Key Takeaways:
Arista Networks reported Q2 revenue of $3.01 billion, up 37.7 percent from a year earlier, its first quarter above $3 billion.
"Arista is experiencing significant demand to achieve our first $3 billion quarter in revenue," Chairperson and Chief Executive Officer Jayshree Ullal said.
Non-GAAP diluted EPS rose 39.7 percent to $1.02, beating the $0.88 consensus by 14 cents. Gross margin came in at 63.4 percent, up 100 basis points sequentially on tariff refunds and customer mix, while operating margin reached 49.9 percent. Net income was $1.3 billion, or 42.9 percent of revenue.
Shares jumped 11.8 percent after hours to $212.99, from a $190.51 close. The company raised its full-year 2026 revenue forecast to about $12.6 billion, implying 40 percent growth and a $1.1 billion increase over its May projection of $11.5 billion — its third guidance raise this year.
International revenue reached $697.8 million, or 23 percent of total sales, up from 13.5 percent in the prior quarter. Cash and marketable securities ended the quarter at $13.3 billion, up from $12.4 billion, while multiyear purchase commitments rose to $9.7 billion from $8.9 billion sequentially and nearly tripled from $3.6 billion a year earlier.
The supply-chain push is unlocking shipments. Chief Operating Officer Todd Nightingale said Arista secured memory supply for 2026 with visibility into 2027, qualified new vendors for PCBs and optics, and built a liquid-cooling supply chain across cold plates, quick disconnects and tubing. The company now runs three contract manufacturers and three distribution facilities in the U.S., Asia and Mexico. Ullal cautioned the industry-wide shortage may persist until 2028.
AI fabric momentum is broadening. Cumulative customers deploying Arista's Etherlink switches exceeded 100, up from four to five at the start of 2024. The company introduced the 7060X-E7 platform with 100-terabit capacity and 1.6-terabit throughput, with trials expected in the second half of 2026 and production in 2027. Chief Technology Officer Ken Duda highlighted three EOS features — Smart System Upgrade, Multipath Reliable Connection and SRv6 segment routing — aimed at keeping AI training clusters running without disruption.
For the third quarter, Arista guided to revenue of about $3.3 billion, gross margin of roughly 63 percent and diluted EPS of $1.06 to $1.08. It maintained its 2026 targets of at least $3.5 billion in AI fabrics revenue and at least $1.25 billion in campus revenue, with the extra $1.1 billion expected to flow across AI, core data center, campus and routing. Ullal said she expects one or two customers to join Microsoft and Meta as 10 percent-plus accounts depending on shipment mix.
The guidance raise signals management expects AI networking demand to accelerate through the second half. Investors will watch the Q3 earnings call for how the incremental revenue splits across product lines and whether supply-chain gains hold as component costs rise.
This article is for informational purposes only and does not constitute investment advice.
