Arista Networks Inc (ANET): A Bull Case Theory

Tue, Sep 16, 2025, 10:43 AM 3 min read

We came across a bullish thesis on Arista Networks Inc. on Long-term Investing’s Substack by Sanjiv. In this article, we will summarize the bulls’ thesis on ANET. Arista Networks Inc's share was trading at $135.87 as of September 2^nd. ANET’s trailing and forward P/E were 53.28 and 41.32 respectively according to Yahoo Finance.

Arista Networks (ANET) has delivered another strong quarter in Q2 2025, with revenues of $2.2 billion, up 30.4% year-over-year, exceeding guidance and prompting a significant upward revision of its FY 2025 revenue outlook to $8.75 billion, up from 17% growth to 25%. Operating expenses rose modestly by 13% year-over-year, driving a 41% increase in operating profit, highlighting ANET’s strong operating leverage. International sales reached $481 million, or 21.8% of total revenue, with EMEA performing particularly well.

The company maintains high gross margins of 65.2%, while R&D and SGA spending remain efficient at 13.4% and 7.1% of revenue, respectively. Cash flow remains robust, with operating cash flow of $1.2 billion and free cash flow of $1.17 billion, supported by a strong balance sheet with $8.8 billion in cash and short-term investments and negligible CapEx.

ANET continues to capitalize on the surge in demand for AI datacenters, benefiting from large-scale investments by cloud hyperscalers like Microsoft and Meta, as well as the shift from proprietary networking protocols to open Ethernet standards under the Ultra Ethernet Consortium. The company’s leading Etherlink products and EOS operating system position it as the premier AI networking platform, with back-end AI networking revenues expected to exceed $1.5 billion in 2025. The VeloCloud acquisition further strengthens its enterprise and campus portfolio. ANET’s operational efficiency, scale, and expanding AI networking opportunities support high margins despite potential competition from cheaper “white-box” alternatives.

While trading at a two-year forward P/E of 43x, above conservative fair value estimates of $95–$105, ANET’s growth trajectory, strong balance sheet, and dominant position in AI networking make it a compelling long-term holding. The company remains a high-conviction portfolio investment, expected to continue outperforming and capturing incremental opportunities from the AI infrastructure boom.

Previously we covered a bullish thesis on Arista Networks Inc (ANET) by Charly AI in April 2025, highlighting its strong positioning in AI and cloud networking, robust margins, and long-term growth potential despite short-term volatility. The stock has appreciated approximately 95% since then as structural demand for AI datacenters materialized. Sanjiv shares a similar bullish view but emphasizes ANET’s Q2 2025 results and expansion into back-end AI networking, reinforcing its growth trajectory.