BBH Select Mid Cap ETF on Arista Networks Inc.
Thesis
Arista is the leading provider of data-center switches to cloud-network customers and is positioned as a direct beneficiary of AI data-center buildouts. First-quarter revenue and free cash flow reached records, while deferred product revenue is temporarily understating reported growth because customer acceptance cycles for new AI products have lengthened. Management clarified that growth including deferred product revenue was 54% and remained confident in the 2026 outlook and 2027 demand backdrop. The fund also believes Arista's multiyear supply commitments and execution record should help it manage component inflation while serving additional large AI customers.
“Arista is the leading provider of data center switches to cloud network customers.”
Key risks
- Supply-chain shortages can constrain shipments and guidance.
- Extended customer acceptance cycles can delay revenue recognition.
- Rising component costs can pressure gross margins.