Ciena’s Growth Rides on the Same Cloud Buyers as Arista. Arista Just Reported.
Yahoo! Finance ·
Key points
- Arista reported Q3 revenue of $3.66 billion, up 58.5% year over year, marking its fastest growth since its IPO.
- Management guided 2027 revenue to about $18.5 billion, a figure well above the prior analyst consensus and signaling continued acceleration into the next year.
- Analysts had anticipated Arista’s 2026–2027 growth to slow toward the mid-40s percentage range, but the company surpassed those expectations while expanding margins to a non-GAAP operating margin of 49.1%.
- Ciena’s forecast for fiscal 2028 sits at $11.0 billion, a target that hinges on supply improving and demand remaining intact as hyperscalers remain major buyers.
- Around half of Ciena’s current quarterly revenue came from hyperscalers, with two customers each contributing more than 10% in the most recent quarter, mirroring Arista’s reliance on Microsoft and Meta for a significant share of 2025 revenue.
- Ciena trades around 23x forward earnings, below its five-year average, highlighting a valuation reset tied to concentration risk from a small handful of large buyers.
- The December report will test whether Ciena can raise its fiscal 2027 floor as more components arrive and budgets from cloud builders continue to expand.
Summary
Arista Networks delivered a blowout quarter with 58.5% revenue growth to $3.66 billion and lifted its 2027 revenue target to about $18.5 billion, signaling continued cloud-networking demand from hyperscalers that also underpins Ciena’s fortunes. Ciena’s next fiscal year is largely constrained by component supply rather than demand, making Arista’s trajectory the key read for its $11.0 billion 2028 revenue forecast. The market has driven Ciena’s multiple down, while Arista’s gains imply cloud budgets remain robust even as investors price in a potential slowdown. Ciena’s December report is the real test to see if management can raise its floor as more components arrive. The broader implication is that cloud builders' spending momentum is sustaining both companies, with the next clarity coming from supply dynamics and actual orders in late 2027–2028.
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