This Quiet AI Stock Could Deliver Huge Upside in 2026

Core Insights - Arista Networks is positioned as a key player in the AI infrastructure space, focusing on high-demand networking solutions that facilitate data transfer for AI applications [4][3] Financial Performance - In Q3, Arista generated nearly $2.31 billion in revenue, marking a 27.5% year-over-year increase, driven by demand from cloud, AI, enterprise, and campus customers [2] - Software and services contributed 18.7% to total revenue, indicating a shift towards higher-margin solutions [2] - Adjusted gross margin rose to 65.2%, supported by a favorable product mix and inventory benefits [2] - Diluted EPS increased by 25% year-over-year to $0.75, while deferred revenue reached $4.7 billion, reflecting strong demand [2] Market Position and Strategy - Arista's EtherLink portfolio is crucial for automating network control, enhancing efficiency for AI accelerators, and ensuring reliable data movement at scale [1][3] - The company is collaborating with industry leaders like Nvidia, AMD, and OpenAI to build a broad ecosystem that supports AI development [6] - Management anticipates the total addressable market for networking to exceed $100 billion, positioning Arista for long-term growth [9] Future Outlook - Arista aims to generate at least $1.5 billion in AI-related revenue by 2025, with a broader target of $10.65 billion in total revenue, implying around 20% growth [8] - Analysts project earnings growth of 26.8% in 2025 and 16.7% in 2026, with a forward earnings multiple of 39x indicating strong market expectations [9] Stock Performance - ANET stock has increased by 19% year-to-date, outperforming the market, with an average price target of $166.75 suggesting a 28% upside potential [10] - Wall Street rates Arista stock as a "Strong Buy," with 16 out of 24 analysts recommending a "Strong Buy" [10]