Arista Networks drops 11% as Q1 results spark margin and supply-chain worries
ANET•Arista Networks shares are sliding after its May 5, 2026 Q1 earnings report, despite revenue rising 35% year over year to $2.709 billion. The selloff is tied to margin-focused concerns, with management signaling willingness to sacrifice gross margin to meet AI data-center demand amid longer-lasting supply-chain constraints.
1. What happened
Arista Networks (ANET) is down about 11% in Wednesday trading (May 6, 2026) after reporting first-quarter 2026 results after Tuesday’s close. The move comes even as Arista posted rapid year-over-year growth, highlighting that investors are prioritizing forward profitability and execution risk rather than backward-looking revenue strength.
2. The catalyst: Q1 earnings plus margin concerns
Arista reported Q1 2026 revenue of $2.709 billion, up 35.1% from Q1 2025, and issued a forward outlook that included commentary around non-GAAP gross margin and operating margin. In post-results discussion, management indicated it is willing to accept lower gross margins to ensure customers can stand up AI infrastructure without being gated by networking gear—an approach that can be read as a near-term profitability tradeoff even if demand remains strong. ()
