Arista Networks (ANET, Financial) is projected to report a year-over-year decline in revenues in 2020, largely caused by a pullback in infrastructure spending at Facebook and Microsoft, Arista's two largest customers in the early part of the year. However, the company returned to growth in the fourth quarter, and customer spending patterns suggest Arista is poised to grow at a healthy pace in 2021 and beyond. Notably, we believe Arista is well positioned to benefit from a coming upgrade cycle, which is expected to see many cloud network providers replace their existing switch hardware with the latest 400G high-speed switches. Importantly,Arista's 400G product lineup has been well received, with our research suggesting the company is defending its leading market position in high-speed switches successfully. We continue to believe that Arista's unique software-first approach to design and quality assurance together with its supremely talented management allow it to create superior products.
Arista's shares appreciated rapidly as fears over weak demand from its top customers abated in the latter part of the year. We recently trimmed the position as the business's valuation grew more challenging, but Arista remains a holding in the portfolio given its inherent advantages and market tailwinds.
From Ruane Cunniff (Trades, Portfolio)'s Sequoia Fund 2020 annual report.
