Core Insights - Jabil, Inc. (JBL) reported strong fourth-quarter fiscal 2025 results, with both net income and revenues exceeding expectations, driven by growth in data center infrastructure, capital equipment, healthcare, and retail automation markets [1] Financial Performance - Net income on a GAAP basis for the quarter was $218 million or $1.99 per share, up from $138 million or $1.18 in the prior-year quarter, primarily due to top-line growth [2] - Non-GAAP net income for the quarter was $360 million or $3.29 per share, compared to $270 million or $2.30 in the prior-year quarter, surpassing the Zacks Consensus Estimate of $2.95 [2] - For fiscal 2025, GAAP net income was $657 million or $5.92 per share, down from $1.38 billion or $11.17 per share a year ago; non-GAAP net income was $1.08 billion or $9.75 per share, compared to $1.05 billion or $8.49 per share in fiscal 2024 [3] Revenue Growth - Net sales for the quarter increased to $8.3 billion from $6.96 billion in the year-ago quarter, beating the consensus estimate of $7.66 billion, driven by strong demand in the Intelligent Infrastructure segment [4] - The Regulated Industries segment contributed 38% to revenues, with a 3% year-over-year growth attributed to the healthcare and packaging end market [4] - Intelligent Infrastructure accounted for 45% of total revenues, with a significant 62% year-over-year increase, supported by demand in capital equipment and AI-related cloud and data center infrastructure [5] - The Connected Living & Digital Commerce segment contributed 17% of total revenues, experiencing a 14% year-over-year decline due to soft demand for consumer-driven products, although strong growth in digital commerce partially mitigated this trend [5] Profitability Metrics - Gross profit for the quarter was $783 million, up from $663 million in the year-ago quarter; non-GAAP operating income was $337 million, an increase from $318 million in the prior year [6] - Non-GAAP operating margin improved to 6.3%, up from 5.8% in the year-ago quarter [6] Cash Flow and Liquidity - In fiscal 2025, Jabil generated $1.64 billion of net cash from operating activities, slightly down from $1.71 billion a year ago; as of August 31, 2025, the company had $1.93 billion in cash and cash equivalents, with $2.38 billion in notes payable and long-term debt [7] - Free cash flow stood at $1.31 billion, compared to $1.05 billion in 2024 [7] Future Guidance - For the first quarter of fiscal 2026, revenues are expected to be in the range of $7.7 billion to $8.3 billion, with non-GAAP operating income projected between $400 million and $460 million; non-GAAP earnings per share are estimated to be between $2.47 and $2.87 [8][9] - Management anticipates that AI data center infrastructure, healthcare, and advanced warehouse and retail automation will be the major growth drivers in 2026, projecting fiscal 2026 revenues at $31.3 billion and non-GAAP earnings per share at $11.00 [9]

Market Overview - Stocks experienced further downside during trading, with major averages showing a lack of direction early but sliding into negative territory as the day progressed [1] - The Dow fell by 171.50 points (0.4%) to 46,121.28, the Nasdaq decreased by 75.62 points (0.3%) to 22,497.86, and the S&P 500 dipped by 18.95 points (0.3%) to 6,637.97, reflecting uncertainty in the artificial intelligence sector [2] Company Performance - Nvidia (NVDA) saw a decline of 0.9% after a 2.8% drop on Tuesday, while Oracle (ORCL) fell by 1.7%, indicating concerns about valuations in the AI sector [3] - The NYSE Arca Computer Hardware Index dropped by 2.3% after reaching a record closing high, highlighting significant weakness in computer hardware stocks [5] Sector Analysis - Gold stocks faced significant weakness, with the NYSE Arca Gold Bugs Index slumping by 2.2% due to a pullback in gold prices [6] - Airline stocks also experienced pressure, leading to a 1.6% decline in the NYSE Arca Airline Index, while energy stocks performed well amid rising crude oil prices [6] Economic Indicators - Traders expressed uncertainty regarding interest rates, with Federal Reserve Chair Jerome Powell indicating that near-term inflation risks are tilted to the upside, creating a challenging economic environment [4] - In the bond market, the yield on the benchmark ten-year note rose by 2.7 basis points to 4.147%, marking a nearly three-week closing high [8]

Group 1 - Arista Networks Inc. is recognized as one of the best technology stocks for long-term investment, with a Buy rating reiterated by analyst Sebastien Naji from William Blair [1] - The company is focusing on increasing its market share in the AI sector, targeting rapidly expanding cloud giants and neocloud customers, which present strong opportunities [2] - Arista's premium stock valuation is supported by solid investments in data centers and a growing enterprise customer base, which are expected to sustain stock performance [2] Group 2 - The company is enhancing enterprise sales through direct selling and channel investments, alongside the acquisition of VeloCloud, which has expanded its reach with managed service providers [3] - Despite competition from firms like HPE and Juniper, Arista's broad campus networking and unified operating system offerings remain attractive [3] - Arista provides advanced networking solutions for AI, data centers, campuses, and routing environments, utilizing its Extensible Operating System for high-speed, automated, and secure network management [4]

Core Insights - Arista Networks Inc. (ANET) is experiencing significant growth in the cloud networking sector, with Q2 revenues increasing to $2.2 billion from $1.69 billion year-over-year, surpassing the consensus estimate of $2.11 billion [1][8] - The company is innovating to meet the rising demands of AI/ML-driven network architectures, enhancing customer experience and engagement [1] - Arista's comprehensive portfolio is well-positioned to benefit from the migration to higher bandwidths (400G and 800G) driven by AI workloads [3] Financial Performance - Arista's Q2 revenues rose to $2.2 billion, exceeding the consensus estimate of $2.11 billion [8] - The company has raised its 2025 revenue guidance by $550 million to $8.75 billion, reflecting strong momentum in cloud and AI [4][8] - The Zacks Consensus Estimate for Arista's earnings for 2025 has increased over the past 60 days [11] Competitive Landscape - Arista faces competition from Hewlett Packard Enterprise (HPE) and Cisco Systems Inc. (CSCO) in the cloud networking space [5][6] - HPE is benefiting from strong demand for its GreenLake platform, which enhances visibility into resource utilization [5] - Cisco is experiencing solid order growth in data center switching, supported by its partnership with NVIDIA for secure AI-native data centers [6] Market Position - Arista's shares have surged 50.9% over the past year, outperforming the industry's growth of 38.3% [7] - The company trades at a forward price-to-sales ratio of 18.35, which is above the industry average [9]

Market Overview - The AI investment trade is currently the most dominant sector in the market, with strong momentum and consistent headlines [2][3] - Confidence in the AI sector is driven by sustained capital expenditures and demand exceeding supply, creating a durable investment thesis [3] - Despite the strength of the AI sector, other market areas also present potential gains, albeit with less robustness [3] S&P 500 Outlook - Goldman Sachs raised its 12-month price target for the S&P 500 to 7200, which is viewed as reasonable [4] - Macroeconomic risks such as tariffs and labor market weaknesses are acknowledged as normal uncertainties in the market [4] - AI is seen as the leading theme for market gains, with expectations of moderate S&P gains over the next year [4] Investment Methodology - The list of the 14 best technology stocks was curated using the Finviz Stock Screener, Seeking Alpha, and Insider Monkey's Q2 2025 database [7] - Stocks were selected based on a 5-year revenue growth rate of more than 10% and ranked by the number of hedge fund holders [7][8] Company Highlights - **ASML Holding N.V. (NASDAQ:ASML)**: - 5-year Revenue Growth Rate: 20.25% - Number of Hedge Fund Holders: 78 - Price target raised from EUR724 to EUR941 by Bank of America Securities, maintaining a Buy rating [9][10] - Expected revenue for 2027 increased to EUR39.2 billion from EUR35.8 billion due to higher sales of lithography machines [11] - **Arista Networks Inc (NYSE:ANET)**: - 5-year Revenue Growth Rate: 28.49% - Number of Hedge Fund Holders: 81 - Buy rating reiterated by William Blair analyst, focusing on market share growth in the AI sector [13][14] - Investments in data centers and enterprise customer base are expected to sustain stock performance [14][15] - The acquisition of VeloCloud has broadened the company's reach, particularly with managed service providers [15][16]

Core Insights - Arista Networks is emerging as a significant player in the AI-driven data center ecosystem, with its stock rising 32.58% year-to-date, outperforming many larger AI companies [1] - The company has received a "Strong Buy" rating from Wall Street, indicating strong investor interest and confidence in its growth potential [1] Company Overview - Arista Networks specializes in cloud networking, developing high-speed switches, routers, and software tailored for modern data centers, particularly for cloud giants and AI workloads [2] - Key products include ultra-fast Ethernet switches, GPU clusters, and management software like CloudVision and EOS [2] Financial Performance - In Q2, Arista's total revenue increased by 30.4% year-over-year to $2.2 billion, surpassing its own target by $100 million [3] - Software and service renewals contributed 16.3% to total sales, indicating a growing recurring revenue stream [3] - Gross margin improved to 65.6%, and diluted EPS rose approximately 37.7% year-on-year to $0.73 [4] - International markets represented 21.8% of revenue, while the Americas accounted for 78.2% [4] - The company ended the quarter with $8.8 billion in cash and investments and repurchased $196 million of its stock, with $1.4 billion remaining under its buyback authorization [4] Growth Drivers - AI networking is the primary factor driving Arista's growth, as data centers evolve into AI centers [5] - The EtherLink portfolio and EOS operating system are gaining traction among customers investing heavily in AI accelerators from Nvidia and AMD [5] - Arista is projected to generate $750 million in back-end AI networking revenue by 2025, a significant increase from having no presence in this area three years ago [5]

Group 1 - Cisco Systems, Inc. (NASDAQ:CSCO) is recognized as one of the 12 best dividend-paying stocks to buy now, highlighting its strong position in the market [1] - The company develops and markets a range of products including networking gear, security solutions, collaboration platforms, and observability tools, focusing on connectivity, network protection, and actionable data insights [2] - Cisco has enhanced its portfolio through significant acquisitions such as ThousandEyes, Acacia Communications, and Splunk, positioning itself to benefit from increasing infrastructure investments driven by the demand for AI applications [3] Group 2 - Cisco has a strong track record of rewarding shareholders, having increased its dividends for 18 consecutive years, with a current quarterly dividend of $0.41 per share and a dividend yield of 2.41% as of September 19 [4]

Core Insights - Arista Networks Inc (NYSE:ANET) is being closely monitored by analysts as a significant player in the AI sector, with Needham raising its price target to $160.00 from $155.00 while maintaining a Buy rating following the Analyst Day presentation [1] - The management highlighted new Cloud/AI capabilities aimed at competing with both White Box and Nvidia, along with investments in Enterprise Campus to challenge Cisco [1] - Needham expressed optimism regarding recent senior management hires, which are expected to enhance Arista's market position [2] - Arista is confirmed as a major new supplier to AI company Anthropic in 2025, with substantial revenue contributions anticipated in 2026 [2] - Arista Networks develops, markets, and sells cloud networking solutions [2]

Group 1 - Cisco Systems, Inc. is a technology conglomerate specializing in networking, cloud management, collaboration, and security solutions [1] - CSCO stock has increased by more than 30% over the past 12 months, driven by strong performance in both top and bottom lines and significant demand for its products [1]

Core Insights - Madison Investments released its second-quarter 2025 investor letter for the Madison Mid Cap Fund, which reported a return of 5.2%, underperforming the Russell Midcap Index's 8.5% increase [1] - The fund highlighted Arista Networks, Inc. as a significant stock, noting a one-month return of 10.06% and a 52-week gain of 52.59%, with a market capitalization of $184.332 billion as of September 18, 2025 [2][3] Fund Performance - The Madison Mid Cap Fund (Class Y) returned 5.2% in Q2 2025, compared to an 8.5% increase in the Russell Midcap Index [1] - The top five contributors to the fund's performance included Arista Networks, Amphenol, Microchip Technology, MKS, and Liberty Formula One [3] Company Focus: Arista Networks, Inc. - Arista Networks is recognized for its data-driven, client-to-cloud networking solutions, benefiting from market enthusiasm for AI-related technologies [3] - The stock of Arista Networks closed at $146.66 per share on September 18, 2025, reflecting strong growth and profitability in its core business [2][3] Hedge Fund Interest - Arista Networks was held by 81 hedge fund portfolios at the end of Q2 2025, an increase from 75 in the previous quarter, indicating growing interest among institutional investors [4] - Despite its potential, some analysts suggest that other AI stocks may offer greater upside potential with less downside risk [4]