We recently compiled a list of the 10 Hot AI Stocks to Buy Now. In this article, we are going to take a look at where Arista Networks Inc (NYSE:ANET) stands against the other hot AI stocks.

A disruptive breakthrough by a Chinese tech startup in January 2025 has shaken the artificial intelligence (AI) market to its core, triggering a sharp sell-off among tech stocks and compelling investors to rethink their exposure to expensive semiconductors and large hardware providers. In just a few days, this innovative AI model demonstrated performance on par with established Western systems while operating at a fraction of the cost, upending the long-held belief that cutting-edge artificial intelligence must be built on enormous capital outlays and massive computing infrastructures.

This unexpected development has exposed vulnerabilities in sectors that have relied heavily on high-cost hardware, sending ripples through investment strategies and forcing market participants to rapidly reexamine the economics of AI. With the rapid emergence of more cost-efficient, scalable models, investors are now witnessing a fundamental shift where technological efficiency and operational agility are beginning to outweigh the premium previously demanded for state-of-the-art AI performance.

This shift is compelling companies across the AI landscape to accelerate innovation and streamline operations as they adapt to a new era defined by lower training costs and more efficient architectures. Although regulatory and national security concerns continue to loom large – particularly regarding data privacy and the geopolitical implications of relying on foreign-developed technologies – the promise of significantly reduced capital expenditures is reshaping the competitive dynamics of the sector. The advent of these efficient, cost-effective models forces large hardware providers and entrenched tech giants to reevaluate their strategies, while simultaneously opening the door to a broader array of investment opportunities that are less dependent on massive budgets and intensive computing resources. For investors, the rapid evolution toward these scalable solutions presents an opportunity to capture long-term value in a market that is becoming increasingly competitive and diversified, as the traditional paradigms of AI development give way to more sustainable and innovative approaches. With this, we will take a look at some hot stocks to buy in the AI sector.

Our Methodology

We shortlisted 10 names with large exposure to the AI megatrend according to ETF databases. We ranked the names by the magnitude of positive revision in 2026 EPS estimates in the last twelve months from Wall Street analyst consensus (street). Our belief is that significant upward revision in EPS estimates from leading analysts serves as confirmation that companies are genuinely benefiting from the AI-related tailwinds and are well-positioned to capitalize on future growth opportunities driven by these advancements. For all the companies mentioned we also include the number of hedge funds that own it.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).

A technician in a server room managing a large-scale network of computers.

Arista Networks Inc (NYSE:ANET)

Magnitude of revision in street 2026 EPS estimates: +17%

Number of Hedge Fund Holders: 70

Arista Networks Inc (NYSE:ANET) is a leading provider of cloud networking solutions, specializing in data-driven networking for large-scale environments such as data centers, campuses, and routing applications. Their award-winning platforms emphasize availability, agility, automation, analytics, and security, all powered by an advanced network operating system. ANET has established itself as a key player in the networking industry, delivering high-performance Ethernet systems designed to meet the demands of modern cloud computing and AI workloads. In the past 12 months, the stock has surged by over 46%, which places it on our list of hot stocks to buy.

In the evolving AI landscape, Arista Networks Inc (NYSE:ANET) is poised to capitalize on the increasing demand for efficient and scalable networking solutions, regardless of existing concerns related to the disruption of the AI inferencing market by Chinese entrants. During a recent conference, the management team provided optimistic guidance for 15% to 17% revenue growth in 2025, driven by a mix of cloud and AI opportunities. The company is seeing a paradigm shift in AI back-end networks, where networks need to be architected for 100% throughput with GPUs running constantly for extended periods, and expects $750 million in AI back-end revenue and an additional $750 million in front-end revenue for 2025. ANET has already experienced double-digit upward adjustments in EPS estimates in the last twelve months, which confirms the accelerating market opportunities for the company, and management further confirmed that clients are seeing a strong ROI and are confident in continuing to invest. Here’s what they said:

“The first thing I would say from a demand perspective, and I'll pass to Martin, is the customers are starting to see ROI. I mean you can look at multiple different hyperscalers who have taken the most aggressive quickest leaps into this, and they're starting to see the business ROI. That's critical, of course, because no one is going to keep spending billions of dollars on this if they're not seeing the business benefits.”

Overall ANET ranks 8th on our list of the hot AI stocks to buy now. While we acknowledge the potential of ANET as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ANET but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.

 

Disclosure: None. This article is originally published at Insider Monkey.