After a shaky start to the year, AI stocks came roaring back in April, with the tech-heavy Nasdaq Composite Index ($NASX) jumping over 14% and the S&P 500 Index ($SPX) up 10%. AI optimism has returned in full force, with investors shifting their focus away from geopolitical tensions and toward strong earnings and massive AI-related spending. These two emerging AI players clearly stood out. In April alone, Advanced Micro Devices (AMD) stock climbed 68%, while Arista Networks’ (ANET) shares surged 40%.
With both AMD's and Arista’s earnings coming up on May 5, are these two stocks a buy now?
#1: Advanced Micro Devices: Riding the AI Accelerator Wave
Advanced Micro Devices designs high-performance computing chips, including CPUs, GPUs, and AI accelerators used in data centers, cloud infrastructure, PCs, and gaming systems. Right now, it is rapidly transforming into a full-scale AI infrastructure powerhouse. After what the company called a “defining year” in 2025, AMD is all set to report its Q1 of fiscal 2026 earnings on May 5 after the market closes. The stock’s rally in April implies investors are curious whether it will beat expectations as rival Intel (INTC) appears to be back in the game.
So far this year, AMD has handily outperformed both the Nasdaq and the broader market, gaining 64%.
In fiscal 2025, AMD’s revenue surged 34% year-over-year (YoY) to $34.6 billion, with a 26% increase in earnings per share (EPS). Strong demand for EPYC server CPUs and the ramp-up of its Instinct AI GPUs drove a 39% surge in data center revenue. Its Instinct GPUs are now used by eight of the top 10 AI companies. Furthermore, AMD's strategic, multi-year agreements with OpenAI, Meta (META), Hewlett Packard Enterprise (HPE), Lenovo, and Tata Consultancy Services highlight how deeply it is embedded in the AI value chain.
For the first quarter, AMD predicts a 32% increase in revenue to $9.8 billion, with analysts anticipating a 25% gain in EPS. Looking ahead, AMD’s roadmap remains aggressive, with MI400, MI500, and the Helios platform set to expand its presence across cloud, enterprise, and high-performance computing (HPC). Management forecasts data center revenue to increase by more than 60% per year, its AI business to reach tens of billions of dollars by 2027, and total revenue growth to exceed a 35% CAGR.
That said, after a nearly 70% surge in April, expectations are extremely high. AMD is trading at a premium of 52x forward 2026 earnings, which are expected to increase by 61.1%. Investors might want to watch out for continued AI revenue acceleration, margin expansion, and evidence of sustained hyperscaler demand in the Q1 print.
On Wall Street, AMD stock has earned a consensus “Strong Buy” rating. Of the 45 analysts covering the stock, 31 rate it a “Strong Buy,” two rate it as a “Moderate Buy,” and 12 rate it a “Hold.” The stock has surpassed its average target price of $294.58. But the high price estimate of $380 suggests the stock has an upside potential of about 7% from current levels.
#2: Arista Networks: Powering the AI Data Highway
Arista Networks builds high-performance cloud networking solutions, including Ethernet switches and software platforms that connect data centers, AI clusters, and enterprise networks. Arista has become a critical backbone for AI infrastructure, collaborating with major players such as Nvidia (NVDA), AMD, Anthropic, Arm Holdings (ARM), Broadcom (AVGO), OpenAI, Pure Storage, and Vast Data, which explains its impressive rally last month.
So far this year, ANET stock has gained 34%, outperforming the broader market.
Arista's platforms enable speeds ranging from 10G to 800G Ethernet, with 1.6T systems in the works, and its switching solutions are built to handle the huge data flows required for AI model training and real-time inference. This surging demand for its high-speed networking led to a revenue increase of 28.6% YoY in 2025 to $9 billion, with a 28.4% increase in EPS to $2.98. AI center networking revenue alone came in at $1.5 billion, which the company expects to more than double to $3.25 billion in 2026.
Arista is scaling rapidly. It has now sold over 150 million cumulative ports, expanded internationally with over 40% growth in Asia and Europe, and now serves more than 10,000 customers globally.
For the first quarter, Arista expects revenue of about $2.6 billion, an increase of 30% YoY, with gross margin landing between 62% and 63%. Arista’s position in AI networking remains compelling. Like AMD, expectations remain high after the April rally, with the stock now trading at a premium of 48x forward 2026 earnings, which are expected to increase by 18.9%. In the Q1 print, investors should watch out for signs of whether the company can sustain this rapid AI-driven growth while maintaining its industry-leading margins.
On Wall Street, ANET stock has earned a consensus “Strong Buy” rating. Of the 27 analysts covering the stock, 22 rate it a “Strong Buy,” two rate it as a “Moderate Buy,” and three rate it a “Hold.” Its average target price of $179.78 suggests an upside potential of 4%. But the high price estimate of $200 suggests the stock has an upside potential of 16% from current levels.
On the date of publication, Sushree Mohanty 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. For more information please view the Barchart Disclosure Policy here.
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