Munger Mode rating: 3 out of 5 — Hold. Our own rating from the research report below, on business quality first: moat durability and management, with price separating the top three.
We have looked at a great many technology companies over the years and passed on nearly all of them, usually because we couldn't tell you what the business would look like in ten years. Arista is one of the rare hardware-and-software franchises where the financial evidence of a moat is overwhelming: a decade of 25-33% returns on equity achieved while sitting on a cash hoard that would make the returns look even better without it, gross margins in the 60s, no debt whatsoever, and a founder-led engineering culture that has taken market share from an entrenched incumbent (Cisco) for fifteen consecutive years. Revenue has compounded at roughly 26% annually for a decade — $1.1 billion in 2016 to $9.0 billion in 2025 — and 2026 guidance of $12.6 billion implies 40% growth this year. This is a wonderful business run by excellent people. Our problem is arithmetic.
Recent filings analysed: 10-Q (2026-08-05), 8-K (2026-08-04), 8-K (2026-06-02), 10-Q (2026-05-06).
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