Arista Networks' stock experienced a sharp pre-market plunge of 10.84% on Wednesday, following the release of the company's first-quarter financial results after the previous day's market close.

The networking equipment maker reported revenue of $2.71 billion and adjusted earnings of 87 cents per share, both exceeding analyst expectations. However, the adjusted gross margin of 62.4% fell short of the expected 62.7%, raising concerns about profitability. Additionally, the company's projection for second-quarter adjusted operating margin of 46% to 47% was below the 48.8% achieved in the same period last year.

Analysts noted that despite the double beat and upside guidance, investors had elevated expectations after the stock's strong rally of nearly 30% year-to-date. The margin miss and softer margin outlook triggered a selloff as the results did not sufficiently exceed the high bar set by the market.