ANET

A month has gone by since the last earnings report for Arista Networks (ANET). Shares have lost about 5.7% in that time frame, underperforming the S&P 500. But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Arista Networks due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Arista Networks, Inc. before we dive into how investors and analysts have reacted as of late. Arista Q2 Earnings Surpass Estimates on Solid Revenue GrowthArista reported strong second-quarter 2026 results with both adjusted earnings and revenues beating the Zacks Consensus Estimate.The company posted a strong 37.7% year-over-year revenue increase, reflecting broad-based growth across its artificial intelligence (AI), cloud and enterprise networking businesses, supported by healthy customer demand and improved product availability.Net IncomeGAAP net income in the reported quarter increased to $1.21 billion or 95 cents per share from $888.8 million or 70 cents per share in the year-ago quarter, driven by higher revenues.On a non-GAAP basis, net income was $1.3 billion or $1.02 per share compared with $934.2 million or 73 cents per share in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimate of 89 cents.RevenuesQuarterly revenues increased to $3.04 billion from $2.2 billion in the prior-year quarter, mainly due to solid growth in both Product and Service segments. The top line beat the consensus estimate of $2.83 billion.Net quarterly sales from Products totaled $2.61 billion compared with $1.88 billion in the year-ago quarter, driven by strong demand for AI and enterprise networking solutions and improved supply chain execution.Service revenues increased to $430.5 million from $327.8 million, reflecting continued growth in the installed customer base and higher maintenance and support services. Other DetailsNon-GAAP gross profit rose to $1.92 billion from $1.45 billion for respective margins of 63.4% and 65.6%. Total operating expenses were $532.3 million, up from $452.4 million in the year-ago quarter. Non-GAAP operating income for the quarter increased to $1.51 billion from $1.08 billion, with respective margins of 49.9% and 48.8%.Cash Flow & LiquidityIn the first six months of 2026, Arista generated $2.78 billion in cash compared with $1.84 billion in the year-ago period. As of June 30, 2026, the company had $2.29 billion in cash and cash equivalents and $338.8 million in other long-term liabilities.OutlookFor the third quarter of 2026, management expects revenues to be approximately $3.3 billion, driven by healthy growth momentum and solid demand trends. Non-GAAP operating margin is expected to be 48-49%, and non-GAAP earnings per share are expected to be between $1.06 and $1.08. Since the earnings release, investors have witnessed a upward trend in estimates review. The consensus estimate has shifted 22.82% due to these changes. At this time, Arista Networks has a average Growth Score of C, a grade with the same score on the momentum front. However, the stock has a grade of F on the value side, putting it in the fifth quintile for this investment strategy. Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Arista Networks has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months. Arista Networks belongs to the Zacks Internet - Software industry. Another stock from the same industry, AppFolio (APPF), has gained 16.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026. AppFolio reported revenues of $281.12 million in the last reported quarter, representing a year-over-year change of +19.3%. EPS of $1.71 for the same period compares with $1.38 a year ago. AppFolio is expected to post earnings of $1.78 per share for the current quarter, representing a year-over-year change of +35.9%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.5%. The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for AppFolio. Also, the stock has a VGM Score of B. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Arista Networks, Inc. (ANET) : Free Stock Analysis Report AppFolio, Inc. (APPF) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Ciena dropped 10% on in-line Q4 guidance despite a record quarter beat, while Arista gained 3% on continued AI networking momentum. Cisco held nearly flat and IYW traded higher, confirming Ciena's slide is a company-specific valuation reset, not a sector-wide unwind. Two customers drove 42% of Ciena's quarterly revenue, and its elevated valuation means the December Q4 report is the next real inflection point. Just released. Our analysts combed the entire stock market and named the ten best stocks to buy right now. The report is free. Enter your email and see if any of your stocks made the cut. Ciena Corporation's (NYSE:CIEN) fiscal third-quarter beat wasn't enough to save its stock this morning. An in-line fourth-quarter revenue outlook overshadowed record results and sparked a sharp de-rating in a name that had rallied hard on the AI networking build. Interestingly, Ciena's peer-group stocks are holding firm, which makes the divergence the story of the session. Ciena stock is down 10% to $320.38, cutting into a year that had shares up 51% through the prior close. The pullback extends a rough stretch, with Ciena now down 18% over the past month. Today's move deepens a de-rating already in progress. Meanwhile, Arista Networks (NYSE:ANET) stock is up 3% to $191.65, isolating Ciena's specific guidance issue from the broader networking demand story. Meanwhile, Cisco Systems (NASDAQ:CSCO) stock is down 0.1% to $109.31. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY), which tracks the S&P 500 index, is up 1% to $773.17, and the iShares U.S. Technology ETF (NYSEARCA:IYW) is trading higher, so Ciena's slide isn't a broad-tape problem. Free Report, Just Released Did Any of Your Stocks Make the Top 10 List? It is an uncomfortable question, and there is now an answer to it. 24/7 Wall St has helped investors make money for over two decades, and our top analysts just finished ranking the definitive Top 10 Stocks To Buy Now. Not the ten biggest companies. Not the ten everyone is arguing about. The ten best stocks to buy right now. Open your account and look at what you own. Some of it you bought for a reason you could still defend today. Some of it you bought years ago for a reason you can no longer remember. The report is free. Put the ten next to what you own and find out which is which. Enter Your Email and See the Ten → Free from 24/7 Wall St. It lands in your inbox. Ciena reported adjusted earnings per share of $2.11 for the quarter ended August 1, 2026, against a $1.72 analyst consensus, with revenue of $1.67 billion versus a $1.63 billion estimate, up 37% from $1.22 billion a year earlier. Ciena's adjusted gross margin expanded to 46.4% from 41.9% in the prior-year period, a clean quality print behind the top-line acceleration. Ciena CEO Gary Smith stated, "Today's outstanding financial performance demonstrates Ciena's leadership in providing industry-leading, high-speed connectivity solutions as AI continues to drive compounding waves of network investment." The problem sits in the forward number. Ciena guided its fiscal fourth-quarter revenue to $1.75 billion plus or minus $50 million, a midpoint that only aligns with the $1.7 billion analyst consensus rather than clearing it. Ciena also raised its full fiscal year 2026 revenue guidance to $6.42 billion, up 35% year over year at the midpoint, but for a stock priced for acceleration, matching isn't beating, according to Ciena Corporation. Two Ciena customers together accounted for 41.7% of quarterly revenue, meaning the AI-driven demand is real but narrow, according to Ciena Corporation. Ciena CFO Marc Graff called the period a record quarter, yet that concentration weighs heavier on the Ciena multiple when the forward guide only matches expectations. That mix is what powered today's de-rating. Arista Networks stock was up 42% year to date (YTD) through the prior close and is extending gains today on continued AI fabric momentum. Arista posted Q2 FY2026 non-GAAP EPS of $1.02 on $3.04 billion in revenue in its August report, its first three-billion-dollar quarter. Management pointed to Ethernet-based AI networking as a durable share opportunity, with a full-year revenue outlook of approximately $12.6 billion. Cisco stock was up 44% year to date through the prior close after booking $4 billion in AI infrastructure orders in Q4 FY2026 and guiding fiscal 2027 AI infrastructure revenue to $7.5 billion. Cisco characterized the environment as a networking supercycle. Arista Networks and Cisco holding firm while Ciena resets is the cleanest evidence that this is a company-level issue, not a sector verdict. The table sets today's session move against the YTD anchor through the prior close for each covered name. Ciena's reset stands out against modest peer gains. Ciena's preliminary fiscal 2027 outlook calls for at least 30% revenue growth on a backlog of $8.5 billion exiting Q3 FY2026, so the December fourth-quarter report becomes the next real inflection point for the stock. Management framed the environment as a multi-year, supply-constrained investment cycle. That keeps the debate about pace and share rather than direction. Position sizing in Ciena shares should account for both the customer concentration and the tendency of supply-constrained networking names to trade on incremental order signals rather than trailing beats. A moderate approach makes sense while the guide-versus-consensus gap sorts out. Ciena's elevated valuation raises the bar for any forward number, and today's tape shows what happens when it isn't cleared. The broader read is that AI networking demand remains intact, with Arista Networks and Cisco both carrying rich YTD gains. Follow-through in those two names during the afternoon session may indicate whether today's Ciena move stays contained or spreads to peers. Ultimately, the IYW ETF trading higher today reinforces the containment case rather than a sector-wide unwind. If you have cash sitting in your account right now, give this two minutes. After more than two decades of helping investors beat the market, our top analysts at 24/7 Wall St. put together a definitive report on the Top 10 Stocks To Buy Today. They combed the entire market. It's not 10 ideas, not 10 stocks everyone is talking about, it's what their research point to as the 10 best stocks to buy right now, and it's free. Read more here and >;elm:context_link;itc:0;sec:content-canvas" data-yga="{"yLinkElement":"context_link","yModuleName":"content-canvas","yLinkText":"see which stocks made the cut -->"}" class="link ">see which stocks made the cut -->> Contact [email protected] for any questions or corrections.

Ciena Corporation CIEN will report third-quarter fiscal 2026 results on Sept. 3, before market open. The Zacks Consensus Estimate for earnings for the to-be-reported quarter is pegged at $1.73 per share, indicating growth of 158.2% from the year-ago reported figure. Analysts have revised their estimates marginally upward for CIEN’s bottom line over the past 60 days. Image Source: Zacks Investment Research The consensus estimate for total revenues is pinned at $1.64 billion, implying an increase of 34.6% year over year. For the fiscal third quarter, management expects revenues of $1.625 billion (+/- $50 million). Our proven model predicts an earnings beat for CIEN this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. That is the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. CIEN has an Earnings ESP of +0.58% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Ciena continues to benefit from robust demand for high-speed connectivity solutions, supported by growing network requirements associated with AI. In the second quarter of fiscal 2026, the company reported record revenues of $1.57 billion, up 40% year over year. On the last earnings call, management highlighted strong demand from cloud providers, hyperscalers and service providers as customers increasingly prioritize high-capacity, low-latency and high-speed connectivity to support AI model training, data ingestion and inference. The company also noted that leading hyperscalers have increased their 2026 capital expenditure plans, with indications of continued expansion into 2027 and beyond, while service providers are reinvesting in network infrastructure after several years of relatively muted spending. Strong demand across Ciena’s Optical Networking and Routing and Switching businesses is another important factor. Optical Networking revenues increased 42% year over year in the fiscal second quarter, driven by strong demand for the RLS and Waveserver product lines, both of which grew more than 55%. Routing and Switching revenues increased 88%, primarily reflecting the continued ramp of Ciena’s data center out-of-band management, or DCOM, solution. Direct cloud customer revenues increased 70% year over year, while service provider revenues grew 28%. India service provider revenues more than doubled year over year, reflecting strong demand for managed optical fiber network, or MOFN, deployments. Ciena is also witnessing continued momentum across its data center and interconnect portfolio. DCOM continues to ramp, with initial orders received from a second hyperscaler customer and lab qualifications progressing with a third hyperscaler. Ciena continues to see strong hyperscaler demand for its 400-gig and 800-gig pluggables and remains on track to more than double pluggable revenues from fiscal 2025 levels. The company also secured its first win with a major switch OEM for its WaveLogic 5 and 6 Nano pluggables. Ciena Corporation price-consensus-eps-surprise-chart | Ciena Corporation Quote The company’s strong backlog also provides substantial visibility. Ciena ended the fiscal second quarter with a backlog of $7.7 billion, up more than $600 million sequentially, and management expects backlog to increase further through the remainder of fiscal 2026. Robust order flows, customer collaboration, a growing services business and the company’s backlog are providing strong visibility into fiscal 2027. Of the $7.7 billion backlog, approximately $6.4 billion represents hardware, with about 80% of that amount expected to be delivered over the following 12 months. On the last earnings call, management also stated that customers would take additional products in fiscal 2026 if Ciena were able to deliver them and that the company is not seeing order cancellations, delivery pushouts or inventory accumulation at customers. Ciena’s margin performance also remains an important factor. Adjusted gross margin reached 44.9% in the fiscal second quarter, driven by engineering cost reductions, product mix and price optimization. Management continues to focus on engineering-driven cost reductions, supply-chain optimization and value-exchange opportunities with customers, including pricing opportunities across the product portfolio. For the fiscal third quarter, Ciena expects revenues of  $1.625 billion, plus or minus $50 million. Adjusted gross margin is expected to be 45%, plus or minus 50 basis points, while adjusted operating expenses are projected at  $410 million, plus or minus $10 million. Adjusted operating margin is anticipated to be between 19% and 20%. However, supply continues to lag demand across the industry. On the last earnings call, management stated that Ciena continues to operate in a supply-constrained environment and is working with suppliers and customers to secure additional capacity to support its growing backlog. The company is experiencing constraints in certain modem components, including CDMs, as well as pump lasers used in amplifiers and line systems. Ciena is making additional investments with suppliers to secure long-term supply and manufacturing capacity and remains on track to spend $250-$275 million in capital expenditures during fiscal 2026. Management also continues to monitor inflationary pressures and product mix while using engineering cost reductions and supply-chain initiatives to mitigate higher input costs. These might have negatively impacted the company’s third-quarter performance. Stiff competition from Cisco Systems, Inc. CSCO, Nokia NOK and Arista Networks, Inc. ANET remains a concern. Ciena shares have risen 325.5% over the past year, outperforming the  Zacks Computer & Technology sector and the Zacks Communication - Components industry’s growth of 31.9% and 198.8%, respectively. The S&P 500 Composite has returned 23.1% over the same time frame. Image Source: Zacks Investment Research Shares of the company’s peers CSCO, NOK and ANET have surged 65.6%, 149.4% and 47.2%, respectively, in the same period. In terms of Price/Book, CIEN shares are trading at 19.57X, higher than the Communication - Components industry’s 10.67X, indicating more risk than opportunity. Image Source: Zacks Investment Research In comparison, CSCO, NOK and ANET trade at multiples of 8.79X, 2.46X and 17.14X, respectively. Ciena’s strong AI-driven demand, expanding cloud opportunities, robust backlog and positive Earnings ESP bode well ahead of fiscal third-quarter earnings. However, persistent supply constraints and premium valuation remain a concern. New investors may be better off waiting for a more attractive entry point before initiating a position. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ciena Corporation (CIEN) : Free Stock Analysis Report Nokia Corporation (NOK) : Free Stock Analysis Report Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report Arista Networks, Inc. (ANET) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Cisco Systems CSCO shares dropped 10% after reporting fourth-quarter fiscal 2026 results on Aug. 12. The decline can be attributed to investor concerns around margin pressure and the quality of forward growth despite very strong top-line results. Revenues increased 18% year over year to $17.3 billion, with product orders jumping 35%. Non-GAAP earnings increased 23% year over year to $1.22 per share. However, non-GAAP gross margin fell 210 basis points (bps) year over year to 66.3%, and product gross margin declined 270 bps to 64.8%, reflecting a higher hardware mix and rising memory costs. Cisco expects first-quarter fiscal 2027 gross margin in the 65-66% range and acknowledged that the rapid growth of hardware-heavy AI and networking businesses is likely to remain a gross-margin headwind through fiscal 2027. Management also implied growth of roughly 13% between fiscal second and fourth quarters. Recurring indicators were comparatively softer, with Annual Recurring Revenues (ARR) growing only 3%, while services revenue was essentially flat.So, what should investors do with CSCO stock? Let’s find out. Cisco shares have jumped 44.9% year to date (YTD), outperforming the broader Zacks Computer & Technology sector’s return of 18.8%. The company has been benefiting from a strong AI push, a networking supercycle, improving its enterprise networking business and recovering its security business. These factors have helped in improving Cisco’s competitive prowess compared with the likes of Hewlett Packard Enterprise HPE, Broadcom AVGO and Arista Networks ANET, shares of which have appreciated 131.9%, 9.9% and 47.5%, YTD, respectively. Image Source: Zacks Investment Research Hyperscaler AI infrastructure orders reached $9.3 billion in fiscal 2026, roughly 4.5 times fiscal 2025, while Cisco expects hyperscaler AI revenue to rise from about $4 billion in fiscal 2026 to $7.5 billion in fiscal 2027. Cisco is well-positioned across AI networking through Silicon One systems, Acacia optics and optical networking, with multiple new hyperscaler design wins and additional opportunities in the pipeline. The scale-across opportunity is noteworthy because Cisco estimates AI-based inter-data-center traffic may require roughly 14 times the bandwidth of traditional data-center interconnects. Beyond hyperscalers, Cisco sees a more than $100 billion networking refresh opportunity, supported by enterprise data-center modernization and a multi-year campus refresh cycle. In the fourth quarter of fiscal 2026, campus orders increased 20% and only about 7% of the campus switching installed base had been refreshed by the end of fiscal 2026. Security and observability should provide another growth leg as AI expands the threat surface. In the fourth quarter of fiscal 2026, firewall orders grew more than 30%, with 6,400 customers adopting Cisco’s newer security products, and Splunk is increasingly being integrated into broader security offerings. In the core security portfolio, over 1,500 customers purchased Cisco’s new products, including Secure Access, XDR, Hypershield and AI Defense in the fourth quarter of fiscal 2026. Cisco suffers from the shift in the business mix toward lower-gross-margin AI infrastructure hardware. The company expects higher hardware volumes to create continued gross-margin pressure, even though operating leverage and expense discipline is expected to help preserve operating margins. AI orders also tend to be very large, nonlinear and placed well in advance, which makes the timing of revenue conversion less predictable and can increase quarterly volatility. Security remains a headwind. Cisco noted that fiscal fourth-quarter’s 14% growth in security revenues benefited from several sizable, longer-duration on-prem Splunk transactions and expects fiscal 2027 security growth to normalize toward the high-single digits. The Zacks Consensus Estimate for CSCO’s fiscal 2027 earnings is currently pegged at $4.89 per share, up 2.3% over the past 30 days, indicating year-over-year growth of 12.93%. Cisco Systems, Inc. price-consensus-chart | Cisco Systems, Inc. Quote The consensus mark for CSCO’s first-quarter fiscal 2027 earnings is currently pegged at $1.18 per share, up 2.6% over the past 30 days, indicating year-over-year growth of 18%. Cisco shares are trading at a premium, as suggested by the Value Score of F. In terms of the forward 12-month price/sales, CSCO is trading at a premium of 6.31X, higher than the Zacks Computer Networking industry’s 5.76X and Hewlett Packard Enterprise’s 1.49X. However, Cisco shares are trading at a discount compared with Arista Networks and Broadcom. In terms of the forward 12-month P/S, Arista Networks and Broadcom shares are trading at 16.93X and 11.2X, respectively. Image Source: Zacks Investment Research Cisco’s strong AI momentum, expanding hyperscaler opportunity, ongoing networking refresh cycle and improving security portfolio provide a solid foundation for long-term growth. However, persistent gross-margin pressure from the growing mix of hardware-heavy AI infrastructure, uneven revenue conversion from large AI orders and relatively soft recurring revenue growth remains a concern. Moreover, CSCO’s premium valuation limits the margin of safety following the stock’s strong year-to-date performance.Given these competing factors, holding CSCO shares appears appropriate at current levels. Existing investors may benefit from the company’s expanding AI and networking opportunities, while prospective investors may prefer to wait for a more attractive entry point or clearer evidence that accelerating revenue growth can translate into stable gross margins and sustained earnings expansion.CSCO currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report Broadcom Inc. (AVGO) : Free Stock Analysis Report Arista Networks, Inc. (ANET) : Free Stock Analysis Report Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Cisco Systems CSCO is set to release its fourth-quarter fiscal 2026 results on Aug. 12.The company anticipates fourth-quarter fiscal 2026 revenues between $16.7 billion and $16.9 billion. Non-GAAP earnings are expected between $1.16 per share and $1.18 per share. The Zacks Consensus Estimate for revenues is pegged at $16.85 billion, indicating growth of 14.86% from the year-ago quarter’s reported figure. The consensus mark for earnings has been steady at $1.17 per share over the past 30 days, suggesting year-over-year growth of 18.18%. Image Source: Zacks Investment Research CSCO’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 2%. Cisco Systems, Inc. price-eps-surprise | Cisco Systems, Inc. Quote Let’s see how things are shaping up prior to this announcement. Cisco’s fiscal fourth-quarter performance is expected to have benefited from robust demand across its networking portfolio, accelerating AI infrastructure deployments and the ongoing campus-network refresh cycle. The company entered the to-be-reported quarter with considerable momentum. In the third quarter of fiscal 2026, product orders increased 35% year over year and remained up 19% even excluding hyperscalers, while networking orders jumped more than 50%. Enterprise and public-sector orders increased 18% and 27%, respectively, and service-provider/cloud orders surged 105%, indicating that demand was broad-based rather than dependent solely on hyperscaler AI spending. Cisco said that its fiscal fourth quarter pipeline remained healthy. Strong demand for AI infrastructure is expected to have benefited top-line growth. The company had already accumulated $5.3 billion of hyperscaler AI orders through the fiscal third quarter, supported by Silicon One networking systems and Acacia optics, and secured five additional hyperscaler design wins during the quarter. Separately, Cisco had accumulated roughly $900 million of AI orders from neocloud, sovereign and enterprise customers and reported an approximately $3 billion pipeline in these markets. This momentum suggests that increasing AI-related deployments and the conversion of earlier orders into revenue were important tailwinds in the fourth quarter of fiscal 2026.Cisco’s campus and enterprise data-center businesses are also likely to have contributed meaningfully. Campus networking orders increased more than 25% in the third quarter of fiscal 2026, data-center switching orders rose more than 40%, and wireless orders increased more than 40%, with Wi-Fi 7 accounting for half of the wireless mix. Importantly, Cisco estimates that its pre-Catalyst 9000 installed base represents tens of billions of dollars of equipment approaching end of support, providing a sizable replacement opportunity. The company characterized the campus refresh as still being very early, with only a mid-single-digit portion of the equipment requiring replacement having been addressed, pointing to continued upgrade activity beyond the third quarter of fiscal 2026. This is expected to have benefited top-line growth in the to-be-reported quarter.However, Cisco’s fourth quarter of fiscal 2026 is expected to have suffered from higher memory prices and an unfavorable business mix. In the third quarter of fiscal 2026, non-GAAP product gross margin declined 330 basis points year over year, primarily because of higher memory costs and mix, as Cisco’s faster-growing hardware businesses carried a different margin profile from software. Splunk’s transition is another challenge. Customers are increasingly shifting from on-premise transactions toward cloud subscriptions, which delays revenue recognition and creates a near-term revenue-growth headwind.Cisco is also suffering from stiff competition from Arista Networks ANET, Dell Technologies DELL and Hewlett Packard Enterprise HPE across AI networking and enterprise security domains. Cisco shares have appreciated 25.4% year to date (YTD), outperforming the Zacks Computer & Technology sector’s return of 16.8%. CSCO shares have underperformed Dell Technologies and Hewlett-Packard Enterprise YTD, while outperforming Arista Networks. Shares of Dell Technologies, Arista Networks and Hewlett-Packard have appreciated 260.5%, 121.6% and 44%, respectively. Image Source: Zacks Investment Research However, the Value Score of F suggests a stretched valuation for Cisco at this moment.In terms of the forward 12-month price/sales, CSCO is trading at 7.05X, higher than the broader sector’s 6.58X, Dell Technologies’ 1.62X and Hewlett Packard Enterprise’s 1.43X, but lower than Arista Networks’ 16.64X. Image Source: Zacks Investment Research Cisco’s long-term prospects are driven by a networking supercycle driven by AI, including AI training, inferencing, agentic applications, sovereign clouds, neoclouds and public-sector infrastructure investments. These all require increasingly fast, scalable and secure networks. Cisco has characterized the current transition as broader and faster than previous networking cycles, with enterprise customers modernizing infrastructure in preparation for AI while hyperscalers continue investing aggressively.Cisco’s strategy of combining Silicon One, Acacia optics, switching, routing and security provides exposure across both hyperscale and enterprise AI infrastructure. The multi-year campus replacement cycle and convergence of networking and security provide another potentially durable growth avenue. AI-related traffic is expected to substantially increase network requirements, while aging installed infrastructure creates a large replacement pool.However, stiff competition remains a headwind for Cisco. The company must successfully manage the Splunk cloud transition and convert its security portfolio refresh into sustained revenue growth. The opportunity is significant, but Cisco management acknowledged that security’s recovery has been slower than originally hoped. Cisco’s fourth-quarter fiscal 2026 results are likely to reflect strong networking demand, accelerating AI infrastructure deployments and continued momentum in the campus refresh cycle. The company’s expanding AI order book, broad-based strength across customer segments and sizable installed-base replacement opportunity bode well for its growth prospects. However, rising memory costs, unfavorable product mix, the Splunk cloud transition and intense competition remain concerns. Moreover, Cisco’s stretched valuation leaves limited room for execution missteps.Cisco currently carries a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable point to start accumulating the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report Dell Technologies Inc. (DELL) : Free Stock Analysis Report Arista Networks, Inc. (ANET) : Free Stock Analysis Report Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Arista Networks (NYSE:ANET) posted its first $3 billion-plus quarter on August 4, and the market noticed immediately. Shares spiked as much as 12.8% the next day on August 5 before settling to a 4.7% gain by midday. Revenue reached $3.036 billion, up 37.7% from a year earlier and 12.1% above the first quarter, while non-GAAP earnings per share climbed to $1.02, a 40% jump. For a stock already riding the AI data center buildout, this was the quarter that turned momentum into proof. What stood out wasn't just the beat; it was the trajectory. Arista's year-over-year growth accelerated from roughly 35% in the first quarter of 2026 to 37.7% in the second, meaning growth is stacking on growth rather than fading. That builds on a full 2025 in which revenue rose 28.6% to $9.0 billion. Analysts had modeled second quarter revenue of $2.83 billion and adjusted EPS of $0.89, so the actual results cleared both comfortably. Profitability moved in the same direction, with non-GAAP operating margin expanding to 49.9% from 48.8% a year earlier and GAAP operating margin rising to 45.4% from 44.7%, even as the company scaled manufacturing to meet demand. Management didn't just clear this quarter; it raised the bar ahead. Full-year revenue guidance moved up to about $12.6 billion, roughly 40% growth, and third quarter guidance of approximately $3.3 billion in revenue and non-GAAP EPS of $1.06 to $1.08 came in well above the Street's prior estimates of $2.95 billion and $0.92. The company also kept its target of at least $3.5 billion in AI fabrics revenue for the year and said its Etherlink AI platforms have now passed 100 cumulative customers. New hardware backs that up: the 7060XE7 Series brings 1.6 terabit AI fabric platforms with liquid-cooled options and up to 100 Tbps of system bandwidth, cutting interconnect power consumption by about 60% versus older optics. Not every line in the report moved in the right direction. Non-GAAP gross margin slipped to 63.4% from 65.6% a year ago, and GAAP gross margin fell to 62.9% from 65.2%, with management pointing to higher component costs tied to the manufacturing capacity it's adding to keep pace with orders. Operating margin still expanded, which shows the company absorbed that pressure lower down the income statement, but a two-point gross margin decline during a demand boom raises the question of how much pricing power is left to give. Customer concentration is the other issue worth watching. Microsoft accounted for 26% of Arista's 2025 revenue and Meta Platforms another 16%, meaning two customers made up 42% of the business, while the company's broader Cloud and AI Titans group represented about 48%. That kind of dependence means a budget shift at either hyperscaler could show up in results quickly. Layered on top is a valuation that already assumes the good times continue, with the stock trading at a level that effectively asks investors to pay today for growth the company hasn't delivered yet. Hedge fund ownership slipped to 85 funds from 91 the prior quarter, a modest pullback even as the stock rallied. Short interest is thin at just 1.91% of float, showing little organized bearishness against the name. Arista trades at a forward P/E of 46.08 as of August 10, a multiple that leaves no room for a growth stumble and prices in continued acceleration rather than just steady execution. Arista just proved the AI networking buildout is still accelerating, not slowing, with faster growth, margin resilience where it counts, and a raised outlook to back it up. For the bulls, that trend needs to keep holding as gross margin pressure and customer concentration test the story over the next few quarters. While we acknowledge the potential of ANET as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 10 Best Future Stocks to Buy Under $10 and 12 Best Performing Semiconductor Stocks to Invest In. Disclosure: None. Follow Insider Monkey on Google News.

Never miss an important update on your stock portfolio and cut through the noise. Over 7 million investors trust Simply Wall St to stay informed where it matters for FREE. Arista Networks (NYSE: ANET) reported record Q2 revenue, reaching its first ever US$3b quarter, supported by rising AI infrastructure demand. The company raised its guidance alongside the results, pointing to continued traction across its networking portfolio. Arista launched new 1.6 Tbps AI fabric platforms aimed at high performance data center workloads. The company was recognized as a Leader in Gartner’s 2026 Magic Quadrant for Enterprise Wired and Wireless LAN, marking progress beyond its core cloud customer base. Readers interested in how other companies are positioning for AI infrastructure growth can continue with 56 AI infrastructure stocks Arista Networks sits at the center of cloud and data center networking, supplying the switching gear and software that power large scale compute clusters. The stock has had a strong run, with returns over 47.7% year to date and over 344.7% across three years, and it now trades at US$197.31. That performance reflects sustained investor interest in the company’s role in high performance networking. Beyond the headline: 1 risk and 2 things going right for Arista Networks that every investor should see. Arista Networks moved from a US$2.2b revenue quarter a year ago to US$3.0b in Q2 2026, with net income at US$1.2b and diluted EPS at US$0.95. The company also reported first half revenue of US$5.7b and net income of US$2.2b. In addition, management set Q3 2026 revenue guidance at about US$3.3b, framed around demand for AI focused networking. The launch of new 1.6 Tbps AI fabric platforms, including liquid cooled options, is aimed at high performance data center workloads. Recognition as a Leader in Gartner’s 2026 Magic Quadrant for Enterprise Wired and Wireless LAN highlights progress in enterprise and campus networking beyond core cloud customers. For the existing narrative that centers on AI driven data center networking and enterprise expansion, this quarter provides more concrete revenue and earnings support. Q2 and first half results show Arista Networks operating at multibillion dollar scale in networking tied to AI and cloud workloads. The new AI fabric platforms connect directly to that theme, while Gartner’s recognition points to traction outside hyperscalers. At the same time, the story still carries familiar risks such as reliance on a small set of large customers and intense competition from other networking and AI hardware suppliers, so execution on product differentiation and software remains important. The next key test is whether Arista Networks can deliver on the Q3 2026 revenue guide of about US$3.3b while keeping earnings quality and AI related demand intact. Investors are likely to watch the mix of AI infrastructure sales within that figure, customer concentration levels, and early uptake of the 1.6 Tbps AI fabric platforms and liquid cooled options. Progress on enterprise campus and branch wins following the Gartner recognition will also be important. Over the next couple of quarters, consistent revenue near or above the new run rate, together with evidence that AI networking demand is not just a short build cycle, will help indicate how durable this inflection looks. For the full picture including more risks and rewards, check out the complete Arista Networks analysis. Alternatively, you can check out the community page for Arista Networks to see how other investors believe this latest news will impact the company's narrative. Stay updated on the most important news stories for Arista Networks by adding it to your watchlist or portfolio. Alternatively, explore our Community to discover new perspectives on Arista Networks. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ANET. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

The New York Times Company NYT reported second-quarter 2026 adjusted earnings of 69 cents a share, which surpassed the Zacks Consensus Estimate of 67 cents by 2.99%. The bottom line increased 19% from the year-ago quarter's adjusted earnings of 58 cents per share. Quarterly revenues rose 11.2% year over year to $762.5 million and exceeded the Zacks Consensus Estimate of $748 million by 1.94%.The strong quarterly performance reflected continued momentum in the company's subscription-first strategy, supported by healthy digital subscriber growth, higher digital-only average revenue per user (ARPU), robust digital advertising demand and continued expansion across its diversified digital products. Total subscription revenues increased 11.7% year over year to $537.9 million in the reported quarter. Subscription revenues from digital-only products rose 16.4% to $407.9 million, benefiting from growth in digital-only subscribers and higher ARPU. Print subscription revenues declined 0.8% to $130 million due to lower single-copy and domestic home-delivery revenues.The company ended the quarter with approximately 13.35 million total subscribers, including 12.80 million digital-only subscribers. Digital-only subscribers increased by approximately 1.5 million from the prior-year quarter. During the second quarter, NYT added approximately 280,000 net digital-only subscribers, which moderated from 310,000 in the first quarter of 2026.Digital-only ARPU jumped 3.1% year over year to $9.94, primarily driven by subscribers transitioning from promotional pricing to higher-priced plans and price increases for certain tenured subscribers. Management expects third-quarter 2026 digital-only subscription revenues to increase 12-15% year over year, while total subscription revenues are projected to grow 9-11%. The New York Times Company price-consensus-eps-surprise-chart | The New York Times Company Quote Total advertising revenues increased 11.3% year over year to $149.1 million. Digital advertising revenues jumped 20.7% to $114 million, benefiting from strong marketer demand and continued growth in advertising supply. Print advertising revenues declined 11.1% year over year to $35.2 million.Affiliate, licensing and other revenues improved 7.1% year over year to $75.5 million, primarily driven by higher Wirecutter affiliate referral revenues, which benefited from a shift in the timing of a marketing promotion by one of the company's partners. For the third quarter, NYT expects digital advertising revenues to increase at a mid-to-high-teens rate, while total advertising revenues are projected to grow at a high-single- to low-double-digit pace. Affiliate, licensing and other revenues are expected to rise at a low-to-mid-single-digit rate. Adjusted operating costs increased 10% year over year to $607.2 million, mainly due to higher compensation and benefits expenses related to journalism, as well as increased marketing and promotion costs.Despite elevated investments, NYT delivered improved profitability. Adjusted operating profit rose 16.1% year over year to $155.3 million, while adjusted operating profit margin expanded 90 basis points to 20.4%.Management expects adjusted operating costs to increase 8-9% in the third quarter as it continues investing in journalism, product innovation and audience growth initiatives. The New York Times ended the quarter with cash and marketable securities of $1.22 billion, up from $1.17 billion at the end of 2025. The company remained debt-free, with no borrowings outstanding under its $400 million revolving credit facility.Net cash provided by operating activities totaled $286.5 million during the first six months of 2026, while free cash flow reached $265.7 million.During the quarter, NYT repurchased 473,691 Class A shares for approximately $35.4 million. As of July 31, 2026, approximately $239.7 million remained available under the company's share repurchase authorization.Capital expenditures were approximately $10 million in the quarter. Management reaffirmed expectations for 2026 capital expenditures of approximately $35-$45 million. The New York Times delivered another solid quarter, beating both earnings and revenue expectations as its subscription-led strategy continued to gain traction. Strong digital subscription growth, higher ARPU, robust digital advertising demand and healthy affiliate revenues helped drive double-digit revenue growth and margin expansion.With more than 13 million subscribers, a debt-free balance sheet, healthy cash generation and continued investment in journalism, video and digital products, NYT appears well-positioned to sustain long-term growth while executing against its subscription-first strategy.We note that shares of this Zacks Rank #3 (Hold) company have fallen 18.3% over the past three months compared with the industry’s decline of 16.1%. Compass, Inc. COMP, which provides an end-to-end technology platform for residential real estate in the United States, currently sports a Zacks Rank #1 (Strong Buy). COMP has a trailing four-quarter average earnings surprise of 37.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Compass’ current financial-year sales and EPS implies growth of 99.7% and 320%, respectively, from the year-ago period’s actuals.Affirm Holdings, Inc. AFRM, which operates a payment network, carries a Zacks Rank #2 (Buy). AFRM has a trailing four-quarter earnings surprise of 74.9%, on average. The Zacks Consensus Estimate for Affirm Holdings’ current financial-year revenues and EPS calls for growth of 30.6% and 720%, respectively, from the year-ago period’s reported numbers.Arista Networks, Inc. ANET, an industry leader in data-driven, client-to-cloud networking for large AI, data center, campus and routing environments, carries a Zacks Rank #2. ANET has a trailing four-quarter earnings surprise of 8.9%, on average.The Zacks Consensus Estimate for Arista Networks’ current financial-year sales and EPS suggests growth of 28.7% and 22.2%, respectively, from the year-ago period’s actuals. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The New York Times Company (NYT) : Free Stock Analysis Report Arista Networks, Inc. (ANET) : Free Stock Analysis Report Compass, Inc. (COMP) : Free Stock Analysis Report Affirm Holdings, Inc. (AFRM) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research