Tom Lee of Fundstrat added Arista Networks (NYSE: ANET) and JPMorgan (NYSE: JPM) to his core list of stock ideas for 2026. The moves came up for discussion on CNBC’s Investment Committee, where two panelists who own the names walked through why they agree with Lee.
Joseph Terranova, Senior Managing Director at Virtus Investment Partners, said he agrees with Lee on Arista. He said Arista is participating in the buildout of AI networking gear and highlighted that the company’s revenue growth is accelerating.
On JPMorgan, Kevin Simpson, founder and CIO of Capital Wealth Planning, called the bank the best of breed in financial services. He believes a rebound in the IPO market is a major catalyst. JPM is among the top banks that help private companies go public, and it earns large fees for running those deals.
Let’s analyze ANET in detail.
Arista Networks (ANET): Catalysts
Arista Networks (NYSE: ANET) Q2 revenue rose 38% year over year. The company also raised its full-year revenue outlook, which points to about 40% annual growth.
Bulls say AI Fabrics is the biggest driver of the stock. AI Fabrics is the networking gear that ties together the thousands of chips inside an AI data center, letting them talk to each other fast enough to train and run large AI models. The company said its Etherlink AI fabric customer count has now surpassed 100 cumulative customers, up from just a handful when the AI networking opportunity first came up.
The upcoming 1.6 Tbps platforms are another catalyst. That figure refers to the data speed the switches can handle, 1.6 terabits per second, which is the next step up in networking speed for these AI clusters. Those platforms are expected to go through trials in the second half of 2026 and could enter meaningful production in 2027.
Bear Case
Bears, however, point to customer concentration and the impact of a potential slowdown in AI spending. AI Fabrics is still the biggest contributor to earnings, and it depends on a small number of large cloud customers. If one of them delays a deployment, works through capacity it already installed, or moves part of its networking to another vendor, Arista’s growth assumptions could prove too aggressive.
Arista trades at a forward non-GAAP P/E of 45.33, nearly double the sector median of 23.15, and above its own five-year average of 37.83. On a trailing basis, the non-GAAP P/E is 53.89 against a sector median of 25.60.
While we acknowledge the risk and potential of 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 ANET and that has 10,000% upside potential, check out our report about the cheapest AI stock.
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