The AI Trade Is More Than Just Nvidia and AMD: Why Arista and Astera Are the Hidden Gems in 2025

The AI revolution is no longer confined to the algorithms and silicon of industry giants like Nvidia and AMD. As the demand for scalable, high-performance infrastructure accelerates, a new class of companies is emerging as critical enablers of this transformation. Astera Labs (NASDAQ: ALAB) and Arista Networks (NYSE: ANET) are prime examples of firms leveraging their expertise in connectivity and networking to capture a growing share of the AI-driven infrastructure market. For investors seeking high-conviction opportunities beyond the usual suspects, these two names offer compelling narratives rooted in innovation, strategic partnerships, and robust financial performance.

Astera Labs: The Semiconductor Connectivity Powerhouse

Astera Labs has positioned itself at the intersection of AI infrastructure and semiconductor innovation. Its Q2 2025 results underscore its rapid ascent: revenue surged 150% year-over-year to $191.9 million, with non-GAAP operating margins hitting 39.2%. This performance reflects the company's ability to capitalize on the shift toward rack-scale AI systems, where high-speed, low-latency connectivity is paramount.

Astera's partnerships are equally impressive. Its expanded collaboration with NVIDIA to advance the NVLink Fusion ecosystem is a masterstroke, enabling hyperscalers to deploy networks that rival traditional scale-out architectures. Meanwhile, its UALink Consortium membership and AMD partnership highlight its role in democratizing memory-semantic fabrics—a critical component for next-gen AI workloads. The company's PCIe 6 product portfolio and Scorpio Fabric Switch design wins further solidify its position as a go-to provider for custom ASIC platforms.

For investors, the key takeaway is Astera's ability to scale its Intelligent Connectivity Platform while maintaining profitability. With third-quarter revenue guidance of $203–210 million and non-GAAP EPS projected at $0.38–$0.39, the company is on track to outperform many of its peers. However, its reliance on hyperscaler demand and the fast-moving nature of AI infrastructure pose risks. Diversifying into enterprise-grade solutions could mitigate this, but for now, Astera's momentum is hard to ignore.

Arista Networks: The Networking Backbone of AI

Arista Networks, long a leader in data center and cloud networking, is now pivoting to become a cornerstone of AI-driven infrastructure. Its Q2 2025 revenue of $2.205 billion—a 30.4% year-over-year increase—demonstrates the strength of its ecosystem. While its gross margins (65.2% GAAP) lag behind Astera's, Arista's scale and recurring revenue model provide a different kind of stability.

The company's recent acquisition of VeloCloud's SD-WAN portfolio from Broadcom is a strategic win, enhancing its CloudEOS routing stack and enabling seamless global WAN services. This move, combined with its AI-driven campus and branch networking products, positions Arista to capture demand from enterprises modernizing their IT infrastructure. Its expansion in India under the “Make in India” initiative also signals long-term growth potential in a market projected to become a major AI hub.

Arista's recognition in Gartner's Visionaries Quadrant for Enterprise LAN Infrastructure underscores its leadership in execution. With Todd Nightingale's appointment as COO and an upcoming Analyst Day on September 11, 2025, the company is poised to articulate a clear roadmap for AI integration. For investors, Arista's strength lies in its ability to standardize AI platforms for clients, reducing complexity in an otherwise fragmented market. However, its slower adoption of open-source innovations compared to rivals like Juniper Networks could be a hurdle.

Why These Stocks Matter in the AI Era

The AI trade is no longer a zero-sum game. While Nvidia and AMD dominate headlines, companies like Astera and Arista are building the infrastructure that makes AI scalable, interoperable, and cost-effective. Astera's semiconductor-driven solutions and Arista's networking expertise are complementary, addressing both the “how” and “where” of AI deployment.

For investors, the key is to balance exposure between these two. Astera offers higher growth potential but with greater volatility, while Arista provides a more stable, cash-generative model. A diversified portfolio including both could hedge against sector-specific risks while capitalizing on the AI boom.

Conclusion: Hidden Gems in Plain Sight

The AI revolution is being powered by more than just GPUs and accelerators. As hyperscalers and enterprises race to build next-gen systems, the demand for connectivity, networking, and platform solutions is creating a new wave of opportunities. Astera Labs and Arista Networks are not just beneficiaries of this trend—they are architects of it. For investors with a long-term horizon, these companies represent a compelling case for why the AI trade is far more nuanced than it appears.

In a market where the usual suspects dominate headlines, the real alpha may lie in the infrastructure that quietly keeps the AI ecosystem running. Astera and Arista are proof that the future of AI is not just about the tools we use, but the networks that connect them.