BBH Select Mid Cap ETF on Arista Networks, Inc.
Thesis
BBH views Arista as a leading supplier of data-center switches positioned to benefit from ongoing cloud and AI infrastructure investment. First-quarter revenue and free cash flow were strong, while reported growth was temporarily obscured by supply shortages, extended customer acceptance cycles, and contracted demand moving into deferred revenue. Management remained constructive on demand for 2026 and 2027 and expects additional large customers beyond Microsoft and Meta. BBH believes multiyear supply commitments, strong execution, and stable gross-margin guidance leave Arista well positioned for the next several years.
“Management also continues to expect one or possibly two new 10%+ customers in 2026 beyond Microsoft and Meta as Arista meets the needs of multiple companies building out data centers for AI.”
Key risks
- Supply-chain shortages
- Extended customer acceptance cycles for new AI products
- Rising component costs