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Neither Arista Networks nor IBM is an automatic better buy in 2026. Arista’s latest reported results show much faster growth, driven by networking for data centers, AI, campus and routing. IBM offers a broader mix of software, consulting and infrastructure, substantial cash generation and a declared dividend. Those operating profiles can help you decide which company fits your priorities, but they do not reveal whether either stock is attractively priced. That requires comparing both at the same date using consistent valuation measures.
What do the latest results say?
The latest company results covered here are for the quarter ended June 30, 2026: Arista released its results on August 4, and IBM on July 22. These are company-reported figures, not independent forecasts. Where IBM reports constant-currency growth or non-GAAP measures, those differ from reported revenue or GAAP results and should be read as such.
| Measure | Arista Networks | IBM |
|---|---|---|
| FY2025 revenue | $9.006 billion, up 28.6% year over year; GAAP gross margin was 64.1% (company-reported). | $67.5 billion, up 8% reported and 6% at constant currency; full-year free cash flow was $14.7 billion (company-reported). |
| Q2 2026 revenue | More than $3 billion, a first for the company, according to its release. | $17.2 billion, up 1% year over year. |
| Q2 2026 business mix | Networking platforms serving AI, data-center, campus and routing environments. | Software: $7.8 billion, up 5%; consulting: $5.3 billion, essentially flat; infrastructure: $3.8 billion, down 7%. |
| Q2 2026 cash flow and shareholder return | Not stated in the cited Q2 release. | $2.5 billion free cash flow; declared quarterly dividend of $1.69 per common share. |
Sources: Arista FY2025 results filed with the SEC, IBM FY2025 results, Arista Q2 2026 release, and IBM Q2 2026 release.
Why consider Arista Networks?
Arista sells networking platforms for large AI, data-center, campus and routing environments. In its Q2 release, it highlighted 1.6 Tbps AI fabric platforms, including liquid-cooled options, and reported its first quarter with revenue above $3 billion. The company’s FY2025 revenue growth of 28.6% and 64.1% GAAP gross margin provide evidence of a fast-growing business with strong gross profitability in that reporting year.
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That growth may appeal to investors seeking exposure to network demand from AI and data centers. It does not establish that demand will continue at the same pace or that ANET shares are reasonably valued. Arista’s own disclosures identify risks that include customer concentration, reliance on limited suppliers and third-party manufacturers, component availability, competition, changing technology and markets, and variability in revenue and margins. Review the company’s 2025 Form 10-K alongside its Q2 release.
Why consider IBM?
IBM spans software, consulting, infrastructure and financing, so its results reflect a broader business mix. In Q2 2026, software grew while consulting was flat and infrastructure declined. IBM cited growth in Red Hat and data software, while transaction processing declined. Overall GAAP revenue was $17.2 billion, up 1% year over year; GAAP net income was $2.2 billion and free cash flow was $2.5 billion.
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IBM declared a quarterly dividend of $1.69 per common share, payable September 10, 2026, to holders of record on August 10. Its Q2 release also reported $62.0 billion in debt at quarter end, including IBM Financing debt. Cash flow and a dividend may matter to income-oriented investors, but neither alone establishes that the shares are inexpensive or that the dividend is sustainable at a particular purchase price.
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What changed in IBM’s 2026 outlook?
IBM’s Q2 results updated its full-year constant-currency revenue growth expectation to 4–5%, down from the “exceed 5%” expectation in its Q1 release. The company continued to expect full-year free cash flow to increase by about $1 billion year over year. The Q2 outlook is the later guidance; the earlier figure should not be treated as current. Both expectations are company guidance, not guaranteed outcomes. See the Q2 release and Q1 release.
Which stock fits different investing priorities?
| If your priority is… | What the cited results indicate | What they do not establish |
|---|---|---|
| Faster reported growth and AI/data-center networking exposure | Arista’s FY2025 growth and Q2 2026 revenue milestone provide stronger growth evidence in these figures. | Whether the growth will persist, or whether ANET’s share price already reflects optimistic expectations. |
| A broader software, services and infrastructure business, with reported cash flow and a dividend | IBM has multiple business lines, reported Q2 free cash flow and declared a quarterly dividend. | Whether IBM’s shares are cheap, whether its dividend fits your needs, or whether slower growth will improve. |
These are conditional comparisons of business characteristics, not buy recommendations. Arista’s growth profile may suit an investor willing to accept concentration and execution risks; IBM’s mix and shareholder distributions may suit someone prioritizing cash generation and a declared dividend. Neither profile removes stock-specific or market risk.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to decide whether either is a better buy
Compare the two stocks using prices from the same valuation date and the same definitions. A high growth rate is not a valuation measure, and cash generation does not automatically make a stock cheap. Before deciding, examine:
- Forward price-to-earnings: Use estimates for the same forward period and note that analyst forecasts can differ.
- Free-cash-flow yield: Compare free cash flow with market capitalization using a consistent period and calculation.
- Enterprise value relative to operating earnings: Account for debt and cash consistently; IBM’s reported debt includes financing debt.
- Expected growth and execution: Consider how much future growth the current share price appears to assume, as well as the risks each company discloses.
- Dividend and obligations: For IBM, weigh the declared payment against cash generation, debt and your income needs; do not infer yield without a current share price.
- Time horizon and downside tolerance: Decide whether your investment case depends on near-term performance or a longer period, and how much volatility or business risk you can accept.
The available results do not establish a current, like-for-like valuation winner. Prices and valuation multiples change, and a responsible conclusion requires current market data alongside the operating figures.
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