Arista Networks delivered a milestone quarterly performance this week, reporting its first-ever $3 billion quarter as AI networking demand continues to accelerate and supply chain pressures begin to ease. The company posted revenue of $3.036 billion for the second quarter of its fiscal 2026, representing a 12.1% increase from the prior quarter and a 37.7% jump compared with the same period a year earlier. The results underscore Arista's growing role in the AI infrastructure buildout and its ability to navigate a challenging component environment.
CEO Jayshree Ullal noted that just five years ago, Arista reported $2.9 billion in revenue for the entire 2021 year. The latest quarterly figure, by contrast, shows how rapidly the networking market has expanded, particularly as hyperscalers and enterprises invest heavily in AI data center infrastructure. “Customers see networking as the central nervous system for infrastructure from the client to campus to data and AI centers,” Ullal said during the company's earnings call.
A key driver of Arista's growth is its AI fabric portfolio. Ullal said the company's Etherlink switch lineup has now surpassed 100 cumulative customers, up dramatically from the initial four or five customers she referenced in 2024. That adoption curve reflects the intense demand for high-performance, low-latency networking in AI clusters, where traditional Ethernet designs are being reworked to handle GPU-to-GPU traffic patterns.
Ullal said growth is broad-based, spanning back-end AI fabrics, front-end data center networks, campus switching, and routing. The scale-across switching and routing market alone is forecast to reach $15 billion to $20 billion by 2030, and Arista is positioning itself to capture a significant share with its Etherlink and routing platforms.
Raised growth outlook
Arista's confidence in the market opportunity is reflected in a raised growth forecast. The company now projects 40% annual growth, an increase of $2.1 billion over its 2025 Analyst Day goal of $10.5 billion and $1.1 billion above its May 2026 projection of $11.5 billion. The upward revision signals that AI networking demand is not just a short-term cycle but a sustained multiyear expansion.
“We are now projecting 40% annual growth, which is an incremental $2.1 billion over our 2025 Analyst Day goal of $10.5 billion, and an incremental $1.1 billion over our recent projections of $11.5 billion in May of 2026,” Ullal said.
Supply chain pressures beginning to ease
Just last quarter, Arista warned that supply chain constraints on networking components—including memory, chips, and wafers—were leading to ongoing shortages and rising costs. This quarter, the company reported meaningful improvement after months of focused work.
“Arista has spent the last six months improving our supply chain to meet growing product demand, and we’re seeing significant improvements,” said Todd Nightingale, Arista's president and COO. “We’ve secured multiyear agreements with leading vendors of strategic components, qualified new suppliers in key areas to limit risk and built out supply chains for next gen AI technologies.”
Nightingale detailed several specific supply chain wins. Memory supply has been secured for 2026, with extended visibility well into 2027 across DDR4, DDR5, and NAND memory. The company has also expanded vendor qualification to increase resilience. For PCBs and optics, Arista can now build capacity within a 12-month window and has deepened commitments from key suppliers. Improved lead time management across thousands of component SKUs is providing greater flexibility while reducing inventory risk.
In addition to traditional components, Arista has established a liquid-cooling supply chain to support next-generation AI infrastructure. “This includes cold plate, quick disconnect, and tubing vendors with capacity agreements for cutting-edge new AI technology,” Nightingale said.
Ullal cautioned, however, that the industry is not out of the woods yet. “I don’t want you to believe that suddenly we waved a magic wand and all our problems have gone away,” she said. “The industry is going to have a two-year problem [with memory and other silicon availability challenges], and I don’t think we get out of it as an industry until 2028. But Arista is taking individually and specifically steps in the first half of this year that we believe will have results in the back half of this year.”
EOS innovations
Kenneth Duda, Arista's president and CTO, said the company is seeing an unprecedented combination of rapid innovation and scale deployment in AI networks. “I have never witnessed the combination of rapid innovation and scale deployment that we are seeing in AI networks,” Duda said. He highlighted three technologies in Arista's EOS operating system that are helping differentiate the company's gear: Smart System Upgrade (SSU), Multipath Reliable Connection (MRC), and Segment Routing (SRV6).
SSU allows switch software upgrades without disruption. As AI both uncovers security vulnerabilities and creates tools to exploit them, frequent upgrades are becoming a hard reality. “While many competing systems require a full reboot to address these issues, leading to expensive and disruptive downtime, Arista EOS handles these upgrades seamlessly,” Duda said.
MRC addresses a fundamental performance issue in first-generation AI networks. In those early designs, every packet on an XPU-to-XPU flow had to take the same path. “That means if two flows hash to the same length, they both run at half speed,” Duda explained. “MRC enables senders to spray a single flow across many paths through the fabric, where receivers reassemble any data that arrives out of order, eliminating the performance hit from fabric cache collisions.”
SRV6 is the technology that gives senders control over which paths to use. “It’s not new, but using it to load balance an AI fabric, that’s the game changer,” Duda said. “The sender tags each packet with a stack of SRV6 segment IDs dictating the exact path the packet will take. The system then uses real-time congestion signaling to dynamically shift packets away from hotspots.”
Because Arista EOS provides a single unified operating system, SRv6 intelligence extends from scale-out fabrics to long-distance scale-across routing. “It gives our customers the combination of high-quality top performance and operational simplicity that Arista is known for,” Duda added.
The optics outlook
Optical connection technology continues to move into the AI networking environment, but Arista believes pluggable optics and copper will remain the dominant approaches for several years. Ullal said the majority of the market will continue using pluggable optics and copper through 2028–2029. “I think there’s very much a philosophy there [of] copper if you can, optics if you must,” she said.
Ullal expects copper to play a major role in short-reach connections, particularly at two-meter to three-meter distances within a rack. Pluggable optics will remain important for longer reaches. However, she cautioned against the proliferation of proprietary co-packaged optics implementations. “Arista is not a fan of five different proprietary implementations,” she said.
Arista's engineering team is working on an open approach to co-packaged optics. “We don’t think open CPO is going to happen overnight, but the idea here is to use socketed optical engines, pigtail fibers, and allow these modules to be fully pretested,” Ullal said. “And whether they’re soldered on the board or nearby, the idea is to have a truly open interface that can operate with multiple vendors and multiple switch configurations.”
Arista supports open, socketed optical engines rather than proprietary solutions. CPO and Near Packaged Optics (NPO) are expected to enter trials in 2027 but will remain a small portion of the market in the near term.
Arista recently unveiled extended pluggable optics (XPO), a form factor designed specifically for high-speed optics. The company assembled more than 100 optics module suppliers as part of a multi-source agreement to build and support XPO. This initiative aims to give customers a standardized, multi-vendor optics ecosystem while avoiding lock-in to any single supplier.
The combination of record revenue, strong AI fabric adoption, improving supply chains, and a clear technology roadmap positions Arista to remain a central player in the AI networking boom. With a raised growth outlook and continued innovation in EOS, the company is betting that its open, software-driven approach will win over customers looking to build scalable and reliable AI infrastructure.
Source: Network World News