Arista Networks

Methodology

Arista's cloud data center networking equipment benefits from concentrated spending by hyperscale customers, creating lumpy but generally strong growth. The company's technical superiority in high-performance Ethernet switching and software-defined networking drives market share gains from legacy vendors. This calculation works reasonably during periods of steady cloud buildout, though customer concentration and project timing create quarter-to-quarter volatility.

Methodology

Arista typically commands premium PEG valuations reflecting superior technology and growing share in cloud and AI data centers. The company's strong margins and market position justify higher multiples than traditional networking hardware vendors, though dependence on a few large customers creates risk. Compare to both cloud infrastructure plays and networking peers to gauge whether Arista's technology leadership justifies its current multiple.

Methodology

Arista does not pay dividends, focusing capital on R&D to maintain technology leadership in cloud networking and expand into campus and routing markets. PEGY essentially equals PEG, providing no additional insight. For Arista, the investment case centers on sustaining share gains in cloud networking and successfully diversifying beyond its core hyperscale customer base.