Everything Money on $ANET (Oct 28, 2026)

So, the first company we have with us, guys, is Arista Networks. It manufactures ultra-fast networking equipment that connects thousands of these AI chips so they can communicate with each other. It is clearly a very important company.

So, in the case of the rise, as AI groups grow in size, these networks become critically important and their software ensures that customers stay with them.

As for the downturn, folks, Nvidia is now also entering the networking field, and a large portion of Arista's sales come from just two giant clients.

I went straight to our artificial intelligence and asked it: "What are the two giant customers that make up Arista's sales?" Microsoft and Meta. In 2025, its two largest end customers accounted for 26% and 16% respectively.

So Microsoft and Meta together accounted for 42% of sales.

However, once a large company has built its entire network on Arista software, moving away from it becomes a real headache.

Remember, guys, when we look at the company's price, everyone wants to go to the share price of 175. That's not the price of a business. The price is the market value, $223 billion.

The share price is the market value divided by the number of shares.

Next, the value of the institution. This is the next scale I'm moving to. Why am I doing that? Okay guys, look at this. When a company's value is less than its market value, that's astonishing.

It is very rare. This essentially means they have more cash on hand than debt. This is the price you pay to buy all the shares. This is the price you pay for all the shares plus all the debt, while also keeping all the cash in the company.

So, you are essentially buying it at a price lower than the market price. This is a sign of a good balance sheet.

Next, the returns on capital are very high. 25% annually over the past five years, and 29% last year. Guys, although this is a very specific number, it's more of a measure of quality for the company.

It indicates the quality of this company; they get good returns on the money invested in the business. Usually, only companies that are expanding their competitive advantage or high-quality companies do this.

You should pay a premium for this type of company.

Now, something else I love. Look at the profit margin here. It is growing. 34.5% annually over the past ten years, 37% over the past five years, and 38.5% last year. Is this ongoing progress that they will continue to make, or is it due to the recent surge in spending on artificial intelligence?

Now, another thing I like about the company is that the free cash flow is greater than the net income. It seems a bit temporary because free cash flow and five-year net income are very similar, but I like this because most companies, especially in the field of artificial intelligence, have the opposite situation.

This means that the net income figure is a much easier number to manipulate, and it is subject to many accounting and Securities and Exchange Commission rules. So, when I see free cash flow better than net income, I get excited.

year net income are very similar, but I like this because most companies, especially in the field of artificial intelligence, have the opposite situation. This means that the net income figure is a much easier number to manipulate , and it is subject to many accounting and Securities and Exchange Commission rules.

So, when I see free cash flow better than net income, I get excited.

Now, there's one thing that doesn't excite me, guys: 43 times free cash flow, and 55 times profits. Even with this large jump in profits and free cash flow, it is still a very high free cash flow multiplier.

And now, folks, here are the eight pillars. The listed shares rose slightly. I'm not worried about that. It hasn't risen enough for me to see 25%, 30%, or 10%. So, I agree to this.

But guys, the 5-year price-to-earnings ratio and the 5-year price-to-free cash flow ratio are too high. If they are growing their profits and free cash flow at consistently high percentages, that is acceptable.

Or it could be acceptable, I must say, because, guys, if the company is going to grow its profits by 50% annually over the next ten years, then you should definitely pay a huge premium.

Okay guys, there isn't much of a future here, but look at this. The move from earnings of $4.11 per share this year to $8 in 2029, nearly doubling in 3 years. This means growth of 25% annually.

What about revenues? It also nearly doubles from $12.7 billion to $24.3 billion. That's truly impressive for a company like this.

Now, my question is: Are these analysts' estimates based on overly optimistic assumptions about the future, or on more Guys, this is the first time I've analyzed Arista Networks.

Arista Networks' revenues have grown by 27% annually over the past ten years. Over the next ten years, do you think growth will be faster, slower, or at the same pace ? Guys, I think it will be slower.

I think people make a lot of big assumptions about this company. So I will choose "slower".

What growth rate would you like to assume? Okay, now I'll think about the overall picture. I think it's likely to grow by about 17%. Okay, guys, the program takes my average default here and says: "Okay, based on your average of 17%, we'll suggest 12.75% as a minimum and 21.25% as a maximum." Well, that seems reasonable.

Profit margin. Arista's average profit margin has been 34.55% over the past ten years . Over the next ten years, do you think it will be higher, lower, or the same? In fact, I think it may stay roughly the same because much of that growth also happened in the last year or two. Therefore, I agree to keep it as it is .

Next, free cash flow. Arista's free cash flow has been 38% over the past ten years. Over the next ten years, do you think it will be higher, lower, or the same? I would choose "by the same percentage".

The historical average price-to-earnings ratio and price-to- free-cash-flow ratio for the S&P 500, not for Arista, are between 15 and 17. Do you think this company is better or worse than the average of companies in the S&P 500 at the end of a 10-year analysis?

Okay guys, does the company have a large economic moat? Kind of , not really. I don't think it's a huge trench, but I do think customer loyalty is a very big advantage for the company.

Does it have a high return on capital? We have seen that it is currently around 29% . certainly. Does it have growing profit margins ? We have seen that profit margins have been growing.

Does it have a good balance sheet? Guys, they had more cash on hand than debt. So, my answer is "yes" to all of these questions. Therefore, I think it's a better company.

So, what is the multiplier I would like to assume? Guys, I'm going to put 20. So, the program will assume my minimum is 15 , the average is 20, and the maximum is 25.

Based on my assumptions, I have a low price between 65 and 70, a high price between 300 and 330, and an average price of around 150. So, compared to today's price of 175, it doesn't seem like a good buying opportunity for me right now.

But it's not that far off . So, if you're interested in owning this company, I'd add it to my watchlist. Now, since I want a safety margin, if its value is 150, I will put 125 as a warning for myself.

Therefore, the system will notify me, and I will receive an email when the stock reaches that price.