Summary of Arista Networks FY Conference Call (December 11, 2025) Company Overview - **Company**: Arista Networks (NYSE: ANET) - **Industry**: IT Hardware and Communication Equipment Key Points Competitive Landscape - **AI Momentum**: Strong activity in the AI space, with Arista focusing on scale-out networking to connect accelerators rather than competing directly with NVIDIA's closed systems [4][5] - **Differentiation**: Arista's unique selling proposition lies in its software (EOS) and efficient hardware design, which offers about 25% lower power draw compared to competitors [6] Market Opportunities - **Non-NVIDIA Accelerators**: Growth in non-NVIDIA accelerator ecosystems presents new opportunities for Arista, particularly in scale-out and scale-across networking [5] - **Campus Market**: Arista is targeting the $30 billion campus market, currently holding about 2.5% market share overall and approximately 5% in the large enterprise segment [15][16] Product Development - **AI and Cloud Deployments**: Arista is seeing strong growth in AI deployments, with a target of $2.75 billion in revenue, driven by both large and tier-two cloud customers [19][20] - **Liquid Cooling Technology**: Anticipated ramp-up in liquid cooling technology for data centers, expected to complement existing compute infrastructure [38][39] Financial Metrics - **Deferred Revenue**: The company has a growing deferred product revenue balance, attributed to longer acceptance terms for larger, more complex projects [24] - **Growth Projections**: Arista expects over 50% growth in the campus segment for the upcoming year, indicating strong demand and market share gains [13] Strategic Partnerships - **Engagement Models**: Different engagement models exist between hyperscalers and tier-two clouds, with hyperscalers requiring close partnerships for co-development [21][22] - **Dual Sourcing Preference**: Customers prefer dual sourcing to avoid being locked into proprietary technologies, which benefits Arista as an Ethernet vendor [32] Technology Trends - **Speed Migration**: The transition from 400G to 800G is expected to accelerate, particularly in AI applications, with Arista focusing on being first to market with next-gen products [34][36] - **Optical Technologies**: LPO (Low Power Optics) and CPO (Co-Packaged Optics) are seen as promising technologies that can reduce costs and power consumption [40] Supply Chain Management - **Component Availability**: Arista faces challenges in managing component availability due to high demand and long lead times for chips, requiring strategic pre-ordering [42][43] Conclusion - Arista Networks is well-positioned in the IT hardware and communication equipment industry, with strong growth prospects in AI, cloud, and campus markets. The company's focus on software differentiation, efficient hardware design, and strategic partnerships will be crucial in navigating competitive dynamics and supply chain challenges.

Group 1 - Arista Networks Inc. is targeting a 20% growth for the next fiscal year, driven by artificial intelligence and data-center expansion, projecting $2.75 billion in AI-related revenue [2] - The company plans to acquire 25 to 40 new AI clients, including enterprises and sovereign entities, supported by an 87% increase in deferred revenue in Q3 due to AI data-center projects [3] - Analysts are optimistic about Arista's growth, with Citi forecasting a 28% sales growth in fiscal 2026 and reiterating a "Buy" rating, while Barclays raised its target price to $183, citing long-term benefits from AI and cloud computing [3] Group 2 - The Extensible Operating System platform enables Arista Networks to provide data-driven cloud, AI, and data-center networking solutions to global enterprises, service providers, and government clients [3] - UBS analyst David Vogt highlighted a robust outlook for Arista Networks, reiterating a "Buy" rating and setting a price target of $155 [3] - Despite the positive outlook for Arista, there are suggestions that other AI stocks may offer greater upside potential with less downside risk [3]

Core Insights - Whales have adopted a bullish stance on Arista Networks, with 28% of investors opening trades with bullish expectations and 14% with bearish [1] - The major market movers are focusing on a price range between $100.0 and $240.0 for Arista Networks over the last three months [2] - The trading volume and open interest data indicate significant liquidity and interest in Arista Networks' options [3] Options Trading Overview - A total of 14 trades were detected for Arista Networks, with 6 puts totaling $218,900 and 8 calls totaling $856,505 [1] - The biggest options trades include bullish call trades with significant total trade prices, such as a $360,000 trade at a strike price of $150.00 [7] Company Profile - Arista Networks is a networking equipment provider specializing in Ethernet switches and software for data centers, with a focus on high-speed applications [9] - The company has gained market share since its founding in 2004 and derives approximately 75% of its sales from North America, with major customers including Microsoft and Meta Platforms [9] Current Market Position - Analysts have set an average price target of $140.0 for Arista Networks, with a neutral rating maintained by a professional analyst [11][12] - The current trading volume for Arista Networks is 3,368,518, with the stock price up by 2.98% to $136.31 [15]

Core Insights - Arista Networks, Inc. has introduced a new technology called Virtual Ethernet Segment with Proxy ARP (VESPA) aimed at enabling enterprises to build large, reliable, cloud-managed Wi-Fi networks, particularly in environments like universities, hospitals, and corporate campuses [2][9] Product Development - VESPA supports over 500,000 devices and 30,000 wireless access points, facilitating seamless roaming across campuses and utilizing data-center technologies such as Virtual Extensible LAN (VXLAN) and Ethernet VPN (EVPN) for large-scale mobility [3][9] - The technology minimizes disruptions related to roaming domains, ensuring zero downtime for mission-critical applications and faster failover [4] - Arista has also upgraded its Autonomous Virtual Assist (AVA), which leverages a Large Language Model (LLM) for enhanced network insights, quicker troubleshooting, and efficient issue resolution [5][9] Competitive Landscape - Arista faces competition from Hewlett Packard Enterprise (HPE) and Cisco Systems, Inc. HPE has introduced new AIOps features and an AI rack-scale solution called "Helios," while Cisco has partnered with Madison Square Garden to modernize its networking infrastructure and launched the Unified Edge platform [6][7] Financial Performance - Arista's stock has increased by 23.8% over the past year, significantly outperforming the industry average growth of 2.4% [8] - The company trades at a forward price-to-sales ratio of 15.68, which is above the industry average of 4.92 [10] - Earnings estimates for 2025 have risen by 3.2% to $2.88, and for 2026, they have increased by 3.4% to $3.31 over the past 60 days [11]

Core Insights - Arista Networks is generating lucrative profit margins, which is a point of interest for investors [1] - Investors are concerned about Nvidia's expansion of services and its competitive stance against Arista Networks [1] Company Analysis - Arista Networks (ANET) has shown a positive stock performance, increasing by 1.78% [1] - Nvidia (NVDA) is perceived as a potential competitor to Arista Networks, raising investor concerns regarding market dynamics [1] Market Dynamics - The competitive landscape is shifting as Nvidia expands its services, prompting scrutiny on how it will impact Arista Networks [1]

Core Insights - Arista Networks, Inc. (ANET) and International Business Machines Corporation (IBM) are key players in the enterprise and data-center networking sector, focusing on cloud computing and AI workloads, hybrid cloud adoption, and data center growth [1][3] - Arista is recognized for its extensive product line in data center and campus Ethernet switches and routers, offering high capacity, low latency, and power efficiency [1][4] - IBM provides cloud and data solutions that support enterprises in digital transformation, including hybrid cloud services and advanced IT solutions [2][3] Arista's Position - Arista leads in 100-gigabit Ethernet switches and is gaining traction in 200- and 400-gigabit high-performance switching products, driven by solid demand trends among enterprise customers [4] - The company has introduced new software products, including CloudEOS Edge and cognitive Wi-Fi software, enhancing its multi-cloud and cloud-native capabilities [4][5] - Despite its strengths, Arista faces challenges such as high operating costs, with total operating expenses rising 36% to $512 million in Q3 2025, and R&D costs increasing 38.2% year over year to $326 million [6] IBM's Position - IBM is benefiting from strong demand for hybrid cloud and AI, particularly in its Software and Consulting segments, with growth supported by analytics and security [7][8] - The acquisition of HashiCorp has enhanced IBM's capabilities in managing complex cloud environments, complementing its Red Hat offerings [9] - However, IBM faces competition from AWS and Azure, with pricing pressure impacting margins and profitability [10] Financial Estimates - The Zacks Consensus Estimate for Arista's 2025 sales and EPS indicates year-over-year growth of 26.7% and 26.4%, respectively [11] - For IBM, the estimates imply growth of 6.8% in sales and 10.3% in EPS for 2025 [12] Price Performance & Valuation - Over the past year, Arista's stock has increased by 21.2%, while IBM's has surged by 34.9% [13] - IBM's shares trade at a forward P/E of 25.5, significantly lower than Arista's 39.67, suggesting a more attractive valuation for IBM [14] Investment Considerations - Both companies expect sales and profits to improve in 2025, with Arista showing better price performance and estimate revisions, albeit at a higher valuation [16] - Investors interested in AI and cloud infrastructure may prefer Arista, while those seeking a resilient tech investment may lean towards IBM [16]

Core Insights - The BBH Select Series - Mid Cap Fund experienced a total return decrease of -0.9% in Q3 2025, underperforming the Russell Midcap Index, which returned 5.3% during the same period [1] - Year-to-date, the Fund's total return is -1.8%, compared to a 10.4% return for the Index [1] - The third quarter saw a continuation of the low-quality rally that began late last year, gaining momentum throughout 2025 [1] Company Highlights - Arista Networks, Inc. (NYSE:ANET) is a key holding in the BBH Select Series - Mid Cap Fund, recognized for its development and distribution of data-driven, client-to-cloud networking solutions [2] - Over the last month, Arista Networks' stock returned -0.20%, but it has appreciated by 21.67% over the past 52 weeks, closing at $130.04 per share on December 09, 2025, with a market capitalization of $163.757 billion [2] - Arista Networks, Inc. was one of the largest positive contributors to the Fund's performance in Q3 2025 [3]

Group 1 - The event is the TMT+C Conference in New York, focusing on the semiconductor and data infrastructure sectors [1] - Arista Networks is represented by key executives including the SVP and CFO, Chief Customer Officer, and a member of the IR team [2]

Core Viewpoint - Arista Networks Inc. (NYSE:ANET) is experiencing mixed analyst sentiment, with UBS maintaining a Buy rating and a price target of $155, while Rosenblatt Securities has a Hold rating with a target of $140 [1][2]. Financial Performance - In fiscal Q3 2025, Arista Networks reported a revenue increase of 27.46% year-over-year, reaching $2.31 billion, which exceeded estimates by $41.76 million [3]. - The earnings per share (EPS) for Q3 was $0.75, surpassing consensus estimates by $0.04 [3]. - International revenue accounted for $468.3 million, representing over 20% of total quarterly revenue [3]. Future Guidance - Management has provided modest guidance for Q4, expecting revenue between $2.3 billion and $2.4 billion, which is below Wall Street's estimate of $3.3 billion [2]. - Analysts at UBS project a 20% growth for Arista Networks in fiscal 2026, which is considered reasonable given the company's recent growth rates of 27.75% over the past 12 months and a 24% compound annual growth rate (CAGR) over the last five years [4]. Market Sentiment - The stock has seen a 16% decline since the release of Q3 results, indicating a drop in investor sentiment despite the earnings beat [2].

Summary of Arista Networks Conference Call (December 09, 2025) Company Overview - **Company**: Arista Networks (NYSE: ANET) - **Industry**: Networking and Data Infrastructure - **Growth**: Expected to reach $10 billion in revenue with a 20% growth estimate for the upcoming year [8][9][13] Key Points Market Opportunity - **Total Addressable Market (TAM)**: Increased from $70 billion to $105 billion year-over-year, encompassing AI, data centers, cloud, enterprise, and campus networking [9][11] - **Market Leadership**: Arista is a market share leader in front-end data center networking and is the only vendor outside of China with significant AI networking capabilities [11][12] Customer Concentration and Diversification - **Customer Base**: Historically, 40% of revenue came from two customers; however, Arista aims to diversify its revenue streams as it approaches the $10 billion mark [12][13] - **Enterprise Growth**: Targeting $800 million in revenue from the enterprise segment in 2025, increasing to $1.25 billion in 2026, representing only 5% market share [13][14] AI Market Dynamics - **AI Spending**: Estimated $2.3 trillion in AI-related spending from 2022 to 2035, with significant opportunities in agentic AI and autonomous robotics [15][16] - **Demand Drivers**: Industries such as education, finance, and healthcare are increasingly adopting AI, leading to a surge in data demand [18][20] Customer Segmentation - **NeoCloud and Sovereign Customers**: NeoCloud customers appreciate Arista's hyperscaler experience, while sovereign customers face longer decision-making cycles due to organizational complexities [22][50] - **Enterprise Adoption**: Enterprises are shifting from cloud-based AI training to on-premise solutions, indicating a trend towards localized data processing [24][27] Technology and Product Strategy - **Scale-Up Opportunities**: Arista is exploring scale-up architectures, which are not currently included in the TAM but are expected to be significant as the market matures [55][56] - **Campus Networking**: Arista plans to leverage its existing portfolio and go-to-market strategy to capture a larger share of the campus networking market, which has a refresh cycle of five to nine years [61][62] Channel Strategy - **Channel Engagement**: Arista is enhancing its channel strategy, focusing on a mix of channel-led and channel-fulfilled approaches to improve market penetration [66][69] Future Outlook - **Growth Indicators**: Key indicators for future growth include guidance, deferred revenue growth, and purchase commitments, with optimism for the next five to ten years [71] Additional Insights - **Customer Decision-Making**: The ownership of AI initiatives within enterprises can influence whether they opt for on-premise or cloud solutions, highlighting the importance of understanding customer dynamics [30][31] - **Blurring of Front-End and Back-End**: The distinction between front-end and back-end networking solutions is becoming less clear as customers seek flexible, integrated solutions [34][36] This summary encapsulates the essential insights from the Arista Networks conference call, highlighting the company's strategic direction, market opportunities, and evolving customer dynamics in the networking industry.