Arista Networks' shares have risen over 57% in 2026 as AI infrastructure demand creates networking bottlenecks. Goldman Sachs expects optical networking revenue to jump more than tenfold between 2026 and 2028. The company now has over 100 customers using its Etherlink AI networking fabric, up from 4-5 in 2024. Arista expects to generate at least $3.5 billion from AI networking customers this year, representing roughly 27% of its anticipated $12.7 billion revenue. The firm's purchase commitments surged to $9.7 billion in Q2 from $3.6 billion year-over-year. Second-quarter revenue increased 38% to $3.04 billion, with Q3 estimates pointing to 43% growth. The global Ethernet switch market grew 43% in Q2 to $18.9 billion, according to IDC.

Arista Networks trades near $188, roughly its pre-August level before the company raised its 2026 revenue outlook for the third time. The market initially priced in that forecast with a 6.7% share rise following the 4 August report, but has since returned most of those gains. Management increased its 2026 revenue outlook to $12.6 billion from $11.5 billion in May, projecting 40% growth. The raise stems from improved supply chain conditions. Multiyear purchase commitments nearly tripled to $9.7 billion at Q2 2026 end. However, gross margin fell to 63.4% in Q2 2026 from 65.6% year-over-year. Management expects rising memory and silicon costs, maintaining its 2026 gross margin guidance between 62% and 64%. The CEO warned the industry's component shortage remains a two-year problem lasting until 2028.

Arista Networks' stock has surged 51% since mid-December, outpacing the S&P 500's 12% gain. The networking equipment maker's latest revenue outlook increase is tied to improved supply chain conditions rather than demand alone. The company's AI customer base for Etherlink switches expanded from four or five customers in 2024 to over 100 currently. However, component shortages have constrained shipments. Arista increased multiyear purchase commitments to $9.7 billion by the end of June 2026, up from $3.6 billion a year earlier. The company now operates three contract manufacturers and distribution facilities across the US, Asia, and Mexico. Revenue surpassed $3 billion in the June quarter, up 38% year-on-year. Management raised its 2026 revenue outlook to $12.6 billion from $11.5 billion. The CEO expects industry-wide component shortages to persist until 2028, making Arista's current $238 billion valuation dependent on successful parts procurement.