The AI Supercycle Needs More Than Just Chips. This Growth Stock Builds the Network That Connects Them.
Yahoo Finance ·
There are plenty of artificial intelligence (AI) stocks grabbing investors' attention these days, and many of them are semiconductor designers and manufacturers. But while the AI data center boom is driving many chip stocks higher, there are other ways to play the artificial intelligence supercycle. Arista Networks ( ANET 3.78% ) is a prime example. The company's networking equipment and software help the biggest tech companies run their AI data centers -- and it could benefit from infrastructure spending for years to come. Arista Networks sells data center networking hardware and software that enables tech companies to manage their data center systems. That's become a very good business to be in, considering that the largest technology players are spending an estimated $750 billion on AI infrastructure this year alone. While Arista has most of its business tied to a handful of large companies -- including Microsoft and Meta -- it's somewhat protected from this concentration. Once a company begins using Arista's hardware and software, it becomes difficult to switch. AI data center systems are complex and costly, and hardware and software upgrades are expensive.
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