Arista Networks, Inc. (ANET Quick QuoteANET - Free Report) outlined an ambitious 2027 growth plan on its third-quarter 2026 earnings call, centered on AI networking and expanding enterprise demand. Management also addressed supply constraints and the timing of new product deployments.

The call also exposed two investor pressure points: whether suppliers can support that pace and how to interpret deferred revenue as new AI products reach customers.

ANET Targets a Larger AI Business in 2027

CEO Jayshree Ullal projected approximately $18.5 billion in 2027 revenues, indicating 38-40% growth. She expects AI fabrics revenue to double to approximately $7 billion, while cognitive campus revenue rises 60% to approximately $2 billion.

During the Q&A, a JPMorgan analyst questioned slower implied growth outside AI and campus. Ullal said that she expects double-digit growth across all sectors, though front-end and back-end network spending can fluctuate between periods.

CFO Chantelle Breithaupt outlined a 2027 non-GAAP gross margin of 62-64% and an operating margin of approximately 49%, maintaining profitability targets alongside the expansion.

Arista Raises Its Near-Term Outlook Again

Ullal raised the 2026 revenue outlook for the fourth time this year to $13.3 billion, representing 48% annual growth. Breithaupt guided for fourth-quarter revenue of $3.9 billion to $4 billion.

The CFO also projected fourth-quarter non-GAAP operating margin of 48-49% and non-GAAP earnings per share of $1.26-$1.3.

Third-quarter revenues reached $3.66 billion, up 58.5% year over year and above the $3.31 billion Zacks Consensus Estimate. Non-GAAP earnings of $1.2 per share exceeded the $1.08 estimate, while non-GAAP operating margin reached 49.1%.

Arista Networks, Inc. Price, Consensus and EPS Surprise

Arista Networks, Inc. price-consensus-eps-surprise-chart | Arista Networks, Inc. Quote

ANET Expects Scale-Across Demand to Expand

Ullal described a shift toward distributed AI inference and networking across data centers. Arista has surpassed 100 Etherlink customers, while its scale-up Ethernet products are expected to enter trials in 2027 and production in 2028.

Answering a Morgan Stanley analyst, Ullal said that scale-across accounted for roughly 30% of the relevant business mix in 2026 and could exceed one-third in 2027. Scale-up revenues should remain immaterial next year.

A Goldman Sachs analyst pressed for clarification on projected deployments exceeding 10 gigawatts by the end of 2027. Ullal described Arista's involvement across diverse accelerators and both new and existing distributed installations.

Arista Defends Supply and Revenue Visibility

Breithaupt reported inventory of $3.2 billion, up from $2.5 billion in the preceding quarter, and purchase commitments of $11.4 billion, up from $9.7 billion. These commitments support component availability for new products and AI deployments.

An Evercore ISI analyst asked about the supply assumptions behind 2027 guidance. Breithaupt cited supplier agreements and two quarters of demand visibility, while acknowledging that the company plans for the following two quarters.

A BofA Securities analyst questioned whether deferred revenue remains a useful growth indicator. Ullal and Breithaupt emphasized that new-product acceptance conditions can shift revenue recognition; the $6.8 billion deferred balance should not be read as a direct quarterly demand forecast.

ANET Sees Enterprise Security Driving Adoption

President and COO Todd Nightingale highlighted customer wins in healthcare, hospitality and Asian web services, citing reliability, automated network management and security segmentation as reasons for adoption.

Responding to Barclays, Nightingale connected campus demand with enterprises prioritizing uninterrupted operations and rapid security updates. President and CTO Kenneth Duda added that lengthy equipment replacement cycles support a multiyear adoption process.

Asked by Wolfe Research about higher research spending, Duda cited liquid cooling and customized AI architectures. Breithaupt said quarterly research and development spending can fluctuate within a framework of 9-11% of revenues.

Arista Emphasizes Execution Across Markets

Ullal framed the opportunity around open Ethernet networking, more accelerator choices and enterprise adoption rather than a single AI deployment model. Management's priorities extend across scale-out, scale-across and campus networks.

Breithaupt emphasized securing components and investing ahead of demand while preserving margins. Those priorities remain central to executing the company's 2027 outlook amid industry supply constraints.

ANET's Zacks Rank and Style Scores

ANET carries a Zacks Rank #2 (Buy) at present, indicating favorable earnings estimate revisions and a positive near-term ranking. Its Growth Score of B and Momentum Score of B reflect relatively attractive characteristics in those styles. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Value Score of D points to less attractive valuation characteristics, while the combined VGM Score of C falls below the A or B grades Zacks favors alongside top-ranked stocks. The Zacks Rank can change as analysts revise estimates following the reported results.