Mizuho says this under-the-radar stock is a 'clear' artificial intelligence winner

Mizuho analysts say Alphabet's (GOOGL) latest earnings report shows the company is the “clear winner” in the ongoing artificial intelligence boom.

“In my opinion, this quarter was good enough to surprisingly sway a lot of naysayers, skeptics, and bears,” they wrote.

“Couple that with lower operating expense growth and management's messaging. Really manage all spending and investments in AI while making modest investments in other areas, and you'll see higher rotational growth and margin expansion.” Optimistic outlook.

However, analysts believe there is another less popular “clear winner” in the current situation.

Specifically, analysts believe Arista Networks (NYSE: NVIDIA) is a better-positioned artificial intelligence company, despite skepticism raised by recent sell-side downgrades based on forecasts of future market share losses as Nvidia strengthens networking technology and GPU acceleration. Combination of operations.

“ANET has two huge cloud customers that account for the majority of the core data center segment: MSFT and META,” the analysts noted.

“Guess who just talked about higher capex and longer timelines for CY25? META and MSFT,” they added.

ANET shares rose 4% after Meta Platforms announced its capital expenditure (capex) outlook for artificial intelligence investments, and analysts believe the stock has the potential to rise further before reporting earnings on May 7.

However, they also cautioned that not all capex growth will directly benefit ANET and that guidance should not be expected to be revised upward significantly.

Analysts explained that generative AI investments in the Ethereum space are viewed more as a 2025 and beyond event, suggesting momentum will gradually build over the coming quarters rather than immediately accelerate.

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Meanwhile, people are primarily focused on Arista's growth potential in 2025, not 2024.

They pointed out: “As the Ethernet standard expands for artificial intelligence network equipment, ANET expects artificial intelligence revenue to reach approximately $700 million next year.”

“But to me, this looks and feels very conservative, and ANET is by far the dominant leader in high-speed, low-latency, mission-critical deployments of DC Ethernet. I think META and MSFT are essentially scaling and building artificial intelligence Data center capacity will not benefit ANET.

“To me, ANET at $260 feels like a gift to those who buy and hold shares of key AI winners,” the analyst concluded.

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