Arista Networks, Inc. (NYSE:ANET) and Cisco Systems, Inc. (NASDAQ:CSCO) are both benefiting as AI clusters turn networking into a larger part of the data-center bill. Arista is growing much faster, but investors are paying about 43.8 times forward earnings for that growth versus roughly 20.7 times for Cisco.
That valuation gap makes the pair more interesting than a simple old-guard versus disruptor story. Recent security work showed that both companies must keep AI networks reliable after deployment, while Arista’s 1.6T platform push shows why hyperscale AI fabrics remain its core growth engine. The portfolio question is whether Arista’s superior economics justify more than twice Cisco’s earnings multiple.
Arista is still the growth and margin benchmark
Arista’s second-quarter revenue rose 37.7% to $3.04 billion, its first quarter above $3 billion. Non-GAAP operating margin reached 49.9%, and non-GAAP EPS increased about 40%. Management guided third-quarter revenue to roughly $3.3 billion.
Those numbers explain the premium. Arista has become deeply embedded in hyperscale cloud and AI fabrics, while its software-led operating model produces margins more typical of software than traditional networking hardware. The bear case is concentration. A relatively small number of cloud customers drive a large share of demand, and a 44 times forward earnings multiple assumes AI networking growth stays elevated.
Cisco is cheaper just as AI revenue starts to matter
Cisco is no longer merely a defensive networking incumbent. Fiscal fourth-quarter revenue grew 18%, networking product orders rose 40%, and hyperscaler AI infrastructure orders reached $4 billion in the quarter and $9.3 billion for the year. Cisco said AI infrastructure revenue was roughly $4 billion in fiscal 2026 and expects about $7.5 billion in fiscal 2027.
That acceleration makes its 20.7 times forward earnings multiple more interesting. Cisco also trades around 33 times free cash flow versus roughly 50 times for Arista. Cisco still grows more slowly, and its broader enterprise portfolio can dilute the impact of AI wins. But security, observability and networking give it several ways to monetize the same customer relationships, while the lower multiple requires less perfection.
Hedge-fund ownership increased for both companies in Q2. Arista rose to 91 holders from 85, although Arrowstreet Capital reduced its stake 10% to 7.62 million shares. Cisco increased to 101 holders from 97, while Fisher Asset Management nearly doubled its position, up 94% to 33.4 million shares. As of August 31, 14.51 million Arista shares were sold short, 1.18% of float, with about 2.5 days to cover.
Arista remains the better business on growth and margins. At today’s prices, Cisco offers the better risk-adjusted stock setup because its AI revenue is accelerating while its valuation leaves far more room for execution that is merely good rather than exceptional.
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