We recently compiled a list of the Jim Cramer’s Latest Lightning Round: 8 Stocks in Focus. In this article, we are going to take a look at where Arista Networks, Inc. (NYSE:ANET) stands against the other stocks that Jim Cramer’s focused on.
Jim Cramer, the host of Mad Money, expressed strong views regarding day trading on Friday, urging novice investors to avoid the temptation of risky market practices. His warning followed an article from The Wall Street Journal, titled “More Men Are Addicted to the ‘Crack Cocaine’ of the Stock Market,” which discussed how an increasing number of investors are developing serious gambling addictions through speculative trading. Cramer emphasized:
“Unless you’re a professional, I’m dead set against day trading, particularly the kind that is based on zero-days-to-expire or zero DTE options. These are options that expire the same day.”
He compared these trades to gambling, urging that they be stopped, as they serve no purpose other than to hook people on the addictive nature of the stock market. Cramer, who highlighted that he has moved away from day trading since retiring, stressed the importance of a more cautious and informed approach. He now advocates for “buy and homework,” his version of buy-and-hold investing, which reflects his belief that things can change with a company and require continuous evaluation.
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Cramer called for self-regulation within the industry and said:
“There’s no reason to push people into zero day options other than pure greed. The industry’s encouraging bad behavior, that’s just plain wrong.”
Cramer further pointed out that day trading is not limited to options but extends to other high-risk investments, such as cryptocurrencies, uranium stocks, and emerging technologies like quantum computing, commercial space, and future mobility stocks. While he expressed confusion over who creates these stocks, he noted that their volatility and high trading volumes indicate they are often used as vehicles for speculative trading rather than sound investments.
Cramer questioned whether the markets could eliminate this behavior, but he firmly believes that a collective value judgment can be made. He particularly criticized the brokerage houses that profit from encouraging risky behavior, stating that these firms must be held accountable for promoting an environment that feeds into people’s gambling instincts.
“After all the markets were created for investing, not day trading on the direction of stocks. There’s a big difference between making an informed investment and pure gambling.”
He called for stronger measures to protect individuals from the dangers of day trading, suggesting that, while it may be impossible to completely eliminate high-risk trades, at the very least, these products should come with warning labels. He condemned those who continue to push these high-risk options, asking whether they truly need the money so badly, and saying, “Shame on you.”
Our Methodology
For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the recent episode of Mad Money on December 20. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Arista Networks, Inc. (NYSE:ANET)
Number of Hedge Fund Holders: 70
Cramer called Arista Networks, Inc.’s (NYSE:ANET) CEO “incredible” and said that he is a buyer of the stock.
“Jayshree Ullal, she is some incredible CEO and that business is smoking hot. I would be a buyer of Arista.”
Arista (NYSE:ANET) is a leading provider of networking solutions, specializing in products for data centers, campuses, and routing. The company is particularly recognized for its focus on AI-driven switches and software tailored for automation, monitoring, and security.
In its third-quarter earnings call, Chair and CEO, Jayshree Ullal, revealed that the company’s total addressable market is projected to reach $70 billion by 2028. The company has experienced impressive growth, with a 33.8% increase in 2023. Ullal noted that the company is on track to exceed its initial growth projections for 2024, now forecasting at least 18% growth, driven in part by the acceleration of AI-related projects.
For 2025, Arista (NYSE:ANET) expects revenue to reach approximately $8 billion, with annual growth between 15% and 17%. Within this projected $8 billion revenue, It is particularly optimistic about meeting its targets in campus networking and AI back-end networking, both of which are expected to contribute $750 million each by 2025. The company’s AI center networking revenues are likely to surpass these targets, with a new aim of around $1.5 billion in 2025.
Overall, ANET ranks 3rd on our list of stocks that Jim Cramer’s focused on. While we acknowledge the potential of ANET as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ANET but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.