With stocks breaking out to new all-time highs, the play that kicked off the current market rally over two years ago, AI, remains strong. But investors are breaking out beyond chip plays to other aspects of the AI rollout.
That includes everything from hardware such as server racks, to data centers, to the land, electricity, and copper needed to build the physical infrastructure of today’s most-advanced software. With so many avenues open, investors still have plenty of ways to profit.
For instance, network switches and other tools for data centers are in hot demand. That’s good news for a company like Arista Networks (ANET), whose devices are critical for developing fast networks.
Arista has boasted a 20% jump in revenues over the past year, and a 37% rise in earnings. Best of all, Arista earns a fat 40% profit margin. With AI centers taking years to build out, that’s years of big performance ahead for shareholders.
Action to take: Investors may like shares here, and should consider the stock as a buy on any short-term market pullback. Arista does not currently pay a dividend.
For traders, shares are likely to keep trending higher into the new year. The January 2025 $420 calls, last trading for nearly $17.50, could see mid-to-high double-digit returns depending on the strength of a year-end rally.
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 company mentioned in this article.