This quarter’s earnings season has shown that investors are less interested in AI, at least as far as big tech names are concerned. Instead, the concern is how those companies are managing their major cash cow, cloud services.
Yet that’s a space where AI tools could enhance returns in the future. And investing with companies that can provide AI tools specifically for cloud services could see big gains outside the well-known big tech names.
The leading player for this intersection of trends is
Arista Networks (ANET).
Their work in developing software for data centers puts them at the center of the cloud and AI trends. That’s helped push shares to all-time highs following bullish analyst ratings, even amid a market correction in the past few weeks.
Arista is already posting strong growth, with revenues up 39 percent, and earnings jumping 65 percent higher in the past year.
Action to take: With shares valued at 25 times forward earnings but strong growth ahead, shares look attractive for those with a long-term outlook.
Plus, short-term momentum traders can play the company’s strong returns higher through the end of the year.
For traders, the March 2024 $250 calls, last going for about $5.50, could see high-double-digit gains from a continued rally in shares in the months ahead.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.
