Arista Networks Surges 5% on Bullish Earnings and Institutional Buys—What’s Next?

Summary
• Arista Networks (ANET) surges 5.05% to $131.41, hitting an intraday high of $133.34
• Argus Investors Counsel triples stake in ANET, now holding 1.7% of its portfolio
• CEO Jayshree Ullal and other insiders sold $28.5M in shares over 90 days

Arista Networks is riding a sharp intraday rally driven by a Q3 earnings beat, robust revenue growth, and a surge in institutional buying. The stock’s 5.05% jump has outpaced its sector peers, with Argus Investors Counsel’s 188.7% stake increase signaling confidence. However, insider selling and a mixed analyst outlook add complexity to the bullish momentum.

Earnings Beat and Institutional Buys Drive ANET Rally
Arista Networks’ 5.05% surge stems from a Q3 earnings beat of $0.75 (exceeding estimates by $0.03) and 27.5% YoY revenue growth to $2.31B. Institutional investors, led by Argus Investors Counsel, have aggressively added to their positions, with the fund’s 188.7% stake increase in Q3 pushing ANET to its 22nd-largest holding. Analysts’ upgraded ratings, including Barclays’ $183 price target and Piper Sandler’s “overweight” call, further fueled buying. However, insider selling of $28.5M in 90 days and a 48.6x dynamic P/E ratio highlight valuation concerns.

Communication Equipment Sector Gains Momentum as ANET Outperforms
The Communication Equipment sector, led by Cisco Systems (CSCO) with a 1.1% intraday gain, is seeing renewed interest amid AI infrastructure demand. Arista’s 5.05% rally far outpaces CSCO’s modest move, reflecting its stronger earnings performance and institutional backing. While CSCO’s 200-day average of $53.91 remains a key level, ANET’s 52-week high of $164.94 and 27.5% YoY revenue growth position it as a sector outperformer.

Options and ETF Strategies for ANET’s Volatile Rally
• RSI: 42.09 (oversold)
• MACD: -1.23 (bearish), Signal: -0.70 (bearish), Histogram: -0.52 (bearish)
• Bollinger Bands: Upper $137.85, Middle $129.25, Lower $120.65
• 200-day average: $118.26 (below current price)

ANET’s technicals suggest a short-term bounce from oversold RSI levels but conflicting MACD signals. Key support at $120.65 and resistance at $137.85 define a trading range. Two options stand out for aggressive positioning:

• ANET20260123C125: Call option with 47.24% IV, 16.63% leverage ratio, delta 0.76, theta -0.59, gamma 0.0315. High liquidity (37,515 turnover) and moderate delta make this ideal for a 5% upside scenario. Projected payoff: $131.41 → $133.34 (max $8.34 gain).
• ANET20260123P122: Put option with 43.42% IV, 222.68% leverage ratio, delta -0.128, theta -0.0239, gamma 0.0234. High leverage and gamma suit a defensive play if the rally falters. Projected payoff: $131.41 → $124.83 (max $7.58 gain).

Aggressive bulls may consider ANET20260123C125 into a break above $137.85, while cautious traders should watch the $120.65 support level.

Backtest Arista Networks Stock Performance
The backtest of ANET's performance after a 5% intraday increase from 2022 to now shows favorable results. The 3-Day win rate is 56.30%, the 10-Day win rate is 59.44%, and the 30-Day win rate is 69.63%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest was 10.60% over 30 days, suggesting that ANET can deliver significant gains even after the initial 5% surge.

ANET’s Rally Faces Key Resistance—Act Now to Capitalize
Arista Networks’ 5.05% surge is a mix of optimism and caution. While Q3 earnings and institutional buying justify the rally, insider selling and a stretched P/E ratio (48.6x) warrant caution. The stock must hold above $120.65 to validate the bounce, with a break above $137.85 unlocking further gains. Sector leader Cisco’s 1.1% move adds context, but ANET’s momentum remains distinct. Watch for a decisive move above $133.34 or a breakdown below $120.65 to define the next phase.