Arista dips after lower 2025 outlook, but analysts remain bullish eyeing beat and raise

Arista Networks’ (NYSE:ANET) stock fell about 6% on Friday after the company’s 2025 revenue outlook was seen below estimates, but analysts maintained their bullish stance after third quarter results exceeded expectations.

The cloud networking solutions provider expects about $8B in revenue in 2025, according to Chairperson and CEO Jayshree Ullal’s comments during the third quarter earnings call. The consensus revenue estimate for 2025 is $8.12B. The company’s third-quarter results and guidance for the fourth quarter were better-than-expected.

Morgan Stanley kept its Overweight rating on Arista with a $410 price target.

Analysts led by Meta Marshall said that Arista had a strong third quarter, which they expect to carry forward to the fourth quarter. Due to the still unknown pacing of five AI trials moving to major deployments, the analsyts noted that their outlook for the year goes up, but short of some buy-side expectations. They remain Overweight given Arista’s strengthening positioning in AI networking, adding that they would be buyers of the weakness.

Arista beat revenue expectations by more than 300bps as there was strength across the business, not just with cloud. The company won a 5th major AI trial customer that is expected to go to pilots/production in 2025, according to the analysts.

Marshall and her team said that while they raised their 2025 numbers to reflect the third quarter raise and better outlook, they have largely left the growth rate as it is, and left estimates still below the buyside expectations. They think this leaves space for upside as they progress through 2025 and more about AI deployment timing is known, mainly as one trial moves slower than expected.

Needham assumed coverage of Arista with a Buy rating and set the price target at $450 noting that it sees enough room for consistent beats with the reset.

Ryan Koontz and his team noted that they assumed coverage of Arista as it delivered another excellent quarter, beating all metrics, but guided the fourth quarter operating margin (about 44%) below consensus on a delayed OpEx investment.

The analysts added that the company’s management also relayed full year 2025 revenue/gross margin/operating margin guidance that was below expectations.

Arista’s management noted an additional hyperscale AI-backend win, bringing the total to five, which will contribute to its $750MM revenue target in 2025. The company also set new $750M revenue bogies for AI-frontend and campus in 2025, according to the analysts.

Koontz and his team see further dominance at Meta Platforms (META), and growing traction at Alphabet’s (GOOGL) (GOOG) Google and Apple (AAPL) driving strong growth in 2025, but at the expense of gross margins which they suspect will decline if the company’s Enterprise business does not meaningfully accelerate.

Meanwhile, Evercore kept its Outperform rating on Arista and raised the price target on the stock to $450 from $425.

Arista reported upside in the September quarter and on the December quarter guidance, said analysts led by Amit Daryanani.

The company also provided an initial 2025 outlook of 15% to 17%, which bracketed the 16% consensus estimate, the analysts added. The analysts see the revenue outlook as conservative and Arista will be well set up to beat and raise as we go through the year.

Daryanani and his team said that Arista’s commentary on AI remains positive, and it noted five customer trials, with three of those moving into production in 2025. One of the five trials was a new one with a customer that had previously been fully InfiniBand (the analysts think Microsoft). It is encouraging as it implies that both of Arista’s largest customers will be using Arista ethernet switches for backend networks, the analysts noted.

The analysts think Meta is likely a material piece of back-end revenue in 2025, but Microsoft (MSFT) may take a little longer as they wait to roll out their internally developed accelerator.

Related to the stock decline after-hours, the analysts said that investors may be a little unhappy with a guidance that implies a revenue deceleration, but they think it is likely conservative and sets up well to beat and raise as we move through the year.