30 Best and Worst Data Center Stocks

23. Arista Networks Inc (NYSE:ANET)

Upside Potential: 14%

Number of hedge funds: 70

Arista Networks Inc (NYSE:ANET) provides data-driven, client-to-cloud networking for large data centers, campus, and routing environments. Arista’s platforms deliver availability, agility, automation, analytics, and security through an advanced network operating stack. The company’s offerings are mainly focused on high-speed data center and cloud networking systems, value-add software-defined network solutions, and advanced routing systems for edge routing and data center interconnect (DCI).

The investment case for Arista Networks Inc (NYSE:ANET) is bolstered by its expansive and innovatively evolving product line, a diversified customer base ranging from hyperscalers to government agencies, and a burgeoning addressable market. The company primarily competes in the high-speed data center Ethernet switching markets for 10 Gigabit Ethernet (“GbE”) and above. Supported by rapid growth, it has achieved a leadership position in high-speed Ethernet port shipments of 100G and above and holds the second-largest market share in overall data center Ethernet switch ports and revenue. Arista Networks stands to benefit from the rising demand for digital transformation, AI, increasing hybrid workloads, and Zero Trust Networking Security.

In a testament to its strong positioning, an analyst from Piper Sandler, on January 23, quoted Arista as the most discussed “winner” of Project Stargate among his coverage of stocks due to its substantial exposure to hyperscalers and AI vendors. He estimates Arista Networks Inc (NYSE:ANET) to capture more than 30% share of high-end data center switching, which implies a serviceable available market (SAM) of over $6 billion over five years, or $1.25 billion annually. This makes Arista Networks Inc (NYSE:ANET) a compelling opportunity in the data center space.