By Marc Guberti, The Motley Fool
Publication Date: 2026-10-06 11:10:00
Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD) have been some of the top-performing artificial intelligence (AI) stocks due to their chips, but the next winner may be in networking. Data centers require a significant amount of networking cables, and that can position Arista Networks (NYSE: ANET) to outperform both chipmakers during the next year. Here’s what makes the stock worth watching.
Missed AI’s “Act 1”? Act 2 Could Be 14x Bigger. Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout. Continue »
The business model
Arista Networks specializes in Ethernet switches, which transport data in, out, and between server racks. Those racks contain the AI chips that process intense workloads and enable AI products and services like ChatGPT. All of Arista’s switches run on its proprietary software.
The neat thing about the software is that it lets Arista’s Ethernet switches easily talk to each other and move data more seamlessly across racks and the data center as a whole. Engineers can make changes to thousands of Arista switches simultaneously instead of making changes to individual switches, which was a nightmare in the early 2000s.
Arista sells more switches when customers need to upgrade their data centers to handle more…