Arista posts record growth as AI networking supercycle accelerates
Network World ·
Arista Networks continued to grow earnings with AI and enterprise networking leading the charge in its third quarter financial call with Wall Street analysts this week. First off, the company’s CEO and chairperson Jayshree Ullal said that the third quarter hit $3.66 billion or 58.5%, the largest year-over-year revenue growth in the history of being a public company. Just five years ago, Arista reported $2.9 billion in revenue for the entire 2021 year, Ullal has noted in the past . “We are witnessing the migration from highly centralized training compute to disaggregated and distributed inference, prefill, and decode, demanding much more intelligent networking and colocation of compute, storage, and KV cache resources rather than simply focusing on raw feeds and speeds and flops of compute. A well-designed network is becoming a foundational cornerstone for optimal token efficiency,” Ullal said. “When we initially began this transformational AI journey, we spoke about four or five AI customers with approximately 50,000 to 100,000 Nvidia GPUs. And in fact, we were largely staring at a proprietary network cycle such as InfiniBand,” Ullal said. “In 2026, we are in a super cycle of AI, having already surpassed 100 Etherlink customers. By the end of ’27, we are forecasting greater than 10 gigawatts of deployment across 10 or more different types of compute accelerators.” A number of factors are driving Arista’s success. AI Security With the exponential rise of generative AI attacks and the ever-increasing cyber threats, securing the network is key and integral to Arista’s customers going forward, Ullal said. One of the core answers to that threat is the company’s Autonomous Virtual Assistant (AVA), which lets administrators ask it questions about network conditions and receive explanations, recommendations, and assistance diagnosing problems. “AVA is incredibly powerful. It seamlessly navigates networking and security infrastructure from campus to WAN, to data center, to cloud, continuously monitoring and troubleshooting, isolating root causes without manual labor-intensive tasks,” said Ken Duda, Arista co-founder, president, CTO & director. “The bad news, of course, is the massive challenge AI poses for us and our customers by discovering and exploiting security vulnerabilities. This threat landscape demands secure and robust networking. Over the past few months, we’ve been collaborating with Anthropic, Google, OpenAI, and many others to integrate new AI-enabled security capabilities from frontier models into our existing software security pipeline,” Duda said. In addition, Arista has maintained one of the lowest CVE counts , less than 100 in the industry over the last two decades. Others are rising exponentially due in part to the simple fact that multiple networking operating systems tend to have more vulnerabilities than just one, according to Duda. Enterprise networking “We’re seeing phenomenal growth across our enterprise business , driven by customers building mission-critical networks, which benefit from Arista’s industry-leading quality and reliability,” said Todd Nightingale, president & COO of Arista. “As the entire industry responds to AI-powered attack exposure, customers are motivated by the fact that keeping their infrastructure current with security updates will protect, segment, and defend against vulnerabilities beyond the network,” Nightingale said. Over the past few years, just practically every significant enterprise has shifted gears and really considered their campus networks and their branch networks mission-critical, with the highest need for reliability, Nightingale said. “This has only accelerated because of the Glasswing and Mythos effect where people are really focused deeply not only on providing the highest level of reliability but being able to do that as they rapidly patch and adjust their infrastructure over time,” Nightingale said. “And the differentiation with EOS and the ability for Arista software to be able to do this with practically no downtime with extremely, extremely high uptime, it’s highly differentiated in the market. And I really think that’s the core of what’s driving market share gains here,” Nightingale added. Arista has a campus revenue target of more than $1.25 billion for the year. Research and development increases Arista reported a big increase in its R&D spending for the quarter: a little more than $130 million in one quarter year over year. Duda said the increase wasn’t that unusual as the vendor sees R&D running at approximately 9%-11% of revenue. “We’re building so much new stuff. The opportunity is humongous in AI … and more engineering resources devoted to hyperscale partnering,” Duda said. He also pointed to Arista’s ongoing work with Cerebras, Microsoft, and Maya to incorporate accelerators and tune buffers and software performance to maximize I/O throughput. “In addition, there’s a new technology introduction around liquid cooling. This requires major infrastructure upgrades and technology upgrades on our part. So I think that’s what’s really driving the expansion in spending there,” Duda said. In March, Arista announced the eXtra-dense Pluggable Optics (XPO) module which offers 12.8Tbps of bandwidth using 64 electrical lanes and includes an integrated liquid-cooled cold plate capable of supporting 400W+ module power consumption, Arista stated. The networking vendor said it has also assembled some 45 leading optics module suppliers under the auspices of a multi-source agreement (MSA) to build and support XPO.