Arista rides AI wave, but battle for campus networks looms
It’s the early 2000s. Cisco has a 70% stranglehold on the Ethernet switch market. Competitors include 3Com, Brocade, Enterasys, Extreme Networks, Force 10, Foundry, and Juniper Networks. Into this crowded field comes Arista Networks, a self-funded startup led by former Cisco execs.
As we approach 2026, Arista has surpassed Cisco in market share for high-speed data center switching. Quarterly revenue skyrocketed by 27.5% year-over-year, according to Arista’s latest earnings report, and it expects to exceed $10 billion in annual revenue in 2026 on a growth rate of around 20%.
Meanwhile, none of those Cisco competitors have survived as independent companies, except for Extreme (which reported annual revenue of $1.1 billion in fiscal 2025, compared to Arista’s $8.75 billion).
So, how is Arista doing it? What did it do right that so many of those other companies didn’t?
First, it has strong, stable, focused leadership with three co-founders still at the helm, each with their own strengths. Chairperson and CEO Jayshree Ullal brings the business savvy and sets the culture. Chief Architect Andy Bechtolsheim is the technology visionary. President and CTO Ken Duda is the software guru and hands-on general.
“Leadership sets a tone and mission for a company and is likely one of the reasons they have been successful. They haven’t strayed from their roots, and Arista looks to have the same focus that they had early on,” says IDC analyst Paul Nicholson.
Second, Arista’s team has the technology chops to build high-bandwidth, low-latency switches that can scale to create massive data center networks. Arista pioneered the spine-leaf, two-tier architecture that is now standard in large data centers. And, over time, it developed a full networking stack of hardware, software, operating system, data lake, visibility, management, automation, AI agent, and security features, such as network detection and response (NDR).
Third, and maybe most importantly, Arista has a well-honed business strategy.
“All of the other vendors were trying to serve everybody,” says Forrester analyst Andre Kindness. They were competing against each other with bloated, feature-laden products aimed at the broadest possible range of customers. Unable to differentiate themselves, they struggled to gain market share and ultimately became acquisition targets.
“What you saw with Arista is, ‘We’re not here to serve everyone, we’re here to develop products for particular markets,’” says Kindness. High-frequency stock traders wanted fast, slimmed down, easily programmable switches, and Arista was happy to fill that need. Then, as the cloud computing market grew, Arista got in on the ground floor, working closely with companies like Microsoft and Meta to develop the networking infrastructure for hyperscale data centers.
“Arista has been laser focused in reaching the right customer segments with the right solutions. They started strong in the financial services sector with their ultra-low latency and high throughput switch solution. Winning business from the hyperscaler segment with their cloud networking solutions placed them more solidly on the map as these pivotal customers drive high volumes of repeatable business,” says Omdia analyst Adeline Phua.
In fact, nearly half of Arista’s revenue comes from what the company refers to as the “cloud titans.”
Also important to Arista’s success is what it didn’t do — which is chase markets outside of networking. Other networking vendors went on acquisition sprees, trying to build broad platforms that integrated security and networking.
Arista didn’t chase SASE, SIEM or other trendy security buzzwords. It prefers to partner with security vendors like Palo Alto or Microsoft while remaining true to the networking mission. “Arista knows who they are, and they stick to their guns,” says Kindness.
Todd Nightingale, newly hired as president and chief operating officer of Arista, told _Network World_ : “By focusing our investment on providing the absolute best networking technology possible, we don’t sacrifice our mission of quality. This is core to doing the right thing by our customers. We are comfortable with that tradeoff.”
“Our strategy also provides our customers with choice,” Nightingale adds. “We never lock customers into a security solution that isn’t fit for their purpose. As security architectures change, we’re able to integrate and partner with the best of breed to provide the most secure outcome for our customers.”
Now, Arista is looking for additional growth in two network specific markets that hold tremendous promise, but also some risks. They’re targeting the next big wave, which is connectivity for AI-powered data centers. And they’re making a big push into the enterprise campus and branch networking markets.
Both initiatives could lead to something Arista has managed to skirt until now — a head-on collision with Cisco.
## Battle for the AI data center
Remember when experts were predicting the demise of the data center? You’re not hearing that so much anymore. In fact, AI has rejuvenated the data center in both the cloud services and enterprise markets. The hyperscalers are building data centers to run AI workloads as fast as they can. And enterprises that are reluctant to put their data in the cloud are training AI models on premises.
“We find ourselves amid an undeniable and explosive AI megatrend,” Ullal said on Arista’s November earnings call with analysts. “We are experiencing a golden era in networking with an increasing TAM [total addressable market] now of over $100 billion in forthcoming years.”
“Our stated goal of $1.5 billion AI aggregate for 2025, comprising both backend and frontend, is well underway. We are experiencing momentum across cloud and AI titans, near cloud providers, and the campus enterprise. The demanding scale of AI buildouts is clearly unprecedented as we look to move data faster across multi-planar networks.”
(Backend refers to AI networking within the data center. Frontend is traffic to and from the data center, driven by the ‘inference’ part of AI, the back and forth between prompts and queries from end users or customers, and the responses from the AI models.)
Most analysts agree that Arista has a leg up when it comes to networking for AI based on its close working relationship with Microsoft, Meta, Oracle and others. “I definitely think Arista has a lead in that area and they are the closest to capturing a big percentage of that market,” Kindness says.
Nicholson concurs: “Arista is positioned to continue benefiting from AI buildouts. The willingness to pivot to support their customers is an advantage — each design change they do for their customers can benefit others, so the support and innovation for and with customers is a win-win.”
But don’t count Cisco out.
Cisco CEO Chuck Robbins has conceded that his company whiffed on the cloud. “We didn’t participate in the infrastructure side of the cloud play, or the cloud evolution. There were a whole lot of things we didn’t capture,” he said at Cisco Live 2024. But Robbins is determined not to miss out on the AI wave. “When the cloud era hit, we perhaps were not as prepared as we should have been. I will tell you today, as this AI era begins, we are very, very prepared,” he said.
Most recently, Cisco raised its guidance on AI infrastructure revenue in fiscal 2026 from $2 billion to $3 billion, primarily from hyperscalers but also from neocloud and enterprise customers.
## Battle for the enterprise
Arista is making a concerted effort to expand its presence in the enterprise campus market. One major move along those lines was the recent acquisition of SD-WAN vendor VeloCloud from Broadcom.
“VeloCloud brings a modern SD-WAN solution to Arista,” Nightingale says. “In large part, this completes our campus offering with wireless, switching (access and spine), routing, NAC and now SD-WAN. Our campus customers have been deploying Arista in the largest, most sophisticated sites including high-rise offices, universities, hospitals and manufacturing locations.”
Ullal has set a target of $1.25 billion in campus networking revenue next year, a significant jump from the $750 million to $800 million expected in this fiscal year. “Ambitious goal, but we’re signed up to it,” Ullal said during her investor day remarks in September.
Experts are not so sure that Arista can compete with Cisco on its home turf, the enterprise.
Dell’Oro Group analyst Sian Morgan says that while Arista has increased campus switch sales above the overall market growth rate for the past two years, “it is very pertinent to ask whether Arista has the portfolio breadth to achieve their enterprise objective. A broader portfolio that includes SSE would definitely help, but it is only one piece of the puzzle.”
Morgan adds that success in the enterprise means Arista would have to up its game with channel partners, which have the direct relationship with enterprise customers. “The real question is whether Arista can find the balance between addressing larger portions of the enterprise market by working with the channel, while keeping the company’s margins at an acceptable level.”
Zeus Kerravala, principal analyst at ZK Research, has a similar opinion: “There should be no question about Arista’s ability to grow above market rates with the cloud providers and in AI builds. Enterprise is another question. The company has great products, but its channel strategy is still relatively immature.”
That’s where former Cisco exec Nightingale comes in, and analysts give Arista high marks for recognizing the need to bring in fresh talent from the outside to drive the campus initiative. “Nightingale may really help Arista develop its channel strategy, something that has been holding back enterprise networking sales,” Morgan says.
## Opportunities and threats
Moving forward, there are both opportunities and potential threats on the horizon for Arista. Here are some of the opportunities:
* **Blue box** : White-box switches — inexpensive, generic, stripped-down boxes — are typically deployed by hyperscalers and large enterprises alongside commercial switches for specific use cases. Arista is now offering a “blue box” solution that adds a software layer of diagnostics, troubleshooting and management for white box switches. The target market is hyperscalers, neoclouds and the most tech-savvy enterprises.
* **Global expansion**. Arista’s revenue is heavily concentrated in North America, so there is the potential for the company to grow its presence in Europe and Asia.
* **The Ethernet wave:** Arista is working cooperatively with other industry players in groups like the Ethernet for Scale-Up Networking initiative and the Ultra Ethernet Consortium to help drive efforts to make Ethernet better for the needs of AI and high-performance computing. IDC’s Nicholson says: “The growth of Ethernet, with the supporting UEC standards, is a tailwind for Ethernet switch vendors as Ethernet becomes the preferred choice over Infiniband for AI factories.”
Then there are the potential threats:
* **Too many eggs in one basket.** It can be an advantage to have a small number of large customers that provide a stable, recurring revenue stream. But there’s also a risk. Losing even one of those big customers could be disastrous.
* **Platformization:** The overarching industry trend is the convergence of security and networking, as well as the desire by enterprise execs to settle on a platform rather than cobble together point products.
* **Maintaining growth rate:** Arista is putting up growth numbers that might seem difficult to sustain over the long term. The company grew revenue 27% year-over-year in its latest quarter, but only 5% sequentially. And fourth-quarter guidance is for revenue growth in the 2% range sequentially. During a recent call, Ullal assured analysts that the apparent slowdown is a minor blip, and that Arista is sticking to its guidance of a growth rate of 20% overall, driven by increases in the 60% range for both AI networks and campus network in 2026.
* **Competition:** There are some interesting X factors in today’s networking world. GPU-maker Nvidia has emerged as the market leader and a formidable force in backend data center switching for AI workloads. Broadcom is another chip vendor moving up the stack with data center switches. And don’t count out HPE, which just completed its Juniper acquisition.
* **Boom or bust** : Finally, Arista and all of the other switch vendors are counting on the data center boom continuing. But there’s always the possibility that the AI bubble will burst.
