Executive Summary
Arista Networks (ANET) is the "Switzerland" of networking. Nvidia pushes its proprietary "Infiniband" technology for connecting GPUs. But the rest of the world (Microsoft, Meta, Broadcom) wants "Ethernet," the open standard. Arista builds the best Ethernet switches in the world. As AI clusters grow to 100k GPUs, Ethernet is the only open standard that scales.
1. EOS: The Software Moat
Arista didn't win on hardware; they won on software.
- EOS: Their operating system is programmable and crash-resistant. Hyperscalers love it because they can write their own code on top of the switch. Cisco's code is spaghetti; Arista's code is elegant.
2. The Back-End Network
AI clusters have two networks: The Front-End (connecting to the internet) and the Back-End (GPUs talking to GPUs). Arista is winning the massive Back-End buildout.
Risks to the Thesis
- Nvidia: If Nvidia successfully forces everyone to use Infiniband (by bundling it with GPUs), Arista gets shut out of the AI cluster.
- White Box: Amazon builds its own switches. If Microsoft and Meta decide to build their own hardware, Arista loses its biggest customers.
Conclusion
Arista is the highest quality networking company. Betting on Arista is betting on "Open Standards" beating "Proprietary Walled Gardens."