Arista Networks: 5 Key Takeaways for Long-Term Investors

Arista Networks (NYSE: ANET) held its fourth-quarter 2024 earnings call on February 18, 2025, highlighting strong momentum in artificial intelligence (AI) networking and cloud infrastructure. For long-term investors, the discussion revealed important insights about Arista's competitive positioning in high-performance networking, its expansion beyond core cloud customers, and its strategy for capturing the growing AI infrastructure opportunity.

Dominant Position in Mission-Critical AI Infrastructure

The rapid growth of AI workloads is creating significant demand for specialized networking solutions, and Arista has established itself as a critical provider for the most demanding deployments. The company's AI strategy spans both "back-end" clusters connecting GPU systems and "front-end" networks linking to broader infrastructure.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Three out of the four customers are expected to this year roll out a cumulative of 100,000 GPUs. ... When you're buying these expensive GPUs that cost $25,000, they're like diamonds, right? You're not going to string a diamond on a piece of thread.

-- Jayshree Ullal, CEO

This validates Arista's technological leadership in the highest-value segments of AI networking, where reliability and performance are paramount. The company's ability to win major AI deployments demonstrates both its technical capabilities and its strong relationships with leading customers.

Expanding Beyond Cloud Titan Concentration

While maintaining strong relationships with key cloud customers Microsoft (NASDAQ: MSFT) and Meta (NASDAQ: META), Arista has successfully diversified its revenue streams across multiple customer segments and use cases.

Our cloud and AI titans contributed significantly at approximately 48%. ... Enterprise and financials were strong at approximately 35%, while the providers, which now includes Apple, was at 17% approximately.

-- Jayshree Ullal, CEO

This balanced growth reduces customer concentration risk while demonstrating Arista's ability to leverage its technology across broader markets. The company's success in enterprise particularly highlights the transferability of its cloud-proven solutions.

Software and Subscription Growth Enhancing Value

Arista is building a significant software and subscription business that enhances its value proposition and creates more predictable revenue streams.

We are pleased to surpass for the first time, the $1 billion revenue mark in 2024 for the software and subscription service category. ... We added over 350 CloudVision customers translating to literally one new customer a day.

-- Jayshree Ullal, CEO

The growth in software and subscription revenue demonstrates Arista's evolution beyond pure hardware sales into higher-margin, recurring revenue streams that deepen customer relationships.

International Expansion Opportunity

Despite strong overall growth, Arista identified international markets as a key area for improvement and investment.

One area I'd like to see more strength ... is international. We're bringing in some new leadership there and hope to see some significant contributions in the next year or so.

-- Jayshree Ullal, CEO

This transparent acknowledgment of an area needing improvement, coupled with specific actions to address it, suggests potential for additional growth as international execution improves.

Innovation-Driven Technology Leadership

Arista's continued investment in research and development is driving meaningful product differentiation and market leadership.

Just in 2024 alone, we introduced six EOS [Extensible Operating System] software releases with greater than 600 new features across our core and adjacent offerings. ... We have increased our 400-gig customer base to approximately 1,000 customers last year in 2024.

-- Jayshree Ullal, CEO

This aggressive pace of innovation helps maintain Arista's competitive advantages in high-performance networking while enabling expansion into new markets and use cases.

Looking Ahead

Arista's management expressed strong confidence in their 2025 outlook, particularly regarding AI infrastructure opportunities. With technological leadership in high-speed networking, strong cloud relationships, and growing enterprise presence, the company appears well-positioned to capture expanding market opportunities.

Management is focused on AI deployment execution, international expansion, and maintaining technology leadership through continued innovation. As Ullal emphasized, "customers are not only looking to connect, but unify and consolidate their data across silos for optical networking outcomes ... placing us in a very unique position as the best-of-breed innovator for data-driven networking."

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $337,818!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $46,848!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $533,073!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Learn more »

*Stock Advisor returns as of February 24, 2025

This article was supplemented by large language models (LLMs). All articles are reviewed by the author and our editorial team, and the author and The Motley Fool take ultimate responsibility for the content. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. David Kretzmann has positions in Apple, Arista Networks, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Apple, Arista Networks, Meta Platforms, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.