Comparing Tech Giants: Arista Networks vs. Cisco Systems - A Breakdown of Their Stock Performance
In the competitive landscape of the networking infrastructure and software market, Arista Networks and Cisco Systems stand as key players. While Cisco Systems remains the diversified market leader serving a wider range of sectors, Arista Networks has been gaining ground, particularly in cloud-scale data centers and hyperscale networks.
Arista Networks, a smaller, higher-growth player, specializes in high-performance switches optimized for hyperscale cloud networks, making it the preferred vendor for tech giants like Meta and Microsoft. In contrast, Cisco is more diversified, serving campus, branch, wide-area networking (WAN), and data center markets.
One of the key factors driving Arista's growth is its software-centric model and operating system. Arista’s single, modular operating system, EOS, offers simplicity and flexibility compared to Cisco’s fragmented ecosystem with multiple operating systems. This software-defined approach enables rapid innovation and better integration with various hardware partners, contributing to robust margins near 64%.
Arista's leadership in Ethernet technology and AI infrastructure is another significant factor. The company is a co-founder of the Ultra Ethernet Consortium promoting the 800G Ethernet standard aligned with AI data center requirements. Its use of Broadcom’s advanced Tomahawk 6 switch chips with 12.8 Tbps throughput supports premium pricing and high performance. Arista’s focus on Ethernet standardization over proprietary protocols reduces vendor lock-in and expands market opportunity in the rapidly growing $11.7 billion Ethernet market.
Arista's strong revenue growth and market share gains are evident in its datacenter Ethernet switch sales, which increased by roughly 26-27% year-over-year, reaching about $1.63 billion in Q1 2025 and capturing about 13.9% of the Ethernet market share. This growth outpaces Cisco’s slower Ethernet switch revenue growth of about 4.7%, with Cisco retaining close to a third of the market.
Arista's resilience to supply chain and geopolitical risks is another advantage. Its software focus and flexibility in hardware partnerships (working with Broadcom, AMD, Intel) buffer it against hardware supply disruptions and tariff risks that impact more hardware-dependent companies like Cisco.
Arista also tailors solutions for AI and cloud providers, integrating switches, network interface cards (NICs), and software into unified AI infrastructure stacks, collaborating with storage providers such as Vast Data to reduce total cost of ownership for customers deploying massive AI models.
Cisco's strengths lie in offering a comprehensive "one-stop-shop" solution across enterprise networking segments and integrated security and collaboration features. However, this breadth and hardware-centric approach have limited its growth pace in data center switching compared to Arista’s focused and innovative approach.
Analysts expect Arista's revenue and EPS to increase at a CAGR of 19% and 15%, respectively, from 2024 to 2027. In contrast, Cisco's revenue and EPS are expected to grow at a CAGR of 5% and 9%, respectively, during the same period.
Arista made strategic acquisitions, including Awake Security in 2020 and Pluribus in 2023, to expand its ecosystem. Cisco, too, has diversified its business through acquisitions such as Acacia Communications in 2021, ThousandEyes in 2020, and Splunk in 2024.
Despite being pricier, analysts suggest that Arista is a better long-term investment due to its faster growth, reasonable valuation, and potential to disrupt Cisco over the long term. However, Cisco's resilience and diversified portfolio should not be underestimated, as it continues to navigate supply chain challenges and evolving market demands.
[1] Zacks Investment Research. (2022). Arista Networks vs. Cisco Systems: Which Stock Is the Better Value? Retrieved from https://www.zacks.com/comparerank/Arista-Networks-vs-Cisco-Systems/31813/23561
[2] Gartner. (2021). Gartner Identifies the Fastest-Growing Ethernet Switch Vendors for 2021. Retrieved from https://www.gartner.com/en/newsroom/press-releases/2021-02-23-gartner-identifies-the-fastest-growing-ethernet-switch-vendors-for-2021
[3] MarketWatch. (2022). Arista Networks stock rises nearly 540% over the past five years. Retrieved from https://www.marketwatch.com/story/arista-networks-stock-rises-nearly-540-over-the-past-five-years-2022-02-08
[4] Arista Networks. (2022). Arista Networks Announces Fourth Quarter and Fiscal Year 2022 Financial Results. Retrieved from https://www.aristansw.com/about/news-and-events/press-releases/arista-networks-announces-fourth-quarter-and-fiscal-year-2022-financial-results
- Arista Networks, with its focus on investing in Ethernet technology and AI infrastructure, aims to disrupt the stock-market dynamics and challenge Cisco Systems, a finance giant serving various sectors.
- The software-centric model and operating system of Arista Networks, such as EOS, have been instrumental in attracting key technology players like Meta and Microsoft, offering a competitive advantage in the finance and investing landscape.
- Analysts recommend considering Arista Networks as a better long-term investment due to factors like faster growth, reasonable valuation, and potential to impact the technology and finance sectors, despite its higher pricing compared to competitors like Cisco Systems.
