Arista laments ‘horrendous’ memory situation

Arista Networks dialed up a strong fourth quarter, fueled by AI and campus Ethernet networking, to close out last year.

“2025 has been another defining year for Arista. With the momentum of generative AI and cloud and enterprise, we have achieved well beyond our goal, at 28.6% growth driving a record revenue of $9 billion,” said Jayshree Ullal, CEO and chairperson of Arista, during the vendor’s earnings call with financial analysts. “Arista 2.0 momentum is clear as we surpassed 150 million cumulative ports of shipments in Q4 ’25.”

Horrendous memory

Like many other vendors, system memory costs are causing Arista pain. (Cisco talked about it recently, too.)

“Arista has taken a very thoughtful approach, being aware of this since 2025 and, frankly, absorbed a lot of the costs in 2025 that we were incurring. However, in 2026 the situation has worsened significantly. We’re having to smile and take it just about at any price we can get. And the prices are horrendous, an order of magnitude, exponentially higher,” Ullal said. “So, clearly, with the situation worsening and also expected to last multiple years, we are experiencing shortages in memory…we are planning for this.”

Going forward, Arista may increase prices selectively on more memory-intensive SKUs to offset rising costs.

“Despite increasing costs across memory and advanced chip silicon, Arista expects to be able to mitigate any negative impacts to its gross margins,” wrote stated Sebastien Naji, a research analyst with William Blair, in a research note. “While the company has largely been absorbing the increasing supply costs, management noted that it may increase prices selectively on more memory-intensive SKUs to offset rising costs. Though Arista has memory included in its $6.8 billion in purchase commitments (up from $4.8 billion in the prior quarter), management acknowledged that additional supply will be required to support anticipated demand levels through 2026.”

Digging in on campus

Arista has been clear about its plans to grow its presence campus networking environments. Last Fall, Ullal said she expects Arista’s campus and WAN business would grow from the current $750 million-$800 million run rate to $1.25 billion, representing a 60% growth opportunity for the company.

“We are committed to our aggressive goal of $1.25 billion for ’26 for the cognitive campus and branch. We have also successfully deployed in many routing edge, core spine and peering use cases,” Ullal said. “In Q4 2025, Arista launched our flagship 7800 R4 spine for many routing use cases, including DCI, AI spines with that massive 460 terabits of capacity to meet the demanding needs of multiservice routing, AI workloads and switching use cases. The combined campus and routing adjacencies together contribute approximately 18% of revenue.”

Ethernet leads the way

“In terms of annual 2025 product lines, our core cloud, AI and data center products built upon our highly differentiated Arista EOS stack is successfully deployed across 10 gig to 800 gigabit Ethernet speeds with 1.6 terabit migration imminent,” Ullal said. “This includes our portfolio of EtherLink AI and our 7000 series platforms for best-in-class performance, power efficiency, high availability, automation, agility for both the front and back-end compute, storage and all of the interconnect zones.”

Ullal said she expects Ethernet will get even more of a boost later this year when the multivendor Ethernet for Scale-Up Networking (ESUN) specification is released.

“We have consistently described that today’s configurations are mostly a combination of scale out and scale up were largely based on 800G and smaller ratings. Now that the ESUN specification is well underway, we need a good solid spec. Otherwise, we’ll be shipping proprietary products like some people in the world do today. And so we will tie our scale-up commitments greatly to availability of new products and a new ESUN spec, which we expect the earliest to be Q4 this year,” Ullal said.

AI growth and outside influences

Largely due to its growing hyperscale customers, Arista said it would double its AI networking revenue from 2025 to $3.25 billion in 2026.

“We interoperate with Nvidia, the recognized worldwide market leader in GPUs, but also realize our responsibility to broaden the OpenAI ecosystem, including leading companies such as AMD, Anthropic, ARM, Broadcom, OpenAI, Pure Storage and VAST Data, to name a few, that create the modern AI stack of the 21st century,” Ullal said.