC's Q2 2026 Ethernet data - Cisco Ethernet $5.43bn (+36.2%), data-centre $2.24bn (+77.3%), Arista $2.3bn, Nvidia $3.86bn. — Q2 2026 · publ. 20 September 2026 · source ↗
  7. Third-party estimateIDC's first-quarter 2026 figure for Cisco's data-centre switching was 43.0% growth, and the second quarter 77.3%.
    IDC, Worldwide Ethernet switch and router tracker, 1Q26 - Cisco switching revenue $4.5B and 29.3% share, router share 35.1%. — 1Q26 · publ. 2026 · source ↗
  8. Third-party estimateIDC's first-quarter 2026 figure for Cisco's data-centre switching was 43.0% growth, and the second quarter 77.3%.
    The Next Platform on IDC's Q2 2026 Ethernet data - Cisco Ethernet $5.43bn (+36.2%), data-centre $2.24bn (+77.3%), Arista $2.3bn, Nvidia $3.86bn. — Q2 2026 · publ. 20 September 2026 · source ↗
Sources
Generated September 25, 2026