- The tech-heavy Nasdaq has been on a tear this year, reaching a new record high.
- Investors seeking exposure to AI-driven growth opportunities should consider Arista Networks and AppLovin.
- With their innovative AI solutions, strong financial health, and impressive stock performance, these companies are well-positioned to thrive in the rapidly evolving digital landscape.
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As the NASDAQ Composite continues its relentless run to new all-time highs, investors are turning their attention to companies at the forefront of artificial intelligence (AI) innovation.
Source: Investing.com
Among the standout performers in this space are Arista Networks (NYSE:ANET) and AppLovin (NASDAQ:APP), two companies harnessing the power of AI to drive growth and innovation in their respective industries.
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Using the power of InvestingPro, let's delve deeper into what makes these two AI winners stand out.
1. Arista Networks
- 2024 Year-To-Date: +35.9%
- Market Cap: $100.3 Billion
With a focus on cloud networking solutions, Arista Networks has emerged as a leader in providing high-performance networking solutions for large data center and cloud computing environments.
Arista has carved a niche with its innovative solutions in the networking technology sector and has been successful in grabbing market share from chief rivals Cisco Systems (NASDAQ:CSCO) and Juniper Networks (NYSE:JNPR). Its biggest customers are Microsoft (NASDAQ:MSFT) and Facebook-parent Meta Platforms (NASDAQ:META). Newer customers include Google-parent Alphabet (NASDAQ:GOOGL) as well as Oracle (NYSE:ORCL).
As seen below, the Santa Clara, California-based company’s Financial Health Score, as assessed by InvestingPro's AI models, reflects its excellent financial position, strong balance sheet and promising earnings and sales growth trajectory.
Source: InvestingPro
In terms of performance, Arista Networks has outpaced the broader market by a wide margin in 2024, with its stock rallying 35.9% year-to-date, far surpassing the Nasdaq's 10.9% gain over the same period.
ANET stock surged to an all-time high of $329.04 on Thursday, before ending the session at $320.26. At current levels, the networking-infrastructure company commands a valuation of $100.3 billion.
Source: Investing.com
Arista topped quarterly estimates and provided an upbeat outlook when it released its first quarter update on May 7 thanks to growing demand for AI networking solutions from large corporations, small businesses, government agencies and educational institutions.
The cloud networking giant also announced a $1.2 billion share repurchase program.
It is worth noting that Arista’s management anticipates $750 million in AI-related sales for 2025. The company has been successful in leveraging AI to enhance its networking offerings, with a particular emphasis on automation and optimization.
By integrating AI-driven insights into its platforms, Arista Networks aims to deliver greater efficiency, reliability, and scalability to its customers, thereby cementing its position as a trusted partner in the evolving digital landscape.
2. AppLovin
- 2024 Year-To-Date: +108.9%
- Market Cap: $27.3 Billion
As a leading global technology platform, AppLovin enables app developers to monetize, market, and analyze their apps. The company also makes mobile games such as "Game of War", "Bingo Story," and "Solitaire Cruise."
With a focus on mobile gaming and entertainment, the mobile app marketing platform leverages AI and machine learning algorithms to optimize user acquisition, engagement, and monetization strategies.
Demonstrating the strength of its business, AppLovin's InvestingPro Financial Health Score highlights its great financial position and strong growth potential, reflecting the company's ability to capitalize on the booming mobile app ecosystem.
Source: InvestingPro
Driven by its AI-powered approach and robust business model, AppLovin has delivered stellar returns for investors this year, with its stock soaring 108.9% year-to-date, significantly outperforming the broader market.
APP stock ended Thursday’s session at $83.23, within sight of its recent 52-week peak of $88.46 touched on May 9. At its current valuation, the Palo Alto, California-based company has a market cap of $27.3 billion.
Source: Investing.com
AppLovin smashed Wall Street's consensus estimates for the first quarter when it reported earnings on May 8. The app monetization company also issued an upbeat outlook for the current period driven primarily by the successful roll-out of its latest AI-based advertising engine.
By harnessing AI-driven insights, AppLovin helps developers maximize the performance of their apps and unlock new revenue streams in an increasingly competitive market.
This personalized approach enhances user satisfaction and boosts ad effectiveness, positioning AppLovin for substantial sales growth as it continues to leverage AI in the highly competitive mobile app ecosystem.
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR S&P 500 ETF (SPY), and the Invesco QQQ Trust ETF (QQQ).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies' financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.