Arista’s Momentum Is Impressive Heading Into 2023, and Our Long-Term Thesis Is Intact

We maintain our $130 fair value estimate for wide-moat Arista Networks after a terrific fourth quarter. Arista beat our expectations soundly in the quarter, but reiterated guidance for 2023 that aligns with our model. Arista’s 2022 was a banner year for sales into cloud customers like Meta Platforms and Microsoft, and the company also showed continued progress encroaching on the adjacent campus market. We see Arista’s broad-based success reflecting its differentiated, software-led approach that in our view creates intangible assets and a wide economic moat. Supply constraints remain a factor into 2023, but we aren’t worried about Arista’s ability to produce good results. We see shares as fairly valued.