Arista Networks Inc at UBS Global Technology and AI Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: David Vogt - UBS AG - Analyst : So roughly six to eight weeks ago, you provided an outlook for 2026. I think, in usual Arista fashion, the outlook was viewed as relatively conservative. So maybe let's start there and talk about how you see fiscal '26 or calendar '26 playing out? And I think it helps investors understand your view and your perspective on how we get there. Like I think in the past, you've talked about multiple vectors, multiple ways to get to the number. Maybe let's start with '26 and then we can drill deeper into each of the different businesses.

Question: David Vogt - UBS AG - Analyst : So I want to dig into each of those components separately. But obviously, we have to start with AI and infrastructure. So this year, front-end, AI-centric back-end, $1.5 billion, you guided to $2.75 billion. I guess, the question that we get from investors all the time is when we think about CapEx trends from the large hyperscalers, your two largest and a third large player, when we think about your inventory, your purchase commitments, how should we think about the correlation or maybe sort of the relationship from those macro data points to how you're thinking about '26 from a visibility perspective and how that kind of underpins your forecast for next year?

Question: David Vogt - UBS AG - Analyst : So to your point -- can I walk back a little bit?

Question: David Vogt - UBS AG - Analyst : So you talk about the CapEx that we're seeing now really starts to filter in '26, '27 given the road map 12 to 24 months. So is it a fair assumption to make that what we're going to see in '26 are programs, design wins that will turn into revenue recognition for you in '26 that have already been spec'd, designed -- you've been designed into them, and you're just waiting on basically approval from large customers to rev rec them. Is that --

Question: David Vogt - UBS AG - Analyst : For the AI component.

Question: David Vogt - UBS AG - Analyst : And how would you characterize -- if we had this conversation, which I think we did a year ago, the visibility and the timeline in terms of -- from program, design -- well, from RFP to design win to rev rec, has there been any sort of dynamic change in the relationship? Or is it to ad hoc by customer by customer to kind of -- like a sort of a nice, neat, tidy package in terms of like how do we think about --

Question: David Vogt - UBS AG - Analyst : So since you brought up the clusters are getting larger. If we go back again, six, nine months ago, we talked about four to five large customers building out larger and larger clusters, upwards of 100,000 GPUs or accelerators, where are we today with these large customers that you've talked about pretty consistently over the last two to three quarters? Like as we go into '26, how much of that incremental growth that we're going to see in AI-centric revenue is coming from these large customers versus that tail that you have? I think you've talked about a very large tail of 30 to 40 other customers. Like how do we think -- how should investors think about the weighting of like the contribution next year from these deals?

Question: David Vogt - UBS AG - Analyst : And presumably on the hyperscaler side, these are large training environments for the most part. It's very early days in terms of inference. Is that the same characterization that you would make for neoclouds that they're training models? Or is it really -- are you starting to see maybe the early stages of hey, we actually have to think about what inference is going to look like and, Arista, how can you help us on job completion time, et cetera --

Question: David Vogt - UBS AG - Analyst : So is that a different type of sort of conversation then historically? So if you think about optimizing for inference day 1 versus let's go pre-AI, obviously, front end, traditional workload, I think, is a fairly -- not standard, but I think well understood kind of road map in terms of what customers were trying to solve for. Does inference bring to bear -- or does it require you to bring to bear different technologies and skill sets? Like -- or is it leveraging what you've built over the last decade plus and extrapolating it into like this optimization for inference?

Question: David Vogt - UBS AG - Analyst : To that point, Chantelle, is that a competitive advantage? So Ken's point on the earnings call was you can bring to bear the entire solution, front end, back end. And obviously, there are some new vendors who are primarily focused on back-end whose legacy -- on a legacy basis, missed this huge cloud demand in the front end. So does that give you sort of a competitive moat or an advantage when you're having these conversations? Or is it just still a best-of-breed for the back end? Like how much of the bundling dynamic actually comes to bear when you're thinking about a relationship with a customer or a new customer?

Question: David Vogt - UBS AG - Analyst : Got it. And then maybe just one other question on kind of how we're thinking about '26. So when we look at '26, how important is it for your road map to have new silicon for '26, right? There's a lot of discussion about 1.6 coming down the pipeline. You're very closely tied to Broadcom. Obviously, it's been a great relationship, great partnership. Because I think on the last call, there was a little bit of concern about maybe some supply chain variability, impacting your ability to ship and hit targets. How do we think about that kind of potential dynamic playing out in '26?

Question: David Vogt - UBS AG - Analyst : I was going to come back to financials later, but since you brought purchase commitments and preparing. So at your Investor Day a number of months ago, you gave a gross margin guide, some of it, I think, if -- correct me if you feel differently, investors interpreted to be sort of to try to future-proof your gross margin from this dynamic that you referenced. Is there, in your mind, a buffer in your gross margin outlook for '26 that takes into consideration sort of the challenging supply chain dynamics, whether it's memory or other components? Is that a way to think about -- how to think about your initial outlook for '26?

Question: David Vogt - UBS AG - Analyst : It's customer mix, customer mix.

Question: David Vogt - UBS AG - Analyst : So then along those lines, if I maybe disaggregate your '26 outlook, I think some of the feedback that we've gotten, and I think you probably have gotten this also, if I look at your AI-centric targets, what you're thinking about campus going from $800 million in '25 to $1.250 billion in '26, it doesn't imply a lot of growth in the more traditional Arista business where you've been historically a share taker, how should investors think about that? Because if that was the case, if that business does grow faster, that's traditional enterprise, which comes at a higher gross margin, and that would skew us towards the higher end of the gross margin range.

Question: David Vogt - UBS AG - Analyst : Right. The margin will spill out accordingly.

Question: David Vogt - UBS AG - Analyst : So sticking on enterprise for a second. So enterprise AI presumably is virtually nothing in your numbers for '26. How are you thinking about that roadmap from your customer perspective, given how successful you've been on traditional enterprise data center, taking a lot of market share over the last decade. What do you see from your customers from a road map perspective? Like what are they -- any sort of sense for problems that they're trying to solve, how they're thinking about this? Is it a '27 dynamic given visibility might take 12 months to get there for them? Or is it a little bit further out from your perspective?

Question: David Vogt - UBS AG - Analyst : So -- okay. So that's a good segue way to campus. So obviously, campus, we're going through a bit of an upgrade cycle. We're seeing it from the biggest player, has a big refresh. You've talked about taking your campus business from $800 million, as I mentioned earlier, with Velo to $1.250 billion. Correct me if I'm wrong, but I think when we've done the math, it looks like your campus business should be margin accretive to the portfolio. Is that accurate? Is that fair? And if so -- gross margin accretive. I know you've given a lot of investment opportunity to Todd and his team to kind of grow this business. How should investors think about sort of that business and the priority of campus within the Arista portfolio? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 5:15PM, ANET.N - Arista Networks Inc at UBS Global Technology and AI Conference

Question: David Vogt - UBS AG - Analyst : Why do you think you're winning with campus in some cases, first, when historically it had been sort of, hey, we lead with the enterprise data center product, people understand the technology that we bring to bear, it's extrapolated to the campus, but now it sounds like you're winning more -- not to say that you're not winning that way, but you're winning more often now with campus first.

Question: David Vogt - UBS AG - Analyst : So you mentioned competitor uncertainty. Obviously, we're 1.5 years to 2 years into a large competitor announcement, not quite deal closing. I mean, I would imagine it's hard to kind of tag that deal we won because of maybe uncertainty in the market. But are you seeing more RFPs? Like how should we think about your ability to kind of win given that degree of maybe technological uncertainty between those two competitors that are now one, and could it be meaningful enough over the long term while they kind of work to kind of integrate two different technological stacks?

Question: David Vogt - UBS AG - Analyst : And does Todd have the marching orders to go out there and find great channel partners? I know that's part of the expense like -- so adding more channel partners. Obviously, you're never going to be Cisco from a channel partner perspective. But like what are you looking for from a partner per se? And what is Todd -- what are some of the metrics that he's focused on to build that footprint for your business?

Question: David Vogt - UBS AG - Analyst : Got it. Okay. I wanted to hit the campus -- get that out of the way. So come back to data center. So there's a lot of moving pieces in data center, whether it's scale up, scale out, scale across, maybe it's a little bit different or nuanced than DCI historically. There was a lot of announcements coming out of OCP, about ESUN. How are we thinking about within your context of your longer-term view? I think I might have asked this on the call to Jayshree, but when you think about scale up versus scale out and scale across, obviously, scale up has not been an opportunity for Arista, how are we thinking about -- maybe I don't know if you can rank order them? Or just how are you thinking about how investors should think about the opportunity there for a market that had been effectively nonexistent for you for Arista's 10-plus year of existence. Scale up --

Question: David Vogt - UBS AG - Analyst : So obviously, you're coming at scale up fresh, large GPU providers bundling and coming into networking from a different angle, how do you think about your position in scale out and scale across as a GPU provider is looking to bundle? Like I'm just trying to think we get this question a lot. The competitive dynamics, obviously, they're selling NICs, they're selling switches. They've got software, full-stack solution. So I just want to get a sense for how you're thinking about the competitive landscape.

Question: David Vogt - UBS AG - Analyst : Does your blue box solution play into the strategy? How do we think about blue box in the portfolio of what Arista brings to bear from best-in-breed to maybe a little bit of a different offering with blue box, is that in response to white box, in response to bundling, like how do we think about how that --

Question: David Vogt - UBS AG - Analyst : So do you think that ultimately, there's an opportunity to run EOS in scale up? Or I would imagine you probably don't need it to your point. So it's just going to run like SONiC or some other --

Question: David Vogt - UBS AG - Analyst : Even a lower version. Like a degraded version.

Question: David Vogt - UBS AG - Analyst : Got it. So I guess what I'd like to do in the minute remaining is give you an opportunity to maybe kind of touch on maybe things that are kind of important to the story that haven't come across either on the earnings call or here today in any of your meetings. So give you an opportunity to kind of --

Question: David Vogt - UBS AG - Analyst : Great. Well, thank you, Chantelle. Thank you, Rudolph. Thank you, everyone. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 5:15PM, ANET.N - Arista Networks Inc at UBS Global Technology and AI Conference