Arista had much to celebrate in its recent Q2 financial results call with Wall Street analysts, reporting a $2.2 billion quarter that exceeded the company’s predictions by $100 million. Here are the key networking highlights from the call.
Feeling good
Arista reported Q2 revenue of $2.2 billion, surpassing the company’s plan by $100 million. Given strong momentum across cloud titans and enterprise customers, management raised 2025 revenue guidance to $8.75 billion from $8.2 billion—a 25% increase, according to Arista CEO Jayshree Ullal.
“Our stated goal of $750 million back-end AI networking is well on track … we do expect an aggregate AI networking revenue to be ahead of the $1.5 billion in 2025 and growing in many years to come,” Ullal said during Arista’s financial presentation. Beyond AI wins across its cloud titan customers, the Arista CEO said it has 25-30 neocloud and enterprise customers.
It’s an Ethernet world
Arista continues to see strong traction for Ethernet in AI back-end deployments at its cloud titan customers, according to William Blair & Co.’s equity report on Arista’s second quarter results.
“The company reiterated guidance for $750 million in AI back-end revenue and another $750 million in AI front-end network pull through. While Arista’s pipeline points to stronger demand across both AI front-end and back-end networks, some uncertainty around the timing of deployments led management to reiterate its $1.5 billion target. Microsoft is the slowest of Arista’s four core cloud titan customers to move to Ethernet but will likely be a more meaningful driver of AI growth in 2026,” according to the report.
“Scale-up networks will be an incremental new market as Arista pursues it. Today, majority of that market lies inside a compute network structure and isn’t something Arista is participating in,” Ullal said. “But we are very encouraged by the standards for Scale-Up Ethernet that Broadcom has initiated and we’re big fans of. We think that Ethernet as a transport protocol is going to favor Arista and Broadcom very much.”
“We also think UALink is another spec that’s coming out, and that may run as an overlay on top of an Ethernet underlay. There needs to be some firm standards there because today, scale-up is frankly all proprietary NV Link. And we’re encouraged by—just like we worked hard to found the Ultra Ethernet Consortium as a member for some of the back-end Ethernet, and the migration from InfiniBand to Ethernet is literally happening in 3 to 5 years. We expect the same phenomenon on scale-up,” Ullal said.
“The rise in Agentic AI ensures any-to-any conversations with bidirectional bandwidth utilization. Such AI agents are pushing the envelope of LAN and WAN traffic patterns in the enterprise,” Ullal said.
Work to do on VeloCloud integration
The recent acquisition of VeloCloud was also a hot topic of the second quarter results that included the introduction of former Cisco exec and industry veteran Todd Nightingale, as its newly appointed President & COO.
“It’s only been a month, but I can’t tell you how impressed I am with the passion and focus of the team, the trust that Arista customers have in the technology and the enormous opportunity we have ahead of us in data center, AI, and in the campus,” Nightingale said.
“VeloCloud’s secure AI optimized WAN portfolio offers seamless application-aware solutions to connect customer branch sites, complementing Arista’s leading spines in the data center and campus,” Ullal said. “In a classic leaf-spine atomic identifier, we are enabling multipathing, encryption, in-band network telemetry, segmentation, application identification, and traffic engineering across distributed enterprise sites. We are so excited to fill this missing void in our distributed enterprise puzzle to bring that holistic branch solution.”
“We also intend to work closely with best-of-breed security partners to enable SASE overlays. Please do note that VeloCloud is not material in 2025, and we have some work to do to restore annual revenue back to pre-Broadcom levels,” Ullal said.
We are looking very carefully at how we support customers from a fully integrated SASE SD-WAN solution, Nightingale added. “It’s a secure WAN that matters. And delivering that solution with great assurance is something that certainly is top of mind for us.”
A widening GPU market
“What is crystal clear to us and our customers is that Arista continues to be the premier and preferred AI networking platform of choice for all flavors of AI accelerators. While the majority today is NVIDIA GPUs, we are entering early pilots connecting with alternate AI accelerators, including start-up XPUs, the AMD MI series and in AI and Titan customers who are building their own XPUs,” Ullal said.
Source:: Network World