Arista Networks Inc. ANET has been benefiting from robust cash flow generation, supported by strong demand for its cloud and AI networking solutions. In the first quarter of 2026, Arista generated operating cash flow of $1.69 billion, a substantial increase from $641.7 million reported in the year-ago quarter. This improvement was primarily driven by higher profit, strong growth in the deferred revenues and efficient working capital management.
During the quarter, the company has demonstrated impressive financial performance. Revenues increased 35.1% year over year to $2.71 billion, while net income climbed to $1.02 billion from $813.8 million a year ago. A scalable cost structure is a major advantage. Revenue growth is outpacing expense growth. The improvement in profitability supports cash generation.
Deferred revenues increased to $6.20 billion at the end of the first quarter from $5.37 billion at year-end 2025, backed by growing customer contracts. These upfront cash payments from customers are a major driver of cash flow. The sustainability of Arista’s cash flow growth will largely depend on continued AI infrastructure spending, cloud customer investments and successful adoption of next-generation networking technologies.
Other Tech Firms With Solid Cash Flow Improvement
In the second quarter of fiscal 2026, Jabil, Inc. JBL generated $411 million of net cash from operating activities compared with $334 million a year ago. The company’s free cash flow was $1.3 billion in fiscal 2025, and it remains committed to generating more than $1.3 billion in free cash flow in fiscal 2026. A higher free cash flow indicates efficient financial management practices, optimum utilization of assets and improved operational efficiency. Strength in AI data center infrastructure, capital equipment and warehouse automation markets are major growth drivers for Jabil.
Sanmina Corporation SANM reported a cash flow from operations of $399 million, underscoring strong execution and working-capital discipline. Free cash flow came in at $342 million, supported by solid earnings and balance-sheet execution, while net capital expenditures were $57 million. Sanmina’s profitability is improving owing to disciplined cost control. Solid momentum in the communications networks, cloud and AI infrastructure end markets provides Sanmina with greater financial flexibility, enabling it to invest in growth initiatives and return capital to shareholders.
ANET’s Price Performance, Valuation & Estimates
Shares of Arista have surged 52% over the past year against the industry’s decline of 13.3%.
Image Source: Zacks Investment Research
From a valuation standpoint, Arista trades at a forward price-to-sales ratio of 14.16, above the industry average.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Arista’s earnings for 2026 and 2027 has increased over the past 60 days.
Image Source: Zacks Investment Research
Arista currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Jabil, Inc. (JBL): Free Stock Analysis Report
Sanmina Corporation (SANM): Free Stock Analysis Report
Arista Networks, Inc. (ANET): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).