We're Reiterating Our $180 Price Target and One Rating on This Holding
Hyperscaler and related capex figures suggest this company's 2026 revenue outlook skews conservative
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Earlier today, we reiterated our price target for Dutch Bros (BROS) , and we are doing the same for Arista Networks (ANET) , maintaining our $180 target. As we do this, we are seeing multiple price target increases for Arista across Wall Street.
Goldman Sachs and UBS increased their Arista targets to $188 and $177, respectively, from $165 and 155, but the bigger move was at Evercore ISI, as it upped its target to $200 from $175. Morgan Stanley raised its target for Arista to $165 from $159, while Bank of America increased theirs to $185 from $175, with Wells Fargo matching BofA’s revision.
Remember, our thinking has been that rising spending on AI and data center buildouts and increasing data traffic from AI, streaming, and other connected devices would drive demand for Arista. The company’s ~29% year-over-year revenue increase in Q4 2025 speaks to that, and so does the ~8% sequential one.
To that, we add the jump in Arista’s total deferred revenue to $5.4 billion exiting 2025 from $4.7 billion at the end of September. As impressive as that 15% increase is, however, keep in mind we should see total deferred revenue move higher as the significant step up in hyperscaler capital spending for 2026 happens. One of the bigger increases was at Meta (META) , which is a key customer for Arista, as is Microsoft (MSFT) .
Those two customers accounted for ~42% of Arista’s revenue in Q4 2025, but it would be a mistake to think they were the only drivers for revenue and deferred revenue in the quarter. Spending also remains strong across Arista’s other customer sectors, which include Enterprise and Financials (32% of revenue) and AI and Specialty providers (20% of revenue, including Apple (AAPL) , Oracle (ORCL) , and other neoclouds). That led the Arista management team to suggest we could see one or two more 10% customers in 2026.
Based on that deferred revenue and the announced step up in 2026 capital spending levels, Arista guided for 2026 revenue of ~$11.25 billion, up 25% year over year, and at a quicker pace than its prior 20% guidance. Baked in that guidance is a doubling to $3.25 billion for what Arista labels “AI centers,” but our thinking about those figures is that they are likely to prove to be somewhat conservative. We’ll have a better idea on that as other data center companies report in the coming weeks. We’ll also compare those aggregate figures against comments from Nvidia (NVDA) when it reports later this month.
A Word on Deferred Revenue
A quick word on deferred revenue and how that ties to revenue delivered by Arista. Exiting 2024, the company’s total deferred revenue stood at $2.8 billion, and it went on to deliver $9 billion in total revenue for 2025. While the total deferred revenue of $5.4 billion offers ample coverage for management’s 2026 revenue guidance, consider the timing of when Meta and others announced their 2026 capital spending plans.
All we’re saying is that as those capital spending dollars are released, we should see a continued step up in Arista’s deferred revenue — and that step up is a potential catalyst for others to become more bullish on ANET shares.
Revenue Guidance
For the current quarter, Arista sees revenue coming in at ~$2.6 billion, vs. $2.48 billion in the December quarter and $2.0 billion in the March 2025 quarter. Examining management’s guidance and the company’s 2025 revenue of $9 billion implies year-over-year revenue growth of 23.5% in Q2-Q4 2026. Again, when matched against 2026 capita spending figures, that adds to our thinking that Arista’s guidance is likely to be somewhat conservative.
When Arista management presents at the Bernstein Insights: What’s Next in Tech event on February 25 and at the Morgan Stanley Tech Conference on March 3, we’ll be paying close attention to comments about order and deferred revenue activity. We’ll also be mindful about the impact of winter weather, chip shortages, and other items that could pose a short-term bump in the road for AI and data center construction.
And yes, the networking equipment demand outlook for Arista, Cisco (CSCO) , and others supports our view on shares of Marvell (MRVL) and Broadcom (AVGO) .
At the time of publication, TheStreet Pro Portfolio was long ANET, BROS, META, MSFT, NVDA, MRVL and AVGO.
