Arista Networks Drops Roughly 23% After Q3 Beat as Margin Signals Curb Enthusiasm

Overview

• Shares have fallen about 23% over 21 trading days since the Nov. 4 report, driven by concern over weaker margin signals and skepticism about near-term AI revenue.
• Fiscal Q3 revenue rose roughly 27% year over year to about $2.31 billion, and earnings per share of $0.75 exceeded estimates.
• Management projected fourth-quarter revenue of $2.3 billion to $2.4 billion, indicating more restrained near-term growth.
• Analyst views are split: Mizuho raised its price target and kept a Buy, Erste cut the stock to Hold citing a likely margin dip next year, and Piper Sandler lifted its target after noting a $625 million build in product deferred revenue that points to backlog with cloud and AI customers.
• Forbes cited strong fundamentals but a rich valuation, including an operating margin near 43%, no debt, and a P/E around 44, and noted a historical median 71.7% one-year rebound after major sell-offs.