Arista Networks (ANET) saw its stock price plummet 11.90% in pre-market trading on Wednesday, following the release of its third-quarter earnings report. Despite beating analyst expectations for Q3, investors were spooked by the company's underwhelming fourth-quarter revenue guidance, which suggested a significant slowdown in growth.

For the third quarter, Arista reported impressive results with revenue of $2.31 billion, up 27.5% year-over-year and surpassing 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.

Several factors contributed to the sharp sell-off: 1. Growth concerns: The tepid Q4 guidance raised worries about Arista's ability to maintain its strong growth trajectory. 2. Shipment constraints: 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. 3. Margin pressure: Management cautioned that margins could face pressure if the product mix tilts too heavily toward cloud and AI offerings. 4. High expectations: Given Arista's recent stock performance, up about 40% year-to-date before the earnings release, investors likely expected a more robust outlook. As the market digests this news, all eyes will be on Arista's ability to navigate these challenges and maintain its position in the competitive networking equipment sector, particularly as demand for AI-related infrastructure continues to grow.