Giverny Capital Asset Management, LLC, an investment management company, recently published its second-quarter 2026 investor letter. A copy of the letter can be downloaded here. The model portfolio returned 13.70% this quarter, compared to the S&P 500’s 15.20% return. YTD, the portfolio gained 5.89%, while the index increased by 10.21%. The long-term link between stock appreciation and earnings growth is strong; Benjamin Graham described the market as a “voting machine” in the short term and a “weighing machine” in the long term. Despite the S&P 500’s 10.2% rise in the first half of the year, 210 stocks lost value, indicating market anomalies. High-quality earnings compounders that benefit from AI capabilities are likely to maintain their competitive edge. Recently, the market has increasingly chased momentum. Tech giants are taking advantage of the optimism of investors amid fears of an AI bubble. Despite strong profit margins, reliance on “moonshot” investments raises sustainability concerns. The author recommends investing in both emerging tech leaders and established firms. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Giverny Capital Asset Management highlighted Arista Networks, Inc. (NYSE:ANET) as one of its leading performance contributors. Arista Networks, Inc. (NYSE:ANET) is a high-speed switching and cloud networking solutions provider for hyperscale users. On July 21, 2026, Arista Networks, Inc. (NYSE:ANET) closed at $174.58 per share, reflecting a market capitalization of $219.82 billion. Arista Networks, Inc. (NYSE:ANET) posted a one-month return of 7.94%, while its shares gained 54.44% over the past 52 weeks.
Giverny Capital Asset Management stated the following regarding Arista Networks, Inc. (NYSE:ANET) in its Q2 2026 investor update:
“Our two largest positions are Alphabet and Arista Networks, Inc. (NYSE:ANET), which I believe have strong positions in the emerging AI economy. Arista is the leading provider of networking equipment for hyperscale data centers. As AI traffic grows exponentially, data center owners increasingly need signal to move seamlessly not only within a given data center, but between data centers. The demands on the routers and switches that direct the flow of traffic are considerable. As the most sophisticated networking provider, Arista’s growth may accelerate in coming years. As for portfolio activity for the quarter, we trimmed Alphabet and Arista. We sold about 20% of our position in Arista in April in two tranches at an average price of about $160. The stock finished the quarter higher than our sale price. Arista and Alphabet remain our largest positions as of June 30. The valuations on both are high enough that future returns likely will be lower than we’re used to, even if the businesses continue to grow.”
Arista Networks, Inc. (NYSE:ANET) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 85 hedge fund portfolios held Arista Networks, Inc. (NYSE:ANET) at the end of the first quarter, compared to 91 in the previous quarter. While we acknowledge the risk and potential of Arista Networks, Inc. (NYSE:ANET) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Arista Networks, Inc. (NYSE:ANET) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Arista Networks, Inc. (NYSE:ANET) and shared the list of high growth wide moat stocks to buy. In addition, please check out our hedge fund investor letters Q2 2026 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.
