In this December 3, 2025 post, I disclose my decision to initiate a 200 share position in Arista Networks (ANET) @ $127.505/share on December 2, 2025 in one of the ‘Core’ accounts in the FFJ Portfolio.
ANET supplies the high performance networking gear that ties AI data centres together. When Microsoft, Meta, and Google build massive AI infrastructure they require networking equipment that can handle the enormous bandwidth demands for the movement of data between thousands simultaneously operating graphics processing units (GPUs).
As noted in my prior post, Nvidia (NVDA) dominates GPUs. Hyperscalers, however, want open Ethernet fabrics.
Enter ANET whose switches and Extensible Operating System (EOS) give cloud providers the flexibility to scale clusters without being locked into a closed ecosystem.
ANET is a significantly smaller company than NVDA. It is, however, growing marketshare in the cloud data centre space. Despite this growth, it generates a gross margin in the mid 60s% and an operating margin in the high 40s%. This suggests customers will pay for performance.
Data centre networking speeds are doubling, moving from 800 Gbits to 1.6 Terabits per second. Since every new generation of GPUs generates more data, data centres will require increasingly faster switches.
NOTE: A terabit is a unit of digital information equal to 1 trillion bits. It describes very high data transfer rates or network capacity, such as terabits per second (Tbps) on backbone internet links and large-scale fiber-optic networks.
ANET should benefit from these upgrades because it supplies the hardware and the software required to handle the increasing data centre requirements.
What I find exceptionally appealing about ANET is that once it is embedded in a data centre, it is very difficult for a competitor to displace it. A data centre’s entire network architecture is essentially built around a specific operating system.
ANET has been expanding its partnerships with NVDA, AMD, and OpenAI and is building products specifically designed for AI workloads. The AI infrastructure build-out is accelerating and I think ANET will capture a significant portion of the network spend as hyperscalers invest heavily into the expansion of their data centres.
Final Thoughts
The Final Thoughts in my December 3 post remain the same. Following further analysis, however, I acquired an additional 200 shares @ $128.01/share in the same account on December 5. My ANET exposure is now 400 shares.
I wish you much success on your journey to financial freedom!
Note: Please send any feedback, corrections, or questions to finfreejourney@gmail.com.
Disclosure: I am long ANET.
Disclaimer: I do not know your circumstances and do not provide individualized advice or recommendations. I encourage you to make investment decisions by conducting your research and due diligence. Consult your financial advisor about your specific situation.
I wrote this article myself and it expresses my own opinions. I do not receive compensation for it and have no business relationship with any company mentioned in this article.
