Arista Networks (ANET) saw its stock price plummet over 11% in after-hours trading on Tuesday, despite reporting third-quarter earnings that surpassed analyst expectations. The sharp decline came as investors were unimpressed with the company's fourth-quarter revenue guidance, which suggested a significant slowdown in growth.

For the third quarter, Arista reported revenue of $2.31 billion, up 27.5% year-over-year and beating the consensus estimate of $2.25 billion. Adjusted earnings per share came in at $0.75, topping analyst projections of $0.71. However, the company's fourth-quarter revenue forecast of $2.3 billion to $2.4 billion indicated a potential growth slowdown to less than 1%, compared to 5% in Q3 and 10% in Q2.

"Likely, investors were assuming a larger beat and raise," said William Kerwin, senior equity analyst at Morningstar. "We've seen this dynamic become common for AI-exposed stocks, where beating expectations isn't enough to drive the stock." Arista executives attributed the slowdown to shipment constraints rather than demand issues, noting that while demand remains strong, the company can't always ship everything needed to keep up with demand. They also cautioned that margins could face pressure if the product mix tilts too heavily toward cloud and AI offerings.