Arista Networks Reports on 3 November: Gross Margin, Not the Beat, Decides the Quarter
Arista Networks reports third-quarter results on 3 November after the close, with consensus at $1.08 a share on revenue of $3.33 billion, about 44% above a year ago on both lines. After four straight beats, the number that will shape the reaction is gross margin: whether the June quarter's recovery to 62.9% holds as revenue keeps climbing.
Maz Vantage Research ·
Arista Networks reports third-quarter 2026 results on Tuesday, 3 November, after the market close. The stock goes into the print well off its highs: it closed at $168.86 on 30 October after an 8.3% one-day drop, against a 52-week range of $114.52 to $217.41. The business has been doing the opposite of the share price, with revenue growing more than 35% a year and every recent quarter landing above consensus. That makes the headline beat the least informative part of the report. What matters is how much of the extra revenue reaches gross profit.
What the street expects
Consensus for the September quarter is earnings of $1.08 a share on revenue of $3.33 billion. Against the same quarter of 2025, that implies growth of roughly 44% on both lines.
| Metric | Q3 2026 consensus | Q3 2025 actual | Change |
|---|---|---|---|
| EPS (adjusted) | $1.08 | $0.75 | +44.0% |
| Revenue | $3.33bn | $2.31bn | +44.5% |
Changes are simple arithmetic on the consensus and the reported figures.
The revenue estimate is also a step up of about 9.8% from the $3.04 billion Arista reported for the June quarter (our arithmetic). That is a demanding sequential bar, but the company cleared a similar one last time: second-quarter revenue rose 12.1% on the first quarter.
The track record
Arista has beaten consensus on both earnings and revenue in each of the last four quarters:
- Q2 2026: EPS $1.02 vs $0.886 expected; revenue $3.04bn vs $2.83bn.
- Q1 2026: EPS $0.87 vs $0.808; revenue $2.71bn vs $2.62bn.
- Q4 2025: EPS $0.82 vs $0.758; revenue $2.49bn vs $2.39bn.
- Q3 2025: EPS $0.75 vs $0.718; revenue $2.31bn vs $2.26bn.
The size of the revenue beat has grown, from about 1.9% in the third quarter of 2025 to about 7.3% in the June quarter (our arithmetic). Revenue growth has accelerated too: the June quarter was up 37.7% year on year and the March quarter 35.1%. A company with that pattern tends to be judged against an unofficial number above consensus, which is one reason a beat alone may not move the stock.
The line that decides the quarter
The line to watch is gross margin. Based on the filed income statements, Arista's gross margin has moved as follows (gross profit divided by revenue, our arithmetic):
- Q2 2025: 65.2%
- Q3 2025: 64.6%
- Q4 2025: 62.9%
- Q1 2026: 61.9%
- Q2 2026: 62.9%
Over three quarters, as revenue grew faster, the margin fell by more than three percentage points. Recent coverage pointed to the tension behind that trend, describing rising estimates and strong AI networking demand alongside concerns about valuation and supply-chain costs. The June quarter was the first in a year where the margin went up rather than down.
The September quarter shows whether that recovery holds. If gross margin stays near or above 63% on revenue of around $3.3 billion, the growth is arriving without giving up profitability, and operating leverage keeps working. That leverage is already visible: GAAP operating margin rose from 42.4% in the third quarter of 2025 to 45.4% in the June quarter, because operating expenses grew much more slowly than gross profit. If gross margin slips back towards 62% or lower, the market is likely to read the quarter as revenue bought with margin, even with a clean beat on the top line.
The other thing to listen for is any comment on how durable AI infrastructure spending is. Recent headlines have raised questions about whether funding for new AI data centres is tightening. Arista's guidance for the December quarter, and anything it says about large-customer orders, will be read against that backdrop.
Valuation and the Maz Rating
At $168.86, Arista has a market value of about $213 billion and trades at roughly 53 times trailing twelve-month GAAP diluted earnings of $3.17 a share (our arithmetic on the last four filed quarters). The analyst price-target consensus is $226.64, with a range of $164 to $289; the consensus sits about 34% above the last close.
On the site's own scoring, Arista carries a Maz Rating of 4.36 out of 5 (Strong Buy), driven by its fundamentals rather than its price. Profitability scores 4.91 and Financial Health 4.53, both close to the top of the scale, while Growth scores 3.67 and Momentum 3.54. Valuation is the clear weak spot at 1.32: on price-to-sales, EV-to-EBITDA and earnings multiples, the stock sits among the more expensive names in technology. That split is the quarter in miniature. The quality of the business is not in question; the multiple leaves little room for a margin disappointment.
Bottom line
Arista has a long run of beats behind it and consensus already assumes growth of around 44%. Another beat would extend the pattern, not change the picture. The number that will shape how the quarter is read is gross margin: holding near 63% would confirm that the June recovery was real, while a slide back would revive the concern that the fastest growth comes with thinner margins. Guidance and any comment on AI customer spending will decide the rest.
This is a preview based on published consensus and filed accounts, not investment advice.