Buffett Brain · Research note
Score updated 26 Sept 2026 · analysis from 2 Jun 2026
ANET· Technology
Arista Networks
Arista Networks is a wonderful business at a price that makes a careful owner wince, trading near 52 times earnings.
Buffett fit
Strong fit
Owner
93
Durability
100
Management
89
Price
1
Score updated 26 Sept 2026 · analysis from 2 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Technology stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If you buy this stock you are buying a business that earns a 22.4 percent and converts more than every dollar of reported profit into cash, with at 121 percent of net income.
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The durability here is about as strong as the numbers get, which is why that score is pinned at the top.
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Management has run this business the way I like to see it run. They carry no debt, is zero, they hold net cash with net debt to EBITDA at negative 0.66, and they have grown the share count by a trifling 0.6 percent a year, so owners are not being quietly diluted.
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Here is where I have to be blunt: there is no at this price.
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- The full reasoning behind all four pillars
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
7- 1 of 42.8 percent and of 63.5 percent show and software-like economics rare in hardware.
- 2 of 22.4 percent, with a five-year average of 26.8 percent, means the business compounds capital at a high rate.
- 3Revenue has grown at a 32 percent annual clip and earnings per share at nearly 42 percent, a genuinely fast-growing franchise.
- 4 runs at 121 percent of net income, so the reported profits are real cash, not accounting fiction.
Concerns
7- 1Valuation is the headline problem: 52 times earnings and an EV to near 50 leave a thin 2.2 percent owner-earnings yield, far too rich for any .
- 2The earnings yield of just 1.9 percent is well below what you would earn holding a Treasury bond with none of the risk.
- 3Market capitalization sits at 24.3 times retained earnings, a steep premium that assumes years of flawless growth.
- 4Heavy revenue concentration among a few hyperscale cloud customers means a single customer's spending pause could dent the 32 percent growth quickly.
Price history
$187+629.1%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Arista sells high-performance ethernet switches and routers to the largest data centers and cloud operators, and increasingly bundles its own software, the EOS operating system, on top of merchant silicon. The economics are unusually good for hardware: a 63.5 percent and a 42.8 percent tell you customers pay up for reliability and software, not just boxes. Revenue has compounded at 32 percent a year, so this is a company growing fast and keeping a large piece of every dollar.
How this analysis has moved
The call has held across 6 reviews.
Sep 27, 2026 → Oct 29, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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