Unlocking AI Power: 2 Top Stocks to Buy Now

Published Date: 25/06/2024

Discover the two AI stocks that are flying under the radar, Arista Networks and Broadcom, and learn why they are well-positioned to benefit from the AI boom.

Artificial intelligence (AI) has taken the world by storm, and Wall Street is no exception. With headlines dominated by ChatGPT and Nvidia, it's easy to overlook the companies that are quietly riding the AI wave. However, Arista Networks and Broadcom are two companies that have posted impressive results and are well-positioned to benefit from the AI boom.

Arista Networks is a critical partner for tech giants like Meta Platforms and Microsoft, supplying routers and switches to their data centers. With 39% of its revenue coming from these two companies, Arista's financial results demonstrate the importance of this relationship. The company posted year-over-year revenue growth of 16% in the first quarter of 2024, with net income growing by 46% compared to the same quarter last year.

Broadcom, on the other hand, is a supplier of semiconductor hardware and software to companies like Apple. The company recently reported impressive earnings results, with revenue increasing by 43% year over year to $12.5 billion. Revenue from AI products grew by 280% and represented approximately 25% of the total. While the company's acquisition of VMWare contributed to the revenue growth, the results demonstrate Broadcom's ability to benefit from the rush to build out AI capacity.

Both Arista Networks and Broadcom trade at steep valuations, but their strong results and positioning in the AI market make them attractive buys. A dollar-cost averaging approach may be the most prudent for investors, but for those looking to tap into the AI boom, these two companies are certainly worth considering.

Arista Networks is a leader in the development of software-driven cloud networks. Founded in 2004, the company is headquartered in Santa Clara, California, and has become a critical partner for many of the world's largest tech companies.

Broadcom is a global technology leader that designs, manufactures, and supplies a broad range of semiconductor products. Founded in 1991, the company is headquartered in San Jose, California, and has become a leading supplier of semiconductor hardware and software to companies around the world.

The Motley Fool is a financial services company that provides financial news, analysis, and advice to investors. Founded in 1993, the company is headquartered in Alexandria, Virginia, and is known for its popular Stock Advisor service.

FAQs:

Q: What is the main benefit of investing in Arista Networks?

A: Arista Networks is a critical partner for tech giants like Meta Platforms and Microsoft, and its financial results demonstrate the importance of this relationship.

Q: How has Broadcom benefited from the AI boom?

A: Broadcom's revenue from AI products grew by 280% and represented approximately 25% of the total, demonstrating the company's ability to benefit from the rush to build out AI capacity.

Q: What is the dollar-cost averaging approach, and why is it recommended for investors?

A: The dollar-cost averaging approach involves investing a fixed amount of money at regular intervals, regardless of the market's performance. This approach can help investors reduce the impact of market volatility and avoid trying to time the market.

Q: What is the Motley Fool's Stock Advisor service, and how can it help investors?

A: The Motley Fool's Stock Advisor service provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month.

Q: What is the potential upside of investing in AI stocks like Arista Networks and Broadcom?

A: The potential upside of investing in AI stocks like Arista Networks and Broadcom is significant, as the AI market is expected to continue growing in the coming years.

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