Arista Networks Raises 2026 Revenue Forecast to $12.6 Billion

Arista Networks raised its fiscal year 2026 revenue forecast to approximately $12.6 billion, a significant increase from the $11.5 billion estimate issued in May. This marks the third upward revision to the company's 2026 outlook, signaling management confidence in continued demand despite ongoing industry constraints.

The adjustment follows a period of accelerating growth, with year-over-year revenue expansion rising from 27.5% in the third quarter of fiscal 2025 to 37.7% in the second quarter of fiscal 2026. Over the three-year period ending June 30, 2026, Arista’s sales grew at an average annual rate of 26.2%, substantially outpacing the S&P 500's 5.9% average growth over the same interval.

Management attributed the recent quarterly growth to spending by AI and enterprise customers. The company noted that its Etherlink switches for AI networks have secured more than 100 customers, a sharp increase from the four or five buyers cited in 2024. This expansion indicates that Arista is selling its AI infrastructure to a broader base of clients than initially reported.

Despite strong demand, executives stated that a component shortage remains an ongoing headwind. During the fiscal Q2 2026 earnings call, management described the supply issue as a two-year problem, stating they do not expect resolution until 2028. They also noted that supply remains tight across the industry while component costs continue to rise.

To mitigate these supply risks, Arista has increased its multiyear purchase commitments. These commitments rose from $3.6 billion a year earlier to approximately $9.7 billion at the end of fiscal Q2 2026, representing a roughly 2.7-fold increase. This strategy aims to secure inventory ahead of future demand, though the prolonged shortage may limit shipping volumes and pressure margins due to rising input costs.

Arista Networks stock currently trades at 55.1 times trailing twelve-month earnings, compared to the S&P 500's multiple of 22.9 times. This valuation premium reflects expectations for sustained high growth, although the shares fell 11.3% in the month leading up to October 16, while the S&P 500 rose 0.35% over the same period.

The company’s next earnings report is expected on or around November 3, 2026. Investors will focus on fiscal Q3 2026 revenue relative to management’s guide of approximately $3.3 billion, which will serve as a key indicator of whether the current growth trajectory holds amid persistent supply chain challenges.