{"id":26086,"date":"2024-07-28T23:56:00","date_gmt":"2024-07-28T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=26086"},"modified":"2025-07-09T11:51:21","modified_gmt":"2025-07-09T03:51:21","slug":"how-arista-makes-money","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/","title":{"rendered":"How Arista, the nemesis of Cisco\u2019s monopoly, makes money?"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Introduction\" >Introduction<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Founding_of_the_company\" >Founding of the company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Company_profile\" >Company profile<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#The_rise_of_the_company\" >The rise of the company<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Core_technologies\" >Core technologies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Company_edge\" >Company edge<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Why_is_it_so_popular\" >Why is it so popular?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Switch_Industry_Overview\" >Switch Industry Overview<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#How_big_is_the_market\" >How big is the market?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Leading_vendors\" >Leading vendors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Market_share\" >Market share<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Company_operation\" >Company operation<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Operating_performance\" >Operating performance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Performance_in_Q1_2024\" >Performance in Q1 2024<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Outlook\" >Outlook<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Customers\" >Customers<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Mega_customers_dominated\" >Mega customers dominated<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Risks\" >Risks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Customer_capital_expenditures_continue_to_increase\" >Customer capital expenditures continue to increase<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Competitors\" >Competitors<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Top_rivals\" >Top rivals<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Cisco\" >Cisco<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Nokia\" >Nokia<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Other_competitors\" >Other competitors<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-25\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Potential_competitors\" >Potential competitors<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-26\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Arista_and_the_latest_technology\" >Arista and the latest technology<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-27\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Super_Ethernet_Alliance\" >Super Ethernet Alliance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-28\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Arista_says_it_still_has_advantages\" >Arista says it still has advantages<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-29\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Its_still_hard_to_say_who_will_win\" >It&#8217;s still hard to say who will win.<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-30\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Capital_market_performance\" >Capital market performance<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-31\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Stock_price_rises_astonishingly\" >Stock price rises astonishingly<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-32\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Valuation\" >Valuation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-33\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Risk\" >Risk<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-34\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Stock_split\" >Stock split<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-35\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Repurchase\" >Repurchase<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-36\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Strong_balance_sheet\" >Strong balance sheet<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-37\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Introduction\"><\/span>Introduction<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Founding_of_the_company\"><\/span>Founding of the company<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Andy Bechtolsheim and David Cheriton co-founded Granite Systems in 1995, which was eventually sold to Cisco in 1996. In 2001, Cheliton and Bettlesheim founded another startup, Kealia, which was acquired by Oracle Systems in 2004.<\/p>\n\n\n\n<p>Cheliton and Bertolsheim held executive positions at Cisco Systems from 1996 to 2003, co-leading the Catalyst product line with Kenneth Duda, Granite Systems&#8217; first employee. In 2004, the three of them founded Arastra, which was later renamed Arista. \u200b<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Company_profile\"><\/span>Company profile<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><a href=\"https:\/\/en.wikipedia.org\/wiki\/Arista_Networks\" target=\"_blank\" rel=\"noreferrer noopener\">Arista Networks<\/a> (ticker: ANET) is a leader in high-performance network solutions. The company specializes in data center switches and routers that deliver lightning-fast speeds, low latency, and unparalleled scalability.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_rise_of_the_company\"><\/span>The rise of the company<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Core_technologies\"><\/span>Core technologies<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Arista&#8217;s core main technology, EOS, is Arista&#8217;s network operating system. It is an independent image that can run on all Arista devices and virtual machines. EOS executes on an unmodified Linux kernel through a Fedora-based userspace and typically has more than 100 independent processes, called agents. These agents are responsible for controlling various features and functions of the switch.<\/p>\n\n\n\n<p>In short, Arista&#8217;s scalable operating system enhances the automation, scalability and security of network operations, while allowing seamless integration with third-party software, which is the main reason why it is different and can stand out in the industry. .<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Company_edge\"><\/span>Company edge<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Arista Networks&#8217; technology and infrastructure are critical to developing and deploying advanced AI applications. The combination of its CloudVision platform and EOS cloud operating system is critical to supporting AI workloads that often involve transmitting and processing large data sets.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_is_it_so_popular\"><\/span>Why is it so popular?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Due to the growing market demand for cloud artificial intelligence network solutions in the past two years, the main factor driving the company&#8217;s performance in recent years has been the growing demand for AI network solutions that connect cloud and data center infrastructure.<\/p>\n\n\n\n<p>The company continues to benefit from growing demand for cloud AI networking solutions, such as Ethernet switches and routers, that connect cloud and data center infrastructure to power the technology.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Switch_Industry_Overview\"><\/span>Switch Industry Overview<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_big_is_the_market\"><\/span>How big is the market?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>According to a <a href=\"https:\/\/www.researchnester.com\/reports\/data-center-switch-market\/4893\" target=\"_blank\" rel=\"noopener\">report by Research Nester, the data center switch market size will be US$6.6 billion in 2023 and is expected to exceed US$28.8 billion by the end of 2036, with a compound annual growth rate of more than 12.8% during the forecast period (i.e., 2024-2036). In 2024, the data center switch industry size is estimated to be US$8.38 billion<\/a>.<\/p>\n\n\n\n<p>It is estimated that there are approximately 7,999 data centers worldwide. About 30% of them are in the United States.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Leading_vendors\"><\/span>Leading vendors<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The companies that dominate the data center switch field are as follows: Cisco, Arista, NEC, Huawei, Juniper Networks, Hewlett Packard Enterprise, Dell, Extreme Networks, D-Link, ZTE, etc.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Market_share\"><\/span>Market share<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Arista&#8217;s market share in the data center switch market has increased rapidly, from 3.5% in 2012 to 18.8% in the second quarter of 2019, according to the Crehan Research Data Center Switch Market Share Report.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Company_operation\"><\/span>Company operation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Operating_performance\"><\/span>Operating performance<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In fiscal 2023, Arista posted record operating income, earnings, and free cash flow. Demand for Arista&#8217;s products remains strong, and its operating profits have expanded significantly over the past decade. As AI workloads become more complex in terms of network connectivity, Arista is well-positioned to address these bottlenecks.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Performance_in_Q1_2024\"><\/span>Performance in Q1 2024<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>First-quarter revenue rose 16.3% to $1.57 billion, and adjusted earnings per share rose 39.2% to $1.99. Both figures beat analysts&#8217; expectations.<\/p>\n\n\n\n<p>Revenue guidance was also stronger than expected at $1.62 billion to $1.65 billion, which would favor midpoint quarter-over-quarter growth of 3.8%, up from the 2% quarter-over-quarter growth reported in the first quarter and equivalent to an annualized growth rate of 16.2% .<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Outlook\"><\/span>Outlook<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Perhaps most importantly, management remains confident about the company&#8217;s opportunities in artificial intelligence. During its Q1 2024 earnings conference call, it highlighted a recent artificial intelligence training cluster in which Ethernet-based switches were paired with InfiniBand competitor technology from AI leader NVDA (ticker: NVDA) In comparison, its work completion rate increased by 10%.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Customers\"><\/span>Customers<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Mega_customers_dominated\"><\/span>Mega customers dominated<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The internal infrastructure of artificial intelligence hyperscale companies such as Microsoft (ticker: MSFT), Meta Platforms (ticker: META), Amazon (ticker: AMZN) and Alphabet (tickers: GOOG and GOOGL) relies heavily on Arista&#8217;s network .<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Risks\"><\/span>Risks<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Arista&#8217;s two largest customers are technology giants Microsoft and Meta Platforms. About 40% of Arista&#8217;s revenue comes from these two companies. This is a very big risk and investors should be careful. <\/p>\n\n\n\n<p>In the past, there were too many companies that were too concentrated on one or two customers, and their business suddenly stopped, causing the company&#8217;s revenue to be severely hit, and the stock price to collapse.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Customer_capital_expenditures_continue_to_increase\"><\/span>Customer capital expenditures continue to increase<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Both Microsoft and Meta have announced that they will increase capital expenditures again next year. Wall Street expects this capital expenditure growth to accelerate as spending on AI infrastructure increases.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Competitors\"><\/span>Competitors<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Top_rivals\"><\/span>Top rivals<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Arista&#8217;s main competitors include Cisco (tickere: CSCO), IBM (ticker: IBM), <a href=\"https:\/\/www.hpe.com\/us\/en\/newsroom\/blog-post\/2024\/02\/hpe-and-juniper-networks-accelerating-value-for-customers.html\" target=\"_blank\" rel=\"noreferrer noopener\">Hewlett Packard Enterprise (ticker: HPE), which acquired Juniper<\/a>, Huawei, etc. Among them, Cisco is particularly important.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Cisco\"><\/span>Cisco<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Please see my post of &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/06\/18\/cisco-ex-largest-company\/\">Cisco, ex-biggest company, the representative of dot-com bubble<\/a>&#8221; for Cisco.<\/p>\n\n\n\n<p>Since the establishment of Arista, Cisco has continued to press hard on Arista step by step. It has launched a comprehensive attack on patents, laws, and marketing. The tactics are exactly the same as the intimidation tactics Cisco used against Huawei twenty or thirty years ago. But it turns out that after thirty years, Huawei and Cisco are no longer rivals of the same magnitude. At present, it seems that Cisco\u2019s various methods of attacking Arista are of no use at all.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nokia\"><\/span>Nokia <span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Nokia has evolved into a major player in cloud computing infrastructure by integrating networking, edge computing and software automation for telcos, cloud providers and enterprises. The company is poised to benefit from copper and fiber deployments of passive optical networking.<\/p>\n\n\n\n<p>It is reportedly the only global supplier offering Open Radio Access Network (O-RAN) with commercial 5G Cloud-RAN networks. Nokia intends to accelerate strategy execution, sharpen customer focus and reduce long-term costs. At the same time, it focuses on building a strong, scalable software business and expanding it to structurally attractive enterprise adjacencies. Nokia\u2019s C-Band portfolio supports 5G standalone and non-standalone networks, cloud-based implementations and O-RAN products.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Other_competitors\"><\/span>Other competitors<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In the Ethernet and switch market, there are Taiwan&#8217;s Accton and Broadcom, two white-label companies that have been working in this field for a long time. Among them, Broadcom is especially a heavyweight manufacturer. Please see my post of &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/12\/02\/broadcom-share-price\/\">The reasons behind Broadcom share price consistantly outperformance<\/a>&#8220;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Potential_competitors\"><\/span>Potential competitors<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Not only are there concerns about competition between InfiniBand and more standard Ethernet technologies, but in April 2024, analysts downgraded Arista due to concerns that Nvidia would also start producing its own Ethernet switches. device.<\/p>\n\n\n\n<p>Nvidia not only makes data center GPUs for artificial intelligence (AI), but another key to its success is InfiniBand, which it acquired when it merged with Mellanox in early 2020. In addition to InfiniBand networking technology that helps simplify the adoption of the latest and greatest AI hardware, Nvidia also acquired some Ethernet technology from Mellanox.<\/p>\n\n\n\n<p>This is exactly why Nvidia\u2019s recent shift in focus towards Ethernet has made the market a little nervous. The company&#8217;s Spectrum-X Ethernet platform hopes to build on InfiniBand&#8217;s early success and become a more direct competitor to Arista for its data center customers. Arista&#8217;s top customers include Microsoft, Meta, major financial institutions and other large enterprises.<\/p>\n\n\n\n<p>However, Arista management pointed out in a conference call with analysts during the first quarter of 2024 earnings release: We don&#8217;t see Nvidia as a direct competitor in Ethernet yet. I think it&#8217;s 1% of their business. This is 100% our business. So we don&#8217;t have to worry about this overlap at all.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Arista_and_the_latest_technology\"><\/span>Arista and the latest technology<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Super_Ethernet_Alliance\"><\/span>Super Ethernet Alliance<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In July 2023, the Linux Foundation announced that it would oversee the establishment of a Super Ethernet Alliance. The founding members of the alliance include AMD, Arista, Broadcom, Cisco, Eviden, HPE, Intel, Meta and the support of Microsoft. <\/p>\n\n\n\n<p>The Super Ethernet Alliance said it is committed to improving Ethernet to meet the low latency and scalability requirements required for high-performance computing and artificial intelligence systems.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Arista_says_it_still_has_advantages\"><\/span>Arista says it still has advantages<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>During Arista&#8217;s earnings call in February this year, the CEO explained the difference between InfiniBand and Ethernet: &#8220;As you know, historically, InfiniBand and Ethernet have had their own advantages when considered separately. .Comparing these technologies in a real-world environment, Ethernet&#8217;s task completion time is approximately 10% faster.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Its_still_hard_to_say_who_will_win\"><\/span>It&#8217;s still hard to say who will win.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In the network market, Arista is undoubtedly still a very weak company. Compared with NVIDIA InfiniBand&#8217;s revenue of billions of dollars, it will be difficult to challenge it in the short term. However, the giants are dissatisfied with the monopoly of AI cluster networks, allowing Arista to gain A valuable opportunity for rapid development. Over time, it is likely to become Nvidia&#8217;s new major concern.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Capital_market_performance\"><\/span>Capital market performance<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Stock_price_rises_astonishingly\"><\/span>Stock price rises astonishingly<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>It rose by 94.04% in one year in 2023, and by 26% in 2024 as of May 8.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Valuation\"><\/span>Valuation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Arista trades at a whopping 39 times 2024 earnings estimates, which certainly isn&#8217;t cheap. But if the company can continue to earn a return on equity (ROE) of 35% as it currently does, and its expected earnings growth of 19% over the next five years can be achieved, then it won&#8217;t cost much.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Risk\"><\/span>Risk<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>However, Nvidia&#8217;s potential to enter the Ethernet switching space is certainly worth watching. There doesn&#8217;t seem to be much of a threat right now, but that may change in the coming seasons.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Stock_split\"><\/span>Stock split<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Arista has conducted a four-for-one stock split in November 2021 and December 2024. The company has conducted a four-for-one stock split twice so far.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Repurchase\"><\/span>Repurchase<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Arista has purchased $2 billion worth of common stock to date.<\/p>\n\n\n\n<p>At the Q1 2024 earnings conference, the company also added an additional share repurchase plan, authorizing the repurchase of an additional $1.2 billion worth of shares.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Strong_balance_sheet\"><\/span>Strong balance sheet<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Arista has $5.45 billion in cash and&nbsp;<strong>no debt<\/strong>, giving a net cash position of $5.45 billions. Priced At 26x operating profits. In terms of company financial side. there is no major weaknesses identified for Arista.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img loading=\"lazy\" decoding=\"async\" width=\"240\" height=\"38\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2024\/05\/Arista-Custom.jpg\" alt=\"Arista\" class=\"wp-image-26087\" style=\"width:240px;height:38px\"\/><figcaption class=\"wp-element-caption\">credit: Wiki<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"block-d8a344e9-4edc-4dc1-b981-40aa61d258b5\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/05\/15\/oligopoly-enterprise\/\">The world&#8217;s most well-known oligopoly companies<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/06\/18\/cisco-ex-largest-company\/\">Cisco, ex-biggest company, the representative of dot-com bubble<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/28\/how-arista-makes-money\/\" target=\"_blank\" rel=\"noreferrer noopener\">How Arista, the nemesis of Cisco\u2019s monopoly, makes money?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/02\/08\/deepseek-rout\/\">DeepSeek routed the global AI and stock<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/02\/12\/chinese-ai-companies\/\">Chinese AI progress and top companies<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/05\/03\/supermicro-is-not-worth\/\" target=\"_blank\" rel=\"noreferrer noopener\">Supermicro, a repeat offender of scandals, valuation is not justified and unsustanable, no worth for long-term holding<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/05\/31\/ai-benefits-industries\/\" target=\"_blank\" rel=\"noreferrer noopener\">Artificial intelligence benefits industries<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/09\/24\/hpe-on-enterprise\/\">HPE expertizes on enterprise technology services<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/03\/04\/hp-important-good-company\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does HP make money? The pros and cons of investing in HP<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/07\/16\/ibm-cloud\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does IBM make money? What&#8217;s next?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/12\/14\/buffett-hold-for-long-haul\/\" target=\"_blank\" rel=\"noreferrer noopener\">Is Buffett no longer hold for long haul? TSMC, HP, and US Bancorp cases study<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/07\/23\/significant-changes-in-broadcoms-business-approach\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does Broadcom make money? Significant changes in business approach<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/12\/02\/broadcom-share-price\/\">The reasons behind Broadcom share price consistantly outperformance<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/03\/04\/data-center-a-rapidly-growing-semiconductor-field\/\">Data center, a rapidly growing semiconductor field<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/06\/04\/how-dell-make-money\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does the resurrected Dell make money?<\/a>&#8220;<\/li>\n<\/ul>\n\n\n\n<p><em><strong>Disclaimer<\/strong><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>The content of this site is the author\u2019s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Arista&#8217;s core main technology, EOS, is Arista&#8217;s network operating system. It is an independent image that can run on all Arista devices and virtual machines.<\/p>\n","protected":false},"author":1,"featured_media":26087,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[454,1492,1278,164,165],"tags":[920,371,210,426,208,168,187,212],"class_list":["post-26086","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-communication","category-datacenter","category-operating-system","category-repurchase","category-stock-split","tag-anet","tag-avgo","tag-csco","tag-hpe","tag-huawei","tag-ibm","tag-nke","tag-nok"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/26086","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=26086"}],"version-history":[{"count":36,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/26086\/revisions"}],"predecessor-version":[{"id":37317,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/26086\/revisions\/37317"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/26087"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=26086"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=26086"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=26086"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}