MW These 'underappreciated' AI stocks could finally get their chance to shine

By Britney Nguyen

Other networking-oriented stocks have more than tripled in the past year, but not Cisco and Arista

UBS named Cisco as a "top pick" among U.S. enterprise hardware and networking stocks.

Many artificial-intelligence stocks have seen big run-ups in the last year. That's why analysts at UBS recommend looking at a few "out of consensus" plays that have room to rally as the AI build-out continues.

UBS analyst David Vogt named Arista Networks (ANET) and Cisco $(CSCO)$ as his top picks among U.S. enterprise hardware and networking stocks for this year, writing that investors have "underappreciated" the revenue-growth opportunities for both of those companies.

"The market is not accurately reflecting" the demand for AI infrastructure in 2026 and 2027 estimates for Arista, Vogt said in a Tuesday note. Arista supplies Ethernet switches and routing platforms for data centers, and Vogt said Wall Street is being too conservative with revenue expectations in light of the company's momentum on purchase commitments, deferred product revenue, inventory and other financial metrics.

Hyperscalers including Meta Platforms (META) and Oracle $(ORCL)$ have kicked off data-center deployments, which "should drive stronger revenue recognition than expected" and in turn spur better guidance from Arista, Vogt said.

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Meanwhile, Cisco has been deemed an "AI loser" by the market, Vogt said, as the company is only growing revenue at a mid-single-digit clip. But Vogt pointed to more than $4 billion worth of AI-related orders for fiscal year 2026 - double the $2 billion in orders in fiscal 2025.

Like with Arista, Vogt said AI infrastructure deployments, as well as "a strong refresh cycle" for Cisco's campus networking solutions, would drive better-than-expected earnings and improved guidance.

Arista's stock has risen 12% in the past 12 months, lagging behind the S&P 500's 18% gain over that span. Cisco's stock has beaten the market, logging a 26% increase over that time period, but it has dramatically underperformed other plays on the networking theme. Shares of Lumentum Holdings $(LITE)$, Celestica $(CLS)$ and Ciena $(CIEN)$ have each at least tripled over the past year.

That means the potential for those stocks is already "widely understood" by investors this year, Vogt said.

For Arista and Cisco, however, "investor sentiment remains mixed at best," creating opportunity if the companies can deliver in accordance with his predictions.

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Data-center capital expenditures are expected to increase by more than 30% this year after rising at a mid-40% clip last year, he said. And while growth could moderate further in 2027, demand still looks strong for accelerated-computing components and back-end Ethernet switches, Vogt noted.

-Britney Nguyen

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January 07, 2026 12:55 ET (17:55 GMT)

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