Shares of Arista Networks Inc (NYSE:ANET) surged nearly 18% on Wednesday after the cloud networking firm reported quarterly results that handily beat expectations and raised its full-year revenue forecast, bolstered by robust hyperscaler and AI infrastructure demand.
Second-quarter revenue rose 30.4% year-over-year to $2.21 billion, topping analysts’ average estimate of $2.10 billion, while adjusted earnings per share came in at $0.73, above the $0.65 consensus.
Arista said non-GAAP operating income surpassed the $1 billion mark for the first time, highlighting "strong demand and disciplined scale." Non-GAAP net income totaled $923.5 million and gross margin stood at 65.6%.
The company guided for third-quarter revenue of approximately $2.25 billion, ahead of the $2.12 billion expected by analysts.
UBS analysts described the quarter as “strong,” driven by product revenue of $1.88 billion, or about 6% above consensus, as hyperscaler demand exceeded market concerns. Arista also raised its calendar 2025 revenue growth forecast to around 25%, up from 17% previously, easing fears over sustainability of growth into 2026.
Key indicators also pointed to long-term momentum. Product deferred revenue jumped 57% sequentially to about $1.9 billion, and purchase commitments rose to $3.64 billion from $3.53 billion in the prior quarter.
UBS added that upward capital expenditure revisions from Meta, Microsoft, and Oracle could boost cumulative CapEx by at least 30% in 2026, supporting the view that Arista’s revenue growth will exceed 20% next year.
In addition, Arista maintained its full-year gross margin forecast between 63% and 64% and raised its operating margin outlook to roughly 48%, up from a previous 43% to 44%. The company also increased its AI back-end revenue target for 2025 slightly to over $750 million.