NEW YORK, May 2, 2026, 15:01 (EDT)
- Morgan Stanley bumped its price target on Arista Networks to $180, up from $165, just before the company’s May 5 results.
- Wall Street is looking for Arista to deliver first-quarter revenue in the area of $2.62 billion, with adjusted earnings pegged at 81 cents per share.
- Arista’s lofty valuation and margin goals now hinge on one key thing: sustained AI data-center demand, at least for the foreseeable future.
Meta Marshall at Morgan Stanley bumped up the price target on Arista Networks Inc. to $180 from $165 while sticking with an Overweight call, noting chatter around the name has “started to pick up” ahead of next week’s earnings. Arista shares slipped a cent to end Friday at $172.70, after reaching $177.14 earlier in the session. TipRanks
Timing is key here. Arista is set to post Q1 numbers after the U.S. market wraps up on Tuesday, May 5. For investors, that’s the next checkpoint to see if AI data-center demand is still translating into spending on the network layer—the switches, optics, and software that connect chips, servers, and storage.
Wall Street is looking for first-quarter revenue of $2.62 billion at Arista, according to the Zacks Consensus Estimate, with adjusted earnings set at 81 cents per share. Back in February, Arista itself forecast revenue to land around $2.6 billion, alongside a non-GAAP gross margin between 62% and 63%, and an operating margin near 46% on a non-GAAP basis. (Non-GAAP figures strip out items like stock-based compensation.)
The hurdle is steep, though hardly unfamiliar. Arista’s fourth-quarter revenue landed at $2.488 billion, a jump of 28.9% versus last year. Non-GAAP net income reached $1.047 billion, or 82 cents per share. CEO Jayshree Ullal said Arista “exceeded both our AI networking and campus expansion goals,” and CFO Chantelle Breithaupt cited “strong operating leverage.” Arista Networks
Management is turning up the pressure for 2026. During the February earnings call, Arista upped its AI networking revenue target to $3.25 billion, a jump from the previous $2.75 billion, and mapped out a 2026 revenue goal of roughly $11.25 billion—a 25% increase. AI networking, in this context, covers the equipment and software connecting AI accelerators, or clusters of chips handling model training and inference.
Forget the headline numbers for a moment—investors will want to dig into product specifics. Back in March, Arista rolled out XPO, a liquid-cooled pluggable optics module pushing 12.8 Tbps. These pluggable optics are essentially swappable modules for zipping data across fiber lines. “A new generation” of optics is needed to keep up with AI’s bandwidth demands, Arista Chief Architect Andreas Bechtolsheim said. Microsoft’s Matthew Mattina pointed to XPO as an “important milestone,” and Sameh Boujelbene at Dell’Oro Group labeled it a “breakthrough for AI data centers.” Arista Networks
Arista is elbowing its way into a packed market. Cisco Systems and Hewlett Packard Enterprise have been battling it out in network equipment for years, while Nvidia is making bigger moves into AI-focused data center networking. According to Zacks, Arista’s push to expand its offerings is giving it more of a fighting chance against Cisco and HPE. Investor’s Business Daily points to Nvidia, Cisco, and HPE’s Juniper arm as key players Arista faces in the AI networking race.
Some of the excitement lately has been linked to spending from big cloud clients, analysts say. Evercore ISI called Google’s Virgo Network—a scale-out AI data-center fabric—both “technically significant” and an “incremental positive” for Arista, pointing out the architecture aligns well with Arista’s products. The firm left its Outperform on the stock unchanged, along with a $200 target price. TipRanks
Much of the optimism is already reflected in the stock. Arista’s consensus first-quarter revenue stands at roughly $2.62 billion, a jump of 30% year over year, according to a recent earnings preview. Still, the preview flagged that shares are expensive, trading at a forward price-to-earnings ratio close to 50, and an enterprise value-to-sales multiple of about 18.5.
There’s a chance AI-driven demand could show up unevenly, or with thinner margins than hoped. Arista has pointed to several risks: concentrated sales tied to just a handful of customers, ongoing supply chain constraints, tariffs, and shifting margins, not to mention reliance on core suppliers. Back in February, the company also highlighted pressure from rising memory and silicon costs, swings in deferred revenue, and the unpredictable pace of customer adoption.
So, Tuesday’s report packs extra significance this time. Eyes are on revenue — does it beat the consensus? Gross margin is expected to land between 62% and 63%. Another question: will management project confidence that large cloud and AI clients are still buying in line with those 2026 goals?
