Goldman Sachs’ Best Phase 2 AI Stocks: Top 24 High Conviction AI Stocks

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

Year To Date Share Price Gain: 80.05%

Number of Hedge Fund Investors in Q2 2024: 65

Arista Networks, Inc. (NYSE:ANET) is a cloud computing hardware and software company. The firm provides networking software, Ethernet products, switches, analytics software, and other associated products and services. For AI, Arista Networks, Inc. (NYSE:ANET) benefits from its Ethernet business division which carries the potential to compete with fiber for data center connectivity. While the firm has seen competition from NVIDIA, which offers the InfiniBand product lineup for data center networking, Arista Networks, Inc. (NYSE:ANET)’s business of being a pure play networking provider enables it to enjoy expertise and economies of scale that translate into lower cost and brand value. Additionally, Arista Networks, Inc. (NYSE:ANET)’s networking software works in tandem with its hardware and allows the firm to generate recurring revenue following hardware sales. Its prominent role in the industry has also led to reports suggesting that Arista Networks, Inc. (NYSE:ANET) is Meta’s partner of choice for a 100,000 GPU AI cluster to create a multi million dollar opportunity for the firm. Goldman Sachs kept its $430 price target and a Buy rating for Arista Networks, Inc. (NYSE:ANET)’s shares in September as it projected 20% revenue growth for 2024 and 2025.

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

“We trimmed our positions in Arista Networks, Inc. (NYSE:ANET) and Carlisle Companies. Both of these companies have witnessed strong multi-year growth in their stock prices, which have resulted in elevated valuations. While we remain confident in the long-term prospects of both of these businesses, we trimmed our holdings to more appropriate position sizes given the risk/reward offered.”