Arista Networks (NYSE: ANET) stock fell over 4% in pre-market trading on Wednesday after analysts flagged a significant revenue drop from one of its major clients, Meta Platforms (NASDAQ: META).
The networking equipment maker recently reported better-than-expected fourth-quarter earnings, fueled by growing demand for its products amid the artificial intelligence (AI) boom.
Arista posted adjusted earnings per share of $0.65 on revenue of $1.93 billion, beating Wall Street estimates of $0.57 per share and $1.90 billion in revenue.
The company also issued upbeat guidance for the current quarter, projecting revenue between $1.93 billion and $1.97 billion, ahead of the estimated $1.91 billion.
In a statement, Arista said,
“We delivered an exceptional financial performance in [the fourth quarter], exceeding our guidance on all key metrics.”
Arista Networks (NYSE: ANET), a key player in the networking sector, counts tech giants like Meta Platforms and Microsoft (NASDAQ: MSFT) among its biggest clients. The company has capitalized on the AI boom, benefiting from the increasing need for data centers to support AI technologies, which rely on Arista’s networking hardware, such as Ethernet switches and routers.
However, analysts cautioned ahead of Arista’s quarterly earnings that the company might be facing a delay in a project for major client Microsoft, along with uncertainty regarding the delivery timeline for Nvidia’s (NASDAQ: NVDA) new AI-optimized Blackwell chips.
These factors have led to some volatility in Arista stock in 2025, which has been affected by broader shifts in Big Tech, particularly after a Chinese start-up, DeepSeek, introduced a low-cost, open-source AI model. This has sparked worries among investors about the future of AI spending among major tech companies, although executives in the sector have reaffirmed their commitment to AI investments.
Shares in Artista slid in premarket trading on Wednesday following an analyst report from Morgan Stanley (NYSE: MS), which pointed to a 17% year-over-year revenue decline from Meta. The analysts noted the decline is “something to continue to monitor,” but maintained a positive outlook on Arista, suggesting they would “buy the weakness” in the stock.
