Arista Networks, Inc.

Arista delivered an all-around beat in the last quarter to finish 2022 on a positive note. Renewals of services and software support made up about 15.8% of the total revenue in the year. In 2022, the global contribution was recorded as 23.5%, with the Americas accounting for 76.5%. Cloud Titans contributed significantly at around 46%, showing triple-digit growth. Their collaboration with Microsoft and Meta also grew stronger. Arista added SONiC functionality to its high-volume switches to further strengthen its collaboration with Microsoft. Meanwhile, their business with the other titans kept expanding. Arista also achieved design successes in the WAN, backbone, and edge folds. The team increased the 400-gigabyte, near-lossless, high-density 7800 R3 series spine. They even added several fresh products built on Tomahawk 4 and their team’s Virtual Output Queue systems built on Jericho2 to the 7280 and 7800 R3 modular systems. In addition, the top-notch, robust operating system, EOS, has advanced and can now support cloud scaling due to multiple copies of the Internet routing table. Overall, the company is well-positioned as a game-changer in data-driven client-to-cloud networking. We give Arista Networks a ‘Hold’ rating with a revised target price.