If AI is the new electricity, then Arista Networks is laying the high-voltage transmission lines. While most investors chasing AI riches are dazzled by chipmakers like NVIDIA or cloud titans like Microsoft, they’re missing one crucial fact: none of that machine learning magic works without ultra-fast, high-bandwidth networking hardware. And when it comes to high-performance networks, Arista isn’t just in the game—it’s dominating the field.
AI infrastructure is having its gold rush moment. But instead of panning for nuggets in the overmined GPU hills, savvy investors should follow the people selling pickaxes and shovels. That’s Arista Networks (ANET): the low-key, high-margin backbone builder quietly powering the generative AI revolution.
In this post, we’ll break down why Arista may be the most profitable way to play AI infrastructure, how it’s riding secular trends in cloud and data center expansion, and why its business model gives it more durability—and more upside—than flashier names in the space.
The AI Infrastructure Boom: Beyond Chips and Hype
When ChatGPT broke the internet in late 2022, everyone scrambled to find ways to play the AI trade. Investors piled into NVIDIA, AMD, and a constellation of AI software plays. But behind every GPT-4, every AI-generated image, and every real-time inference engine lies an enormous problem: moving vast quantities of data in and out of data centers at lightning speed.
This isn’t a job for your average router. AI workloads require a different beast: low-latency, high-throughput, ultra-scalable Ethernet switching that can keep up with the training demands of trillion-parameter models.
Enter Arista.
Arista Networks designs and sells cutting-edge networking equipment—particularly ultra-high-speed Ethernet switches that are now becoming essential infrastructure for AI workloads. With customers like Microsoft Azure, Meta, and other hyperscalers, Arista sits right at the center of the AI data storm.
While NVIDIA’s GPUs are busy crunching numbers, Arista’s switches are quietly ensuring all that data flows smoothly. No bottlenecks. No lag. No downtime.
Why Ethernet Is Eating the AI World
Traditionally, AI clusters have relied on NVIDIA’s proprietary networking solutions like InfiniBand. But there’s a big, expensive problem: InfiniBand is great for a few GPUs, but it doesn’t scale economically. And in the new era of 10,000+ GPU clusters, scalability is everything.
That’s where Arista’s Ethernet-based switching comes in.
The industry is shifting from InfiniBand to Ethernet—especially for training and inference workloads that span multiple data centers and continents. Arista has been a pioneer in 800G Ethernet switching, the kind that hyperscalers need to stitch together massive clusters efficiently.
In short, as AI infrastructure becomes more decentralized, open, and bandwidth-hungry, Arista’s approach becomes not just viable—but superior.
Even NVIDIA has conceded this point. At Computex 2024, CEO Jensen Huang highlighted how Ethernet would be the backbone for connecting DGX platforms across clouds and regions. That was music to Arista’s ears—and investors should take note.
The Arista Business Model: Profit First, Hype Later
While many AI plays operate on venture capital steroids or sacrifice margins for growth, Arista is an anomaly: it’s wildly profitable, absurdly efficient, and doesn’t need AI hype to justify its valuation.
Let’s run through the financials:
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Gross margins consistently above 60%. For hardware, that’s elite.
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Operating margins north of 35%. The company runs lean and scales beautifully.
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Free cash flow margins around 30%. This is not a cash-burning startup.
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$4.8 billion in cash and no debt. A war chest for R&D, buybacks, or M&A.
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Return on equity over 30%. Capital efficient in a way most tech firms can only dream about.
And yet, Arista trades at a reasonable PEG ratio compared to its AI-adjacent peers. It’s not a value stock, but it’s a rare growth company with fundamentals that justify every dollar.
In other words: this is not a speculative AI bet. It’s a proven compounder with a durable moat and a front-row seat to the next decade of AI infrastructure expansion.
Key Customers: Big Tech’s Best-Kept Secret
Arista doesn’t just sell to anyone. Its customer list reads like a who’s-who of hyperscale royalty.
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Microsoft Azure: Longtime partner and one of Arista’s biggest clients. They’re using Arista’s switches to build massive AI supercomputers across multiple geographies.
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Meta (Facebook): Investing heavily in AI datacenters and leaning on Arista for scalable networking solutions.
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Amazon (rumored): While AWS has its own chips, it’s increasingly turning to third-party networking vendors to meet demand.
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AI startups & sovereign clouds: From Anthropic to Oracle to European sovereign AI initiatives, new entrants are choosing Ethernet-first designs for cost and flexibility.
This is key. Arista isn’t dependent on a single vertical—it’s positioned to benefit from every AI buildout, whether it’s OpenAI’s next cluster or the Saudi government’s sovereign AI network.
Software Eating the Switch
Here’s the kicker: Arista isn’t just a hardware company.
Its EOS (Extensible Operating System) software stack runs on its switches and delivers programmability, telemetry, and automation that hyperscalers need for efficient AI operations.
This software layer isn’t just an upsell—it’s part of what makes Arista’s switches uniquely scalable and cost-effective. It’s why customers stick around. EOS gives Arista pricing power and differentiation in a market where “speeds and feeds” alone won’t cut it.
Think of it this way: Arista is doing for networking what Apple did for smartphones—bundling sleek, reliable hardware with an intuitive, extensible software ecosystem.
And investors are finally waking up to the fact that this combo creates a recurring revenue stream with long-term lock-in, high margins, and deep customer loyalty.
Valuation: Still Room to Run
As of July 2025, Arista trades at about 38x forward earnings, which may seem rich at first glance—but not when you consider:
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Revenue growth above 25% annually
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AI-related demand still in early innings
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No need to raise capital
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Massive optionality in emerging markets and edge compute
Compare this to NVIDIA (trading at 45–50x), Broadcom (30x), or Marvell (55x) and Arista’s valuation looks downright reasonable—especially for a company growing this fast with this much cash flow.
Even more impressively, Arista has never issued stock to fuel growth. The company’s culture, driven by co-founder Jayshree Ullal and a scrappy, engineering-first team, emphasizes organic growth and self-sufficiency.
The market is finally rewarding that discipline. But there’s still room for multiple expansion if AI infrastructure demand keeps exceeding expectations—as it almost certainly will.
Risks: What Could Derail the Arista Train?
Let’s not get too euphoric—every great investment carries risk.
Here are a few to watch:
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Customer concentration. Microsoft and Meta drive a large portion of revenue. Any pullback or internal transition could hit top-line growth.
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Competition from Cisco, NVIDIA, and others. While Arista leads in high-performance Ethernet, big names want in. But Arista’s first-mover advantage and software differentiation offer protection.
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AI bubble deflation. If the broader AI narrative slows or GPU supply constraints ease, infrastructure growth might moderate.
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Commoditization of switching. If Ethernet switches become a price war, margins could erode. But Arista’s software stack and customer service provide insulation.
In sum, Arista isn’t immune to tech volatility. But its business model, balance sheet, and secular tailwinds make it more resilient than most.
The AI Arms Dealers: Why Arista Beats NVIDIA (Yes, Really)
Let’s be honest—most investors aren’t thinking about Ethernet when they think about AI. They’re thinking about GPUs, foundation models, and eye-watering server farms.
But if you're building a diversified, contrarian AI portfolio, you need exposure to the arms dealers—those quietly selling the tools and infrastructure every AI player needs, no matter who wins the application layer.
That’s Arista.
Unlike NVIDIA, Arista doesn’t depend on pushing the envelope of Moore’s Law every quarter. It doesn’t need to invent a new AI architecture every year. It doesn’t need to bet billions on custom silicon that might flop.
It just needs to keep doing what it’s already doing: shipping faster, smarter, more scalable Ethernet switches—and wrapping them in software that customers love.
Even better? It doesn’t have to compete with its own customers. Unlike NVIDIA, which is increasingly pushing into AI cloud services and inference platforms, Arista stays in its lane. That makes it the preferred partner for hyperscalers who don’t want their supplier to become their competitor.
The Bottom Line: Buy the Backbone
In every tech revolution, there’s a tendency to chase the shiny object—the killer app, the viral moment, the moonshot.
But the biggest, steadiest profits usually come from the quiet enablers. The companies that lay the groundwork. The pipes, not the content. The infrastructure, not the interface.
Arista Networks is the AI backbone.
It won’t make headlines for training a new model. It won’t create the next killer chatbot. But without Arista, none of those things can function at scale. The data won’t move. The GPUs will stall. The inference will break.
That’s what makes Arista the most profitable—and most underappreciated—way to play the AI infrastructure boom.
As the world shifts toward decentralized, always-on, AI-powered systems, the need for high-speed, scalable networking will only intensify. And when it does, Arista will be there—quietly shipping switches, collecting software margins, and rewarding shareholders who saw the play no one else noticed.
Disclosure: As always, do your own due diligence. This article is for informational purposes only and does not constitute investment advice. But if you’re looking for the AI gold rush’s smartest pickaxe seller, Arista’s your guy.
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