Arista Networks (ANET) Stock Forecast: 1.6Tbps Switch Launch Drives 7% Rally - BofA and KeyBanc at $200

Arista is expanding its foothold in AI networking with its 7060XE7 Series, the new top networking platform for AI infrastructure. The switch delivers 1.6 trillion bits of switching capacity per second, or twice as much bandwidth as its predecessor. It's designed to be capable of connecting large AI clusters where thousands of graphic processing units and other AI accelerators constantly communicate. Increased bandwidth helps prevent network saturation and increases training efficiency, so high-performance switching is becoming more and more critical to AI infrastructure.

The fact that Meta, Microsoft, and Oracle have deployed Arista's new switch takes the announcement away from being solely a product launch, as these hyperscale cloud providers are now among the first commercial adopters of the company's platform. The switch is available in both air-cooled and liquid-cooled formats, meaning it's suitable for both conventional data centers and future high-density AI racks that will support new GPUs like Nvidia Blackwell and other next-gen systems.

KeyBanc stated that the biggest demand for its products has come from AI inference deployments as well as deployments that feature XPU-based designs. "XPU" refers to hardware devices that are not the more typical graphics processing units, and instead include TPUs from Google, Trainium and Inferentia chips from Amazon, Maia systems from Microsoft, as well as custom AI chips like application-specific integrated circuits (ASICs). Because its Ethernet network is hardware-agnostic, Arista will be able to reap the benefits regardless of the vendor of the AI accelerators. It also allows for another bullish view by Morgan Stanley that the migration from InfiniBand to Ethernet AI networking will continue in the long term, presenting a major upside opportunity for Arista.

The new growth driver for Arista is increasingly AI. The firm said it is forecasting that 11.5 billion will be its fiscal 2026 revenue, which will include $3.5 billion in AI products. Following first quarter of fiscal 2026 revenue of $2.71 billion, management also guided that second quarter of the fiscal year will generate revenue of approximately $2.8 billion. The company expects gross margin to be in the 62 to 63% range, and the operating margin to be 46 to 47%.

This guidance illustrates how quickly AI networking has grown from an emerging business within Arista's portfolio to now accounting for a significant portion. It continues to grow its campus networking segment, with an expected $1.25 billion of revenue in the campus networking segment by 2026, but now AI has become its biggest growth engine and the most important factor driving investor sentiment.

Armed with that optimistic view, Arista shares trade at around 54 times trailing earnings, which is considerably higher than the median in the communications sector. Although a higher P/E is justifiable for stocks with higher earnings growth, it also means less of a cushion if the company falls short of expectations. 

On the other hand, the company's co-founder, Andreas Bechtolsheim, sold off 240,000 shares worth roughly $39 million under a pre-arranged 10b5-1 plan on July 2. Bechtolsheim still owns more than 182 million shares, so the sale is likely a move to manage the size of his portfolio. However, given the analysts' targets on Arista ranging from $190 to $200, the upside potential at the stock's current level appears constrained.

On the 4H time frame, ANET is bouncing off the rising trendline and is at an RSI of 67.20 neutral-bullish, while the green candle confirms buyers after the pullback before and the channel looks to be extended to $196.92 to $202.86. Support will likely come from $174.17 to $163.32 levels, and a close above $196.90 will drive up to the $202.80 levels. Risk below $174.10.

Arista Networks (ANET) Stock Price Chart - Source: Tradingview

• Entry: Long above $196.90, as channel resistance is cleared.
• Target: $202.80, which is the channel extension.
• Stop Loss: Close below $174.10, as the ascending trendline fails.

7060XE7: Arista 7060XE7 rack-scale 1.6Tbps AI switch. At Meta, Microsoft, Oracle.

Q1 2026: Revenue of $2.71B (+35.1% yoy). Non-GAAP operating margin of 47.8%. Zero debt, $2.79B in cash.

Q2 earnings release: Aug 4, 2026. 2026 Full Year: $11.5B guidance, $3.5B AI.

The 7060XE7 Series is the latest AI networking platform from Arista, delivering 1.6Tbps of capacity, ideal for AI rack-scale deployments. The greater bandwidth is a relief in times of AI training and inference network traffic and the platform will soon be deployed with key customers such as Meta, Microsoft, and Oracle. Following the product's announcement, KeyBanc updated its target to $200, pointing to "very high AI inference and XPU workload demand."

An increasing AI networking need as well as the launch of the 7060XE7 and the improved belief that previous worries about supply-chain constraints and deferred revenue were unfounded were cited by both Bank of America and KeyBanc for updating their targets to $200. Morgan Stanley has upped its target to $190, highlighting that Arista is benefiting from the industry move away from InfiniBand to AI networking that uses Ethernet.

The earnings on Aug. 4 will center on:

• How close they are to the $3.5B AI revenues they are targeting.
• Campus networking results, which are projected to reach $1.25B by 2026.
• Updates on 7060XE7 deployments, customer base, and supply chain.

If the supply chain can produce goods in line with AI networking needs, that will likely confirm the current positive outlook.

Arista Networks Inc. is priced at $184.87 following a 7% jump prompted by the release of its 7060XE7 AI networking solution, which is now available to Meta, Microsoft, and Oracle. The company has reported 35.1% year-over-year sales growth for its first quarter and now forecasts revenue of $11.5 billion for the year, including $3.5 billion derived from AI services. The stock has been garnering upgrades from Wall Street, with analysts at both Bank of America and KeyBanch setting a new price goal of $200 per share. ANET has yet to penetrate the trendline above $196.90, which could signal further upside, and the stock should receive another boost from Arista's upcoming Q2 earnings report on Aug. 4.