THE LONG CON

(ANET), (AAPL), (MSFT), (META)

Remember that scene in The Sting when Paul Newman and Robert Redford con Robert Shaw so thoroughly he doesn’t even realize he’s been taken until the credits roll? 

That’s Arista Networks (ANET) right now. Instead of chasing headlines, they’ve been locking in the infrastructure contracts that actually make AI work. 

Every time someone trains a model or scales a data center, odds are good it’s Arista’s tech keeping it from collapsing under its own weight.

No hype cycle. No circus. Just a company installing the pipes, flipping the switch, and collecting real revenue.

Their Q2 earnings just dropped and they weren’t subtle. 

Revenue was up 30% year-over-year to $2.2 billion. Adjusted EPS of $0.73 trounced estimates of $0.65. But more impressive was the 65.6% gross margin.

If you’ve ever run a hardware business, you know those numbers don’t just stroll in the door. That’s not selling routers. That’s selling necessity.

As for their operating margin? A cool 48.8%. You don’t see those outside software companies or whatever black magic Apple’s (AAPL) pulling off in Cupertino. 

Yet here’s Arista, shipping physical gear and raking in profits like it’s the early days of cloud.

Then there’s Meta (META) and Microsoft (MSFT). These aren’t just marquee clients. They’re practically family at this point. 

Their AI infrastructure is tangled so tightly with Arista’s gear that walking away would be like pulling out your own intestines to save on groceries. 

That 15% revenue concentration from Meta? Analysts call it risky. I call it leverage.

But Arista’s not simply riding coattails. They’re actually leading with next-gen 400G and 800G ethernet solutions, the very plumbing hyperscalers need to keep AI clusters from turning into parking lots. 

Their EOS software has become the de facto standard in Ethernet-based data centers. That means once you’re wired in, switching is not a weekend project. It’s open-heart surgery.

Even in a macro environment where many AI names are slowing or missing guidance, Arista beat expectations and raised its Q3 outlook. 

Despite these, Wall Street still thinks this is a networking play. That’s like calling a Formula 1 car just another vehicle with four wheels. 

Arista isn’t outfitting IT closets. They’re threading the backbone of hyperscale data centers – the same companies training tomorrow’s AI models while you’re still trying to get your smart fridge to stop ordering oat milk.

And they’ve done it without the usual chest-pounding. While Cisco (CSCO) holds think tanks and strategy offsites, Arista’s already taken the beach, planted the flag, and sent the postcard.

They’re sitting on $8.84 billion in cash, with zero debt. They even bought back nearly a billion in stock in the first half of 2025. 

On top of these, their Q3 guidance is solid. $2.25 billion in revenue with a 64% gross margin. And with EPS expected to nearly double from $2.27 in 2024 to $4.52 by 2028, you’re staring at a 19% compound annual growth rate. 

At a 35-times multiple, you’re looking at fair value in the $140–145 range. It’s trading around $132. You don’t need a CFA to see the spread.

Yes, if Meta or Microsoft suddenly vanished off the face of the earth, it would hurt. But they won’t. 

These firms have built billion-dollar AI stacks around Arista’s networking DNA. That kind of relationship doesn’t unwind over a bad quarter or a golf course disagreement.

And let’s not forget supply chain resilience. While others scrambled, Arista kept its cash conversion cycle steady at 264 days. They even handled cross-border tensions with cool-headed logistics shifts. 

And just like Newman and Redford in The Sting, Arista played the long con with elegance. They didn’t need to shout, hype, or dance for investors. They built the system, turned on the lights, and let everyone else play catch-up. 

At this point, all that’s left is watching the rerating unfold.