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8. Arista Networks (NYSE:ANET)

Number of Hedge Fund Investors: 85

Arista Networks (NYSE:ANET) is a key beneficiary of the AI revolution because it makes the connectivity backbone that ties together AI infrastructure in data centers. The company is investing heavily in R&D to stay ahead. R&D spending jumped 29 percent in the most recent quarter to $343 million.

The stock trades at a 43x to 45x forward P/E. That’s a 72 percent premium to the sector median at 25x. But the numbers justify it. Over the past year, revenue growth sits at 31 percent versus peers at 11 percent. For FY2025, the company posted 28.6 percent YoY growth. Management just guided to 27.7 percent YoY growth for FY2026. Over the past five years, revenue compound annual growth rate was 31.2 percent. Over the past ten years, it was 26.8 percent.

EPS growth over the past year is 23 percent compared to peers at 17 percent. Looking forward, consensus estimates call for 22.1 percent EPS CAGR through FY2028. The company’s historical five-year EPS CAGR was 39.5 percent and the ten-year CAGR was 34.6 percent.

Arista Networks (NYSE:ANET) benefits from these AI tailwinds because it supplies the connectivity backbone that ties together all the hardware in data centers. Here’s how it works.

The global cloud computing market was valued at $944 billion in 2025 and is projected to reach $3.3 trillion by 2033, a 16 percent CAGR. The data center market stands at $300 billion in 2026 and could reach $700 billion by 2034, an 11 percent CAGR. The global AI market is expected to become a $3.5 trillion market by 2033, a 31 percent CAGR.

But the key is how Arista Networks (NYSE:ANET) specifically wins from this. As data centers build out to handle AI workloads, they’re changing how they connect hardware. The ratio of CPUs to GPUs in data centers is shifting from 1:8 during the training phase to 1:4 during the inference phase, heading toward parity. That means you need more networking to connect all these chips together. Arista makes the ethernet and interconnect solutions that tie GPUs, CPUs, and the underlying infrastructure together. More GPUs and CPUs means more pipes needed. That’s Arista Networks’ (NYSE:ANET) market.

McKinsey expects inference to become the dominant workload in AI data centers, representing more than 50 percent of all AI compute and roughly 30 to 40 percent of total data center demand. More inference workloads mean more networks needed to connect concurrent swarms of real-time inference.