Arista Networks

Arista demonstrates strong pricing power in practice. Its GAAP gross margins have consistently been in the mid-60% range, which is very high for a hardware company. Margins actually improved from 61.9% in FY2023 to 64.1% in FY2024, indicating either better pricing or higher-value mix.

This suggests the company can raise prices or shift to higher-margin products without losing customers quickly. Large hyperscale customers have limited alternatives for Arista’s performance niches, giving the firm leverage. However, Arista is not a regulated monopoly – competition exists and chip commoditization ultimately caps pricing.

We believe Arista will maintain or slightly raise margins but cannot charge arbitrarily high new prices. Overall, we see very strong pricing power, earning a score in the mid-70s.