10 Best Cloud Stocks To Buy According to Short Sellers

6. Arista Networks, Inc. (NYSE:ANET)

Number of Hedge Fund Investors  in Q2 2024: 65

Short Interest as % of  Shares Outstanding: 0.83%

Arista Networks, Inc. (NYSE:ANET) operates on the hardware side of the cloud computing industry. It sells products such as routing systems and switches, and the firm also offers its own software products. While the software and end use phases of the artificial intelligence stack might take longer to generate revenue, the hardware side is seeing booming demand as evidenced by NVIDIA’s share price. This has also translated into robust share price performance for Arista Networks, Inc. (NYSE:ANET), as the stock is up 86% over the past 12 months. Another key advantage that Arista Networks, Inc. (NYSE:ANET) has enjoyed over other hardware firms is its operating system that manages data centers and other systems. This works in tandem with its network switches, and Arista Networks, Inc. (NYSE:ANET) enjoys a considerable presence in the ethernet market. However, the firm is facing competition from AI giant NVIDIA for its ethernet and Infiniband products, and as its software is tailored to non AI use cases, Arista Networks, Inc. (NYSE:ANET) remains vulnerable to a competitor taking its share in the AI market.

Artisan Partners mentioned Arista Networks, Inc. (NYSE:ANET) in its Q2 2024 investor letter. Here is what the fund said:

“Arista Networks is the market leader in cloud networking equipment used in data centers. Shares have experienced strong outperformance since the beginning of 2023 due to its ethernet options being well positioned to capture market share in AI cloud environments (more scalable and cheaper than InfiniBand, an out-of-the-box solution by Nvidia). Similar to Chipotle, after a period of strong performance, we trimmed the position based on valuation and market cap.”