Arista Networks (ANET) Surged as Multiple Tailwinds Aligned

Giverny Capital Asset Management, LLC, an investment management company, recently published its fourth-quarter 2025 investor letter. A copy of the same can be downloaded here. The Portfolio returned 0.01% compared to 2.66% for the S&P 500. YTD, the fund returned 12.58% compared to 17.88% for the Index. The firm faced a challenging fourth quarter and calendar year, despite solid appreciation. The outperformance of a few large technology companies has negatively impacted performance, given the portfolio's underweight in large tech and overweight in smaller niche leaders. While portfolio companies are excelling in earnings growth and capital returns, the market is fixated on AI investments, leaving the actual benefits unclear. Additionally, you can review the Portfolio’s top 5 holdings to see its best picks for 2025.

In its fourth-quarter 2025 investor letter, Giverny Capital Asset Management highlighted Arista Networks, Inc. (NYSE:ANET) as one of its leading performance contributors. Arista Networks, Inc. (NYSE:ANET) is a high-speed switching and cloud networking solutions provider for hyperscale users. The one-month return of Arista Networks Inc (NYSE:ANET) was 3.32%, and its shares gained 27.12% of their value over the last 52 weeks. On January 30, 2026, Arista Networks, Inc. (NYSE:ANET) stock closed at $141.74 per share, with a market capitalization of $178.491 billion.

Giverny Capital Asset Management stated the following regarding Arista Networks, Inc. (NYSE:ANET) in its fourth quarter 2025 investor letter:

"Arista Networks, Inc. (NYSE:ANET) has been our best performing stock since inception, and 2025 was more of the same. It makes high-quality routers and switches for hyperscale users like Meta Platforms and Microsoft. This networking equipment, coupled with a software operating system that helps users manage capacity bottlenecks in data centers, optimizes the flow of data through massive computer networks. The AI data center buildout helps Arista, but it also has a leading position in cloud computing centers."

Arista Networks, Inc. (NYSE:ANET) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 92 hedge fund portfolios held Arista Networks, Inc. (NYSE:ANET) at the end of the third quarter, which was 81 in the previous quarter. In the third quarter of 2025, Arista Networks Inc (NYSE:ANET) reported revenue of $2.3 billion, up 27.5% year-over-year, exceeding expectations. While we acknowledge the potential of Arista Networks, Inc. (NYSE:ANET) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Arista Networks, Inc. (NYSE:ANET) and shared the list of best strong buy growth stocks to buy according to hedge funds. ClearBridge Large Cap Growth Strategy established a position in Arista Networks, Inc. (NYSE:ANET) in Q4 2025, leveraging strong ties with hyperscalers. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.