We recently compiled a list of the Jim Cramer’s Best Performers List: 12 Stocks Cramer is Talking About. In this article, we are going to take a look at where Arista Networks, Inc. (NYSE:ANET) stands against the other best performers on Jim Cramer’s list.
On a recent episode of Mad Money, Jim Cramer took a moment to celebrate the two-year anniversary of the current bull market. He mentioned that this particular bull market has been quiet and gentle, which he attributes to the unusual circumstances surrounding its rise. “The whole first year of this bull’s life was an anomaly. That’s because the Fed was furiously tightening and the market went up anyway,” Cramer explained.
He emphasized that for the past two years, opportunities have been evident, stating, “Every night I say there’s always a bull market somewhere, and for the last two years, well, it’s been right in front of you.”
Cramer then went on to discuss the lead performing stocks and ended the segment, saying:
“The bottom line, if you’re going to buy these stocks, I’d go first with Nvidia, then with Broadcom, and finally Fair Isaac, if only because we need something that’s not connected to the data center, even as we know, it will remain a strong story for the ages.”
Cramer also advised investors to shift their focus away from the consumer price index (CPI) report, suggesting that its significance has diminished since the Federal Reserve began cutting rates.
“We had to be concerned about this stuff when the Fed was on the warpath, either raising rates or leaving them higher for longer. Now, though, the Fed is your friend, so I wouldn’t obsess about the details.”
He did emphasize, however, that the monthly labor report remains important in the current climate. He remarked on the tendency for many to become “Fed watchers,” suggesting that this reliance on government data can detract from the deeper analysis of individual companies. Cramer referenced Austan D. Goolsbee, president of the Chicago Fed, who advised against an overemphasis on CPI data, as the Fed is unlikely to base decisions on it. Cramer explained:
“When the Fed’s raising rates in order to stamp out inflation, it can be very important. When we’re in a rate hike cycle, you’re trying to figure out when that’s going to end. But we’re not in that kind of cycle anymore. We’re in a rate cutting cycle.”
Cramer explained that last month the Fed implemented a double rate cut, setting a downward trend that is expected to continue. He added:
“Sure, if we had a huge spike in the CPI this morning, then maybe the Fed would change its stance. But that would have to be an extreme reading. And there’s nothing extreme about today’s 2.4% inflation number, just a tick above the expected 2.3, still down from the 2.5% reading from the prior month.”
Cramer concluded with a strong reminder about the nature of investing. “Forget the macro, people. It’s not that meaningful when the Fed’s cutting rates. And keep your eyes on the prize: Earnings,” he urged. Ultimately, he reinforced that earnings dictate stock prices in the long run, and that’s where the focus should be for those looking to make money in the market.
Our Methodology
For this article, we compiled a list of 12 stocks with the biggest gains over the past 2 years that were mentioned by Jim Cramer during his episode of Mad Money on October 10. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 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
Cramer mentioned that Arista Networks, Inc. (NYSE:ANET) is unsung among the winners and is a dominant player in various types of switches and more.
“I just have such a soft spot for such a good company. It’s called Arista Networks. It is probably the most unsung of all these winners because it’s a dominant player when it comes to network infrastructure for the cloud. But nobody ever sees it.
Yeah, it’s got a lot of business with the data center. I know this is tiresome, but it works. Arista hit an all-time high today. I think it’s got more room to run because this is the dominant player in all sorts of switches, adapters, and networking services that people don’t really care about but are making you a lot of money.”
Arista Networks, Inc. (NYSE:ANET) focuses on developing, marketing, and selling data-driven networking solutions tailored for data center, campus, and routing environments. On October 7, Citi raised the price target on the stock to $460 from $385 and kept a Buy rating. The adjustment aligns with the firm’s upgraded growth outlook for capital expenditures among the “Big Four” cloud providers, which is projected to rise from 40% to 50% year-over-year for 2024.
This positive trend is attributed to strong data center spending in the first half of the year, along with optimistic commentary from the company. Citi forecasts that investment in data center infrastructure will continue to expand due to ongoing demand driven by artificial intelligence, with an expected growth of 40% in 2025.
In August, Arista Networks, Inc. (NYSE:ANET) was selected by the Alabama Fiber Network (AFN), a consortium of eight electric cooperatives, to supply routing and switching equipment for an extensive middle-mile network initiative. The project, which is part of the Be Linked Alabama initiative backed by the State of Alabama, aims to deliver a 6,600-mile open-access network across all 67 counties. The AFN’s investment exceeds $340 million, and the company’s high-performance 7280SR3 platform has been chosen to support this critical broadband expansion.
Overall ANET ranks 7th on Jim Cramer’s list of best performing stocks. While we acknowledge the potential of 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 more promising than ANET but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.
