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Globe and Mail
18 hours ago
- Business
- Globe and Mail
Should You Forget SoundHound AI and Buy 2 Artificial Intelligence (AI) Stocks Right Now?
SoundHound AI (NASDAQ: SOUN), a developer of artificial intelligence (AI)-powered speech and audio recognition tools, has been a polarizing investment ever since its public debut three years ago. The bulls were initially impressed by its rapid growth, expanding customer base, and the disruptive potential of its tools, which could be customized for restaurants, vehicles, consumer electronics, and other markets. Nvidia 's minor investment in the company raised even more green flags. However, a lot of SoundHound's growth was driven by its acquisitions rather than its organic improvements -- and it remained deeply unprofitable. It also faces stiff competition from similar voice recognition platforms, and many investors fled after Nvidia sold its entire stake earlier this year. From 2024 to 2027, analysts expect SoundHound's revenue to increase at a compound annual growth rate (CAGR) of 48%. They also expect its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to turn positive by the final year. That's a promising growth trajectory, but it's still richly valued at 20 times this year's sales, so any bad news could easily sink its stock. Instead of investing in SoundHound AI, it might be smarter to invest in two other AI-oriented stocks that are on firmer ground: Arista Networks (NYSE: ANET) and Micron (NASDAQ: MU). 1. Arista Networks Arista Networks is a top networking hardware and software company. But unlike its larger competitor, Cisco, which locks in its customers with proprietary hardware and software, Arista uses off-the-shelf chips and open-source software that are compatible with a broad range of hardware. It also sells low-latency switches, optimized for hyperscale data center and cloud networks, and its CloudVision platform enables those clients to easily monitor their own cloud deployments. Arista's flexible, modular, and scalable strategy made it a top choice for cloud giants like Meta Platforms and Microsoft. So, while Cisco might be a better one-stop shop for enterprise and campus customers, Arista is a more focused play on the booming cloud and AI infrastructure markets. From 2019 to 2024, Arista's revenue rose at a CAGR of 24%, while its adjusted net income increased at a CAGR of 30%. From 2024 to 2027, analysts expect its revenue and earnings per share (EPS) to grow at a CAGR of 19% and 15%, respectively. That growth should be driven by the soaring need for cloud and AI infrastructure upgrades, its gradual expansion into the enterprise and campus markets to challenge Cisco, and the rising adoption of its integrated security services. Arista's stock isn't cheap at 39 times this year's earnings, but it could still have plenty of room to grow. 2. Micron Micron is one of the world's largest producers of DRAM (dynamic random-access memory) and NAND memory chips. It controls smaller slices of both markets than South Korea's Samsung and SK Hynix, but Micron manufactures slightly denser DRAM chips with its 1-beta process. That technological edge makes it a top choice for performance-oriented cloud and AI companies. Micron is a cyclical company that follows the memory market's boom and bust cycles. Its last bust occurred in 2023, when the PC market lapped its pandemic-driven acceleration, the 5G smartphone upgrade cycle cooled, and more data centers prioritized their purchases of Nvidia's AI-oriented graphics processing units (GPUs) over new memory chips. But from fiscal 2024 (which ended last August) to fiscal 2027, analysts expect Micron's revenue and EPS to grow at a CAGR of 23% and 148%, respectively. The company's growth is accelerating again as the PC and smartphone markets stabilize and more data center customers install solid-state drives (SSDs) and high-bandwidth memory (HBM) chips to support the latest cloud and AI applications. That's an impressive growth trajectory for a stock that trades at just 13 times next year's earnings. Micron is likely trading at that lower valuation because it's a cyclical stock. However, it still has plenty of upside potential in this boom cycle as the cloud and AI markets generate fresh tailwinds for its business. Should you invest $1,000 in SoundHound AI right now? Before you buy stock in SoundHound AI, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and SoundHound AI wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $704,676!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $950,198!* Now, it's worth noting Stock Advisor 's total average return is1,048% — a market-crushing outperformance compared to175%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 23, 2025
Globe and Mail
2 days ago
- Business
- Globe and Mail
5 High-ROE Stocks to Buy as Markets Bask in Middle East Truce
Shrugging off Middle East tensions in the wake of the Israel-Iran truce, the broader equity markets witnessed a steady uptrend for the past three days, inching closer to record-high territories. Allaying fears of an economic slowdown triggered by the sudden geopolitical crisis, the markets were buoyed by plummeting oil prices and a 90-day pause in tariffs till July 8. With a seemingly fruitful discussion between the top U.S.-China diplomats to iron out the differences related to trade tariffs and a likely meeting between the U.S. officials and Iran taking place next week for a long-term peace agreement, markets appear to be on cruise control. Investors now await further clarity on the interest rate cuts with inflation data slated for release later today. As investors employ a wait-and-see approach in a classic example of 'backing and filling' in the market, they can benefit from 'cash cow' stocks that garner higher returns. However, identifying cash-rich stocks alone does not make for a solid investment proposition unless it is backed by attractive efficiency ratios, such as return on equity (ROE). A high ROE ensures that the company is reinvesting cash at a high rate of return. VICI Properties Inc. VICI, TE Connectivity plc TEL, Arista Networks Inc. ANET, Banco Bilbao Vizcaya Argentaria, S.A. BBVA and AppLovin Corporation APP are some of the stocks with high ROE to profit from. ROE: A Key Metric ROE = Net Income/Shareholders' Equity ROE helps investors distinguish profit-generating companies from profit burners and is useful in determining the financial health of a company. In other words, this financial metric enables investors to identify companies that diligently deploy cash for higher returns. Moreover, ROE is often used to compare the profitability of a company with other firms in the industry — the higher, the better. It measures how well a company is multiplying its profits without investing new equity capital and portrays management's efficiency in rewarding shareholders with attractive risk-adjusted returns. Screening Parameters In order to shortlist stocks that are cash-rich with high ROE, we have added Cash Flow greater than $1 billion and ROE greater than X-Industry as our primary screening parameters. In addition, we have taken a few other criteria into consideration to arrive at a winning strategy. Price/Cash Flow lesser than X-Industry: This metric measures how much investors pay for $1 of free cash flow. A lower ratio indicates that investors need to pay less for a better cash flow-generating stock. Return on Assets (ROA) greater than X-Industry: This metric determines how much profit a company earns for every dollar of asset, which includes cash, accounts receivable, property, equipment, inventory and furniture. The higher the ROA, the better it is for the company. 5-Year EPS Historical Growth greater than X-Industry: This criterion indicates that continued earnings momentum has translated into solid cash strength. Zacks Rank less than or equal to 2: Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks are known to outperform irrespective of the market environment. Here are five of the 11 stocks that qualified the screening: VICI Properties: New York-based VICI Properties is an experiential real estate investment trust (REIT) that owns and acquires gaming, hospitality and entertainment destinations. The geographically diverse portfolio comprises approximately 127 million square feet of space, encompassing around 60,300 hotel rooms and more than 500 restaurants, bars, nightclubs and sportsbooks. The company has a long-term earnings growth expectation of 4.6% and delivered a trailing four-quarter earnings surprise of 0.9%, on average. VICI Properties carries a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here. TE Connectivity: Based in Galway, Ireland, TE Connectivity is a global technology company that designs and manufactures connectivity and sensor solutions for a wide range of industries, including automotive, aerospace, defense, energy and medical. With operations in more than 130 countries, TE Connectivity focuses on emerging technologies such as 5G, electric vehicles, industrial automation and smart cities to position itself at the forefront of connectivity advancements. TE Connectivity carries a Zacks Rank #2. The company has a long-term earnings growth expectation of 9.3% and delivered a trailing four-quarter earnings surprise of 3.3%, on average. It has a VGM Score of B. Arista: Santa Clara, CA-based Arista is engaged in providing cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for next-generation data center networks. Arista uses multiple silicon architectures across its products. It has a long-term earnings growth expectation of 14.8% and delivered a trailing four-quarter earnings surprise of 11.8%, on average. Arista carries a Zacks Rank #2. Banco Bilbao: Headquartered in Bilbao, Spain, Banco Bilbao provides retail banking, wholesale banking and asset management services primarily in Spain, Mexico, Turkey, the Rest of Europe, South America, the United States and Asia. The company has a long-term earnings growth expectation of 5.5% and delivered a trailing four-quarter earnings surprise of 6.3%, on average. Banco Bilbao carries a Zacks Rank #2. AppLovin: Headquartered in Palo Alto, CA, AppLovin offers a software-based platform for advertisers to enhance the marketing and monetization of their content in the United States and internationally. The company provides end-to-end software and AI solutions for businesses to reach, monetize and grow their global audiences. AppLovin has a long-term earnings growth expectation of 20% and delivered a trailing four-quarter earnings surprise of 22.9%, on average. It has a VGM Score of B. AppLovin sports a Zacks Rank #1. You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge. The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out. Click here to sign up for a free trial to the Research Wizard today. Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. Disclosure: Performance information for Zacks' portfolios and strategies are available at: Zacks' Research Chief Picks Stock Most Likely to "At Least Double" Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren't winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%. See Our Top Stock to Double (Plus 4 Runners Up) >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report TE Connectivity Ltd. (TEL): Free Stock Analysis Report Banco Bilbao Viscaya Argentaria S.A. (BBVA): Free Stock Analysis Report AppLovin Corporation (APP): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis Report VICI Properties Inc. (VICI): Free Stock Analysis Report
Yahoo
2 days ago
- Business
- Yahoo
Will ANET's Deeper Focus on Cloud-Native Software Pay Off?
Arista Networks, Inc. ANET has made several additions to its multi-cloud and cloud-native software product family with CloudEOS Edge. It has introduced new cognitive Wi-Fi software that delivers intelligent application identification, automated troubleshooting and location services. This supports video conferencing applications like Google Hangouts, Microsoft Teams and Zoom. The acquisition of Awake Security, a Network Detection and Response platform provider that combines AI with human expertise to autonomously hunt and respond to insider and external threats, has expanded its cognitive campus portfolio with new platforms. These include the 750 Series modular chassis and the 720 Series 96 port fixed switch. Arista has also announced unified edge innovations across wired and wireless networks for its Cognitive Campus Edge portfolio for Enterprise Workspaces and an enterprise-grade Software-as-a-Service offering for the flagship CloudVision should benefit from its software-driven, data-centric approach that helps customers build their cloud architecture and enhance the cloud experience they offer their clients. The company holds a leadership position in 100-gigabit Ethernet switching for the high-speed datacenter segment. It is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations. Cisco Systems, Inc. CSCO is the largest player in the networking space. The company has a strong presence in the router and switch market. It has retained a leadership position in WLAN and Ethernet switching and is rapidly expanding its presence in the network security domain. Cisco provides Next-Generation Network Routers that transport data, voice and video information from one IP network to another. It is expanding its Agentic AI footprint with the introduction of Webex AI Agent, Cisco AI Assistant for Webex Contact Center, Workflow Automation in Cisco AI Assistant for Webex, AI Capabilities in Webex Control Hub and Webex Calling Customer Assist. Its strategy of integrating AI across security and collaboration platforms and developing agentic capabilities across the portfolio is a key catalyst for improving the customer Networks Inc. JNPR is taking significant steps to enhance the adoption of its AI-Native Networking Platform through the introduction of its Blueprint for AI-Native Acceleration. This comprehensive framework is designed to simplify and accelerate the deployment and utilization of AI-driven networking solutions, benefiting enterprises across various sectors. By leveraging Juniper's AI-Native Networking Platform, organizations can expect up to an 85% reduction in operational expenses and a 90% decrease in network trouble tickets. The platform's industry-leading AIOps technology is key to delivering these results, providing reliable, measurable and secure connections across all devices and applications. The Blueprint for AI-Native Acceleration further enhances these capabilities, enabling customers to achieve up to nine times faster deployments. Arista has surged 10.7% over the past year compared with the industry's growth of 34.3% Image Source: Zacks Investment Research From a valuation standpoint, Arista trades at a forward price-to-sales ratio of 13.47, above the industry. Image Source: Zacks Investment Research The Zacks Consensus Estimate for Arista's earnings for 2025 has increased over the past 60 days. Image Source: Zacks Investment Research Arista currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report Juniper Networks, Inc. (JNPR) : Free Stock Analysis Report Arista Networks, Inc. (ANET) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
2 days ago
- Business
- Yahoo
Nvidia Could Send This AI Networking Stock 6 Feet Underground
The AI networking space is heating up in 2025, and not in a way that favors everyone. Arista Networks Inc (ANET), long a heavyweight in high-performance cloud networking, suddenly finds itself in the crosshairs of a market shift it didn't see coming. Nvidia (NVDA), the leader in AI chips, is now setting its sights on the Ethernet turf. Equipped with upcoming Quantum-X switches boasting 1.6T speeds and a timeline that beats rivals by a full year, Nvidia is not just entering the market, but could be redefining the playing field. 1 Dividend Stock to Buy Yielding Over 7% Ditch Big Tech and Buy These 3 Popular Stocks in 2025 Instead Robinhood Just Hit a New Record High. Is It Too Late to Buy HOOD Stock? Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! BNP Paribas took note and hit Arista with a downgrade earlier in June. For Arista, survival now hinges on reinvention, fast execution, and a serious rethink of its AI roadmap. Santa Clara-based Arista Networks (ANET) is a leading player in cloud networking, specializing in high-performance Ethernet switches for large-scale data centers and enterprise environments. The company has built a reputation for delivering software-driven networking solutions powered by its proprietary Extensible Operating System (EOS), which offers scalability, programmability, and reliability. Arista commands a market cap of $119.3 billion, underscoring its significance in the tech and networking industry. ANET stock has dipped by 12.9% in 2025 due to a mix of rising competitive pressure, shifting demand, and macroeconomic uncertainty. Investors are increasingly wary of Nvidia's aggressive entry into AI-optimized Ethernet switches, which threatens Arista's core market share. Yet, over the past 52 weeks, ANET rose 15.2%, surging by over 10.8% over the past three months alone. ANET stock is not cheap, priced at 39.9 times forward adjusted earnings and 16.5 times sales, trading well above the sector medians and even its historical averages. That premium once made sense, thanks to Arista's Ethernet dominance in AI. But with Nvidia bulldozing into the same space, that crown feels shaky. Premiums only last with a wide moat, and right now, Nvidia is already halfway across Arista's shrinking trench. Arista Networks reported a stronger-than-expected first quarter of 2025 on May 6, crossing $2 billion in revenue for the first time, up 27.6% year over year. GAAP profits hit $813.8 million or $0.64 a share, while non-GAAP earnings reached $826.2 million or $0.65 per share, easily topping last year's $0.50. What's fueling the charge is solid demand from cloud giants, AI-driven data centers, and campus enterprises - all attracted by Arista's cutting-edge portfolio of advanced networking solutions. New innovations, like Cluster Load Balancing, enhanced observability tools tailored for AI, and an upgraded EOS platform, helped seal deals and expand customer relationships. Margins held firm, with non-GAAP gross margin coming in at 64.1%, just a hair shy of Q4 levels. Cash from operations climbed to $641.7 million, up from $513.8 million a year ago, while Arista's cash and cash equivalents amounted to $1.8 billion. A $787 million stock buyback, plus a fresh $1.5 billion authorization, added extra shine. Looking ahead, management guided Q2 revenue to $2.1 billion with expected non-GAAP gross margin and operating margin around 63% and 46%, respectively. Management remains bullish on AI, cloud, and enterprise tailwinds, though looming tariff risks could weigh in the back half of the year. Still, Arista reaffirmed its full-year gross margin range of 60% to 62%. Meanwhile, analysts predict EPS to be around $2.30 for fiscal 2025, up 11.7% year-over-year, before surging by another 15.2% annually to $2.65 in fiscal 2026. BNP Paribas' analyst, Karl Ackerman, downgraded ANET stock from 'Outperform' to 'Neutral' due to rising competitive threats, particularly from Nvidia. The analyst noted that the AI networking landscape is rapidly transitioning from InfiniBand to Ethernet, with Nvidia and other emerging players poised to lead this market shift. He also noted that Nvidia's anticipated launch of Quantum-X switches and rack-scale GPU systems, as early as the second half of 2025, could significantly compress Arista's near-term growth prospects. As a result of these pressures, Ackerman revised his projection for Arista's AI-related sales in 2027, lowering it from $3.4 billion to $2.5 billion. Arista stock has a consensus 'Moderate Buy' rating overall, as analysts remain cautiously optimistic. Out of 22 analysts covering the stock, 13 recommend a 'Strong Buy,' two give a 'Moderate Buy,' and seven analysts stay cautious with a 'Hold' rating. The average analyst price target for ANET is $110.95, indicating potential upside of 15%, while the Street-high target price of $130 suggests that the stock could rally as much as 35%. On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Sign in to access your portfolio
Globe and Mail
2 days ago
- Business
- Globe and Mail
Will ANET's Deeper Focus on Cloud-Native Software Pay Off?
Arista Networks, Inc. ANET has made several additions to its multi-cloud and cloud-native software product family with CloudEOS Edge. It has introduced new cognitive Wi-Fi software that delivers intelligent application identification, automated troubleshooting and location services. This supports video conferencing applications like Google Hangouts, Microsoft Teams and Zoom. The acquisition of Awake Security, a Network Detection and Response platform provider that combines AI with human expertise to autonomously hunt and respond to insider and external threats, has expanded its cognitive campus portfolio with new platforms. These include the 750 Series modular chassis and the 720 Series 96 port fixed switch. Arista has also announced unified edge innovations across wired and wireless networks for its Cognitive Campus Edge portfolio for Enterprise Workspaces and an enterprise-grade Software-as-a-Service offering for the flagship CloudVision platform. Arista should benefit from its software-driven, data-centric approach that helps customers build their cloud architecture and enhance the cloud experience they offer their clients. The company holds a leadership position in 100-gigabit Ethernet switching for the high-speed datacenter segment. It is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations. Other Tech Firms Focusing on Cloud Networking Cisco Systems, Inc. CSCO is the largest player in the networking space. The company has a strong presence in the router and switch market. It has retained a leadership position in WLAN and Ethernet switching and is rapidly expanding its presence in the network security domain. Cisco provides Next-Generation Network Routers that transport data, voice and video information from one IP network to another. It is expanding its Agentic AI footprint with the introduction of Webex AI Agent, Cisco AI Assistant for Webex Contact Center, Workflow Automation in Cisco AI Assistant for Webex, AI Capabilities in Webex Control Hub and Webex Calling Customer Assist. Its strategy of integrating AI across security and collaboration platforms and developing agentic capabilities across the portfolio is a key catalyst for improving the customer experience. Juniper Networks Inc. JNPR is taking significant steps to enhance the adoption of its AI-Native Networking Platform through the introduction of its Blueprint for AI-Native Acceleration. This comprehensive framework is designed to simplify and accelerate the deployment and utilization of AI-driven networking solutions, benefiting enterprises across various sectors. By leveraging Juniper's AI-Native Networking Platform, organizations can expect up to an 85% reduction in operational expenses and a 90% decrease in network trouble tickets. The platform's industry-leading AIOps technology is key to delivering these results, providing reliable, measurable and secure connections across all devices and applications. The Blueprint for AI-Native Acceleration further enhances these capabilities, enabling customers to achieve up to nine times faster deployments. ANET's Price Performance, Valuation and Estimates Arista has surged 10.7% over the past year compared with the industry 's growth of 34.3% Image Source: Zacks Investment Research From a valuation standpoint, Arista trades at a forward price-to-sales ratio of 13.47, above the industry. The Zacks Consensus Estimate for Arista's earnings for 2025 has increased over the past 60 days. Arista currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Research Chief Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months. Free: See Our Top Stock And 4 Runners Up Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cisco Systems, Inc. (CSCO): Free Stock Analysis Report Juniper Networks, Inc. (JNPR): Free Stock Analysis Report Arista Networks, Inc. (ANET): Free Stock Analysis Report
