Here’s Why Giverny Capital Asset Management Trimmed Arista Networks (ANET)

Giverny Capital Asset Management, LLC, an investment management company, recently published its fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. The portfolio continued its strong performance in the fourth quarter, but trailed the S&P 500 Index. The portfolio returned 0.78% compared to a 2.41% return for the S&P 500 Total Return Index in the quarter. The fund returned 21.09% in 2024 compared to the 25.02% return for the Index during the same period. For more information on the fund’s top picks in 2024, please check its top five holdings.

In its fourth quarter 2024 investor letter, Giverny Capital Asset Management emphasized stocks such as Arista Networks, Inc. (NYSE:ANET). Arista Networks, Inc. (NYSE:ANET) is a technology company that engages in the development and distribution of data-driven, client to cloud networking solutions. The one-month return Arista Networks Inc (NYSE:ANET) was 0.81%, and its shares gained 63.24% of their value over the last 52 weeks. On February 6, 2024, Arista Networks Inc (NYSE:ANET) stock closed at $115.27 per share, with a market capitalization of $145.213 billion.

Giverny Capital Asset Management stated the following regarding Arista Networks Inc (NYSE:ANET) in its Q4 2024 investor letter:

“I trimmed Arista Networks Inc (NYSE:ANET) as it grew beyond 10% weight in the portfolio thanks to its continued outperformance. Arista has been on a tear in January and if our clients are lucky I will leave Arista alone for a while! The market appears to see that Artificial Intelligence data centers are going to require robust investment in networking equipment, and Arista is the leader in that sector.”

Arista Networks, Inc. (ANET): Growth Fueled by AI Networking Solutions

A technician in a server room managing a large-scale network of computers.

Arista Networks Inc (NYSE:ANET) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 70 hedge fund portfolios held Arista Networks Inc (NYSE:ANET) at the end of the third quarter which was 65 in the previous quarter. In the third quarter, Arista Networks Inc’s (NYSE:ANET) revenue increased 20% year-over-year to $1.81 billion. While we acknowledge the potential of Arista Networks Inc (NYSE:ANET) as an investment, our conviction lies in the belief that 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article we discussed Arista Networks Inc (NYSE:ANET) and shared the list of best debt free stocks to buy. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.