Best U.S. networking stocks to own into Q3 earnings: DB

Best U.S. networking stocks to consider ahead of Q3 earnings: Deutsche Bank's outlook

Artificial-intelligence infrastructure remains a driving force behind networking stocks heading into third-quarter earnings, according to Deutsche Bank analysts. While they acknowledge the potential impact of optical circuit switching (OCS) on traditional networking architectures, particularly the spine layer, the bank believes the broader networking opportunity remains intact.

Deutsche Bank maintains buy ratings on two prominent U.S. networking stocks: Cisco Systems and Arista Networks. Cisco Systems is seen as offering a more established route to participate in the AI networking buildout. The bank notes that the adoption of packet switching will likely persist as AI inference becomes more complex and unpredictable, even if OCS reduces demand for some traditional spine-layer equipment.

Arista Networks, on the other hand, provides more direct exposure to the AI networking cycle. As compute clusters continue to grow, faster connections become increasingly essential, especially for GPU-based infrastructure where packet routing relies on switches. Deutsche Bank estimates a potential $15 billion to $20 billion scale-across market by 2030, a figure they believe could be conservative, given the ongoing spending plans from hyperscalers.