When Microsoft, Meta or another large technology company builds a data center, buying powerful processors is only part of the expense. Those processors need to communicate with thousands of servers, storage devices and other computing systems. Even a small networking delay can become costly when expensive equipment is waiting for information.
That is the business Arista Networks has spent years building. The California-based company, listed on the New York Stock Exchange under ANET, supplies the networking hardware and software used by major cloud operators and large enterprises. Its products are rarely visible to consumers, but they help run the infrastructure behind cloud computing, internet services and artificial intelligence.
Arista is often discussed as an AI-related stock. Yet its business is considerably broader than AI, and understanding that difference matters when examining how the company earns money.
What Arista Actually Sells
Arista’s main products are Ethernet switches and routers. A switch connects devices within a network, while routers help direct traffic between networks. Large data centers need thousands of these connections to move information reliably.
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The company also develops software that controls and monitors networking equipment. Its Extensible Operating System, known as EOS, runs across much of its hardware portfolio. CloudVision provides centralized network management, automation and visibility.
This software is an important part of Arista’s business model. Large customers do not choose networking equipment solely by comparing hardware specifications. They also consider how easily the equipment can be managed, whether it works with existing systems and how much effort engineers must spend maintaining the network.
Arista earns revenue from equipment sales and ongoing support services. The hardware generates most of its revenue, while service contracts provide additional income from customers maintaining their installed networks.
Why AI Has Increased Demand for Networking
Training large AI models requires many processors to work together. These processors continuously exchange information, making network performance an important factor in how efficiently an AI system operates.
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Arista develops high-speed Ethernet networking equipment for these environments. Its portfolio includes 800-gigabit platforms and newer 1.6-terabit technology designed for demanding computing workloads.
The attraction for customers is not simply faster data transfer. Better networking can help reduce the time expensive computing equipment spends waiting for information. For companies investing billions of dollars in AI infrastructure, improving utilization can make a meaningful difference.
Arista benefits when customers expand these networks, but it does not manufacture the GPUs that perform most AI calculations. Its business depends on the networking decisions made alongside those computing investments.
Big Customers Bring Big Business and Big Risks
Arista’s customer base is unusual because a relatively small number of technology companies purchase enormous quantities of networking equipment.
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In 2025, cloud and AI titans accounted for approximately 48% of its revenue. Enterprise customers contributed 32%, while AI and specialty providers represented the remaining 20%.
Two individual customers accounted for 26% and 16% of annual revenue, respectively. That concentration shows how closely Arista’s performance is connected to the infrastructure plans of its largest buyers.
A major cloud company may increase orders substantially during a data-center expansion and then reduce purchases after completing the project. These changes can affect Arista’s sales even when the customer’s underlying cloud business remains healthy.
Arista Is Trying to Build a Bigger Enterprise Business
Cloud networking established Arista’s reputation, but the company has been expanding into corporate campuses, branch offices and wider enterprise networks.
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Businesses need reliable connections between offices, employees, applications and data centers. Arista wants to supply more of that infrastructure rather than remain primarily associated with hyperscale computing.
Its acquisition of VeloCloud from Broadcom in June 2025 added software-defined wide-area networking technology. This helps organizations connect offices and other locations across geographically distributed networks.
The enterprise market offers a different type of customer relationship. Instead of depending mainly on enormous cloud infrastructure projects, Arista can sell networking products and services to a wider range of organizations. However, Cisco and Hewlett Packard Enterprise already have substantial customer relationships in this market.
What the Financial Numbers Say
Arista reported revenue of $9.006 billion in 2025, an increase of 28.6% from the previous year. Net income reached approximately $3.51 billion.
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The growth continued during the second quarter of 2026, when revenue increased 37.7% year over year to $3.036 billion. Its GAAP operating margin reached 45.4%.
These figures are notable for a company whose business still relies heavily on physical networking equipment. Arista’s profitability reflects the value of its technology, software capabilities and relationships with large customers.
However, strong operating margins also create expectations. The company must continue investing in engineering and new products while competing for increasingly demanding customer contracts.
Competition Is Getting More Complicated
Cisco remains an established competitor in enterprise networking, while Nvidia has become increasingly important in AI data-center connectivity. Nvidia offers networking systems alongside its AI computing products, giving customers another option when designing large clusters.
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Arista’s reliance on merchant semiconductor suppliers also makes supply availability and component pricing important considerations.
The company must continually improve networking performance without allowing its products to become interchangeable with cheaper alternatives. Its software, customer support and engineering capabilities are therefore just as important as the speed of its switches.
Arista’s business has grown because large computing systems need reliable connections, regardless of which company supplies the processors. AI has increased the importance of that requirement, but the company’s longer-term performance will depend on retaining major cloud customers, expanding its enterprise presence and maintaining the technical advantages that helped it compete with much larger networking companies.
Disclaimer: This article is published by Onetrader for educational and informational purposes only. It does not constitute financial or investment advice or a recommendation to buy, sell or hold any security. Investing in stocks involves financial risk. Onetrader is not registered with SEBI as an investment adviser. Readers should conduct independent research and consult a qualified financial professional before making investment decisions.
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