July 18, 2024

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2 Top Artificial Intelligence Stocks to Buy Right Now

2 min read

Artificial intelligence (AI) is the hottest topic on Wall Street right now. Some headline names are unavoidable in this space, and for good reason. There are also many companies doing everything they can to demonstrate their AI credentials, regardless of how legitimate their claims might be.

However, some companies have flown a bit under the radar while posting impressive results and have legitimate tailwinds from the AI boom currently taking place. Here are two companies that might be the top AI stocks to buy right now.

1. Arista Networks

When you hear about AI, it’s often about companies rushing to buy the semiconductor chips necessary to train the large language models (LLMs) that power consumer-facing products like ChatGPT. However, it’s important to remember that many of these chips end up in the data centers of the largest tech companies in the world. Inside these companies’ data centers, the servers are connected by routers and switches, and a large percentage of those routers and switches are supplied by Arista Networks (NYSE: ANET).

As tech giants like Meta Platforms and Microsoft grow their data center footprints, Arista is a critical partner. The financial results demonstrate just how important this relationship has been for Arista. Thirty-nine percent of Arista’s total revenue comes from Meta and Microsoft.

In the first quarter of 2024, Arista posted year-over-year revenue growth of 16%. While this was a deceleration from previous quarters, profitability remained strong. Net income grew by 46% compared to the year-ago quarter. This impressive increase in net income was driven by an improvement in gross margin, which jumped more than 4 percentage points over Q1 2023, as well as a reduction in operating expenses as a percentage of revenue.

2. Broadcom

Broadcom (NASDAQ: AVGO) is a supplier of semiconductor hardware and software in a variety of products such as wireless routers and cellphones. Much like Arista, Broadcom has relied on relationships with large…

2024-06-24 18:15:00

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