A 50-year-old man from Stanwell was arrested on suspicion of attempted murder and racially aggravated public order.
The 19-year-old victim sustained non-life threatening injuries and remains in hospital.
Surrey Police were called to Viola Avenue, Stanwell, just before 10.30pm on Saturday to reports of a man acting aggressively and shouting racist comments whilst carrying a baseball bat and a knife.
Several nearby vehicles were also damaged.
A further call was received by Surrey Police at 10.30pm reporting that a man had been stabbed.
It is believed that the suspect is the same man who was reported as acting aggressively, Counter Terrorism Policing South East said in a statement.