We recently compiled a list of the AI News You Should Not Have Missed. In this article, we are going to take a look at where Arista Networks, Inc. (NYSE:ANET) stands against the other AI stocks.
Artificial intelligence (AI) is the new buzzword that is attracting the attention of almost everyone on Wall Street. The sector, characterized by rapid growth, significant investment, and intense competition, has witnessed a surge in venture capital (VC) funding over the past few months. In 2023, global VC investment in AI startups exceeded $94 billion. This surge in funding reflects the strong belief that these investors have in the transformative potential of AI across various industries. Merger and acquisition activity in the field is also on the rise, with more than 1,100 such deals in 2023 alone. Larger tech companies are actively acquiring AI startups to bolster their capabilities in the shortest time possible.
Some sector-specific numbers highlight the AI potential in minute detail. For example, in the healthcare universe, the AI healthcare market is projected to reach $102 billion by 2028, with startups focusing on diagnostics, drug discovery, and personalized medicine. In finance, AI-driven financial services are expected to reach a market value of $26.67 billion by 2026, with startups focusing on fintech, fraud detection, and algorithmic trading. In the retail world, AI is revolutionizing through personalized shopping experiences and supply chain optimization, with the sector projected to grow at a 34.4% CAGR by 2030.
Read more about these developments by accessing 33 Most Important AI Companies You Should Pay Attention To and 20 Industrial Stocks Already Riding the AI Wave.
Hedge fund interest in AI has increased in the past few months, an indication of the long-term growth potential of the industry. During routine interviews with the media, investor conferences, and through their 13F activity, hedge fund managers have detailed their bullish views on AI. For example, Bill Ackman, the chief Pershing Square Capital Management, has said that AI startups represent the next frontier in technology, offering unparalleled opportunities for innovation. He adds that the key is finding those with a clear vision and the ability to execute in a rapidly evolving landscape.
Similarly, Ray Dalio of Bridgewater Associates is of the opinion that the impact of AI on industries is undeniable, and the startups driving this change are in a unique position to capitalize on it. Dalio adds, however, that it’s crucial to invest in those that are building sustainable, ethical models, as they will be the long-term winners. Paul Tudor Jones of Tudor Investment Corporation believes that AI startups are not just about tech but about transforming entire industries. He notes that the challenge is in navigating the hype and identifying the true innovators who have the potential to disrupt established markets.
Read more about these developments by accessing Billionaire Stan Druckenmiller Is Betting On AI Infrastructure, Tobacco and Industrial Stocks and 10 Tech Stocks to Monitor Amid Market Volatility According to Bernstein Analyst.
Our Methodology
For this article, we selected AI stocks based on the latest news and analyst ratings. These stocks are also popular among hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician in a server room managing a large-scale network of computers.
Arista Networks, Inc. (NYSE:ANET)
Number of Hedge Fund Holders: 65
Arista Networks, Inc. (NYSE:ANET) engages in the development, marketing, and sale of data-driven, client to cloud networking solutions for data center, campus, and routing environments. The company offers ethernet solutions for AI data centers, ensuring high throughput and low latency. It is competing with similar products made by Broadcom, and the InfiniBand of NVIDIA. The latter is becoming popular because it comes bundled with NVIDIA GPUs, which hyperscalers are using to power their AI data centers. Ethernet is a cheaper solution to the NVIDIA product, a fact already highlighted by Meta Platforms earlier this year.
Arista Networks, Inc. (NYSE:ANET) has the potential to disrupt some of the NVIDIA business in the networking domain. Jefferies analyst George Notter recently raised the price target on the stock to $380 from $340 and kept a Buy rating, noting that the company previously talked about having won four out of five major Cloud trials for AI/back-end networking, and a fifth customer, possibly Microsoft, might trial with Arista, giving credence to claims that the firm can displace some InfiniBand usage at the account.
Overall ANET ranks 19th on our list of the AI stocks you should not have missed. While we acknowledge the potential of ANET as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ANET but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
