Arista Networks Plummets 2% Amid Supply Chain Woes and AI Demand Divergence – What’s Next?

Summary
• Arista Networks (ANET) trades at $124.67, down 2.04% intraday, with a range of $122.08–$127.54
• 52-week high/low: $164.94/$59.43; dynamic PE ratio: 46.07
• Sector leader Cisco (CSCO) down 1.2%, signaling broader communication equipment sector pressure

Today’s selloff in Arista Networks reflects a collision of near-term supply chain constraints and lingering optimism over AI-driven demand. With the stock trading near its 200-day moving average and elevated volatility in options markets, traders are recalibrating positions as management flags execution risks. The $122.38 Bollinger Band support level and $145.36 midline will be critical in determining whether this correction is a buying opportunity or a deeper bearish pivot.

Supply Chain Constraints and AI Demand Divergence Drive ANET's Slide
Arista Networks’ 2.04% intraday decline stems from management’s recent warning about supply chain bottlenecks, despite robust demand for AI infrastructure. The company’s Q3 report highlighted $2.31 billion in revenue but underscored lead time delays and component shortages as growth hurdles. While AI networking remains a core catalyst, the disconnect between customer demand and delivery capabilities has triggered profit-taking. Analysts at Simply Wall St note that the $13.6 billion 2028 revenue forecast hinges on resolving these execution risks, creating short-term volatility as investors weigh near-term challenges against long-term AI potential.

Communication Equipment Sector Under Pressure as Cisco Drags
The Communication Equipment sector mirrored ANET’s decline, with Cisco Systems (CSCO) down 1.2% as broader tech sector jitters spread. While Arista’s AI-focused narrative differentiates it from traditional infrastructure peers, the sector-wide selloff reflects macroeconomic caution. Supply chain disruptions highlighted in Arista’s report echo industry-wide challenges, particularly in semiconductor-dependent firms. However, ANET’s 2.04% drop outpaces CSCO’s 1.2% decline, suggesting investors are pricing in more immediate execution risks for AI-centric plays.

Options Playbook: Puts and Calls for ANET's Volatile Outlook
• RSI: 19.73 (oversold)
• MACD: -4.73 (bearish), Signal: -2.17, Histogram: -2.56
• Bollinger Bands: Upper $168.33, Middle $145.36, Lower $122.38
• 200D MA: $111.70 (below current price)

ANET’s technicals suggest a short-term oversold condition, but structural support at $122.38 (lower Bollinger Band) and resistance at $145.36 (midline) define a key trading range. The 30D RSI at 19.73 hints at potential near-term bounce, though the 200D MA remains a critical psychological level. With the sector under pressure and elevated options volatility, traders should focus on defined-risk strategies.

Top Options Picks:
• ANET20251128P125 (Put):
- Strike: $125, Expiry: 2025-11-28
- IV: 65.79% (high volatility)
- LVR: 21.73% (moderate leverage)
- Delta: -0.48 (sensitive to price swings)
- Theta: -0.0115 (slow time decay)
- Gamma: 0.0280 (responsive to price changes)
- Turnover: 21,271 (liquid)
- Payoff: At 5% downside ($118.44), intrinsic value = $6.56
- This put offers high gamma and moderate leverage, ideal for a bearish breakout below $122.38.

• ANET20251128P124 (Put):
- Strike: $124, Expiry: 2025-11-28
- IV: 64.87% (high volatility)
- LVR: 24.22% (moderate leverage)
- Delta: -0.45 (balanced sensitivity)
- Theta: -0.0217 (moderate time decay)
- Gamma: 0.0282 (responsive to price changes)
- Turnover: 2,060 (liquid)
- Payoff: At 5% downside ($118.44), intrinsic value = $5.56
- This put balances leverage and liquidity, suitable for a controlled short-side play.

Hook: Aggressive bears may consider ANET20251128P125 if support at $122.38 breaks, while ANET20251128P124 offers a safer entry for a pullback.

Backtest Arista Networks Stock Performance
Here is the performance analysis of the “ –2 % Intraday Plunge Rebound ” strategy on Arista Networks (ANET) from Jan-2022 through 18-Nov-2025. Key metrics show the approach delivered a 142.8 % total return (≈ 26.5 % annualised) with a 1.01 Sharpe ratio. Maximum draw-down reached 36.1 %.Parameter notes (auto-completed for you):• Take-profit 15 % and stop-loss 8 %: common swing-trade thresholds that balance reward versus risk. • Max holding 20 trading days: limits capital lock-up and reduces exposure to prolonged down-trends.Open the interactive report below to review details, trade log, and equity curve.

ANET at Crossroads: Supply Chain Risks vs. AI Growth – Immediate Action Required
Arista Networks’ 2.04% decline underscores the tension between near-term execution risks and long-term AI-driven demand. While the stock trades near its 200D MA and lower Bollinger Band support, the sector’s broader weakness—exemplified by Cisco’s 1.2% drop—heightens uncertainty. Traders should monitor the $122.38 level for a potential rebound or breakdown. For bulls, a close above $145.36 could reignite AI optimism, but supply chain risks remain a wildcard. Act now: Watch for a breakdown below $122.38 or a reversal in Cisco’s trend to gauge sector sentiment.