Arista Networks, Inc. (ANET) Citi raises price target to $460 as data center capex growth prospects improve amid AI demand

We recently created a list 35 AI News You Can't Miss. In this article we will look at where Arista Networks, Inc. (NYSE:ANET) stacks up against other artificial intelligence stocks you shouldn't miss.

The AI ​​industry continues to evolve, and investors are closely monitoring investments, advancements in AI capabilities, and new partnerships to keep pace with the continued development of generative AI and integration into key industries. One of the most exciting developments in artificial intelligence last week was the 2024 Nobel Prize in Physics, which was awarded to scientists John Hopfield and Geoffrey Hinton for their pioneering work in machine learning. Hopfield, a researcher at Princeton University, gained recognition for developing an associative memory system – a neural network model capable of storing and reconstructing images or other data patterns. His work revolutionized the way data patterns are represented and recalled, marking significant progress in the field of artificial intelligence. Meanwhile, Hinton, a professor at the University of Toronto, pioneered a method for autonomously discovering properties of data, enabling machines to perform tasks such as identifying specific elements in images. His contributions have played a key role in enhancing AI's ability to recognize images and identify patterns.

Another noteworthy report worth mentioning is a recent Reuters study on the funding that AI startups have received this year. The study highlighted AI startup OpenAI's recent $6.6 billion funding round, which raised the company's valuation to over $157 billion. It also highlights other AI startups that have received more than $500 million in funding this year. These include xAI, CoreWeave, Scale AI, Drawing AI, Groq, Mistral AI and Cohere. This year, they raised $6 billion, $1.1 billion, $1 billion, $657 million, $640 million, $600 million and $500 million, respectively. All startups are valued at more than $2.5 billion, and xAI, founded by Tesla CEO Elon Musk, is valued at more than $24 billion. A recent report by Goldman Sachs shows that companies around the world are expected to spend nearly $1 trillion building artificial intelligence infrastructure in the coming years. The report highlights the enormous scale of investment needed to meet the growing demand for AI technologies across industries. In 2024 alone, venture capital firms have already completed approximately 200 deals with AI companies, providing nearly $22 billion in funding. The average size of these funding rounds exceeds $100 million, reflecting the rising valuation of AI startups, which now often exceeds $1 billion.

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Read more about these events by accessing 30 Top AI Stocks According to BlackRock I Beyond the tech giants: 35 non-tech AI opportunities.

Our methodology

For this article, we selected AI stocks by reviewing news articles, stock analyzes and press releases. These stocks are also popular among hedge funds. Why are we interested in stocks that hedge funds invest in? The reason is simple: our research has shown that we can outperform the market by imitating the best stocks of the best hedge funds. As part of our quarterly newsletter strategy, we select 14 small- and large-cap stocks every quarter, and since May 2014, we have returned 275%, beating our 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:Aneta)

Number of hedge fund holders: 65

Arista Networks, Inc. (NYSE:ANET) develops, markets and sells data-driven client-to-cloud networking solutions for data centers, campuses and routing environments. Citi raised its price target for the stock to $460 from $385 and reiterated its Buy rating on the stock. The report raised the Big Four cloud data center capex growth forecast for 2024 from 40% to 50% year-over-year, based on data center spending volume in the first half of the year and positive company commentary and guidance. Citi expects data center capital expenditures for large cloud service providers to increase by 40% in 2025 due to continued demand for artificial intelligence and continued investment in expanding data center infrastructure.

ANET in general ranks 22nd on our list of AI stocks you can't miss. While we recognize ANET's potential as an investment, our belief is based on the belief that certain AI stocks are capable of delivering higher returns, faster. If you're looking for an AI stock that shows more promise than ANET but trades at less than 5x earnings, check out our report on cheapest AI stocks.

READ MORE: $30 Trillion Opportunity: Morgan Stanley's 15 Best Humanoid Robot Stocks to Buy I Jim Cramer says NVIDIA has “become a wasteland”.

Disclosure: None. This article was originally published on Insider Monkey.