This AI Darling Is Especially Strong in the Summertime By Lucas Downey, Editor, TradeSmith's Alpha Signals There’s an old saying on Wall Street: The trend is your friend. As I’m sure you’ve learned, stocks in motion tend to stay in motion. New trends can emerge from many different situations. Sometimes price momentum is ignited from an exciting new product like Apple’s (AAPL) iPhone. Or in today’s environment, major indices are bouncing ferociously back from extreme oversold levels. Once you’ve identified a trend change, study it – and ride the profits. Today, we’ll be examining the latest blistering rally in stocks. Common sense may have you wanting to hit the sidelines. Just don’t make that mistake. History proves that steep recoveries lay the foundation for new bull markets. Today’s signal study will equip you for what’s next… new highs in 2025. And I’ll single out one AI darling to play for a summertime rip. The S&P 500 Just Recorded One of the Rarest Rallies Spanning Decades It’s a good idea to do a quick recap of the last month. Thirty days ago, stocks were on their knees. April 2025 will go down as one of the craziest meltdowns ever. Not only did equities briefly fall into a bear market, volatility reached the highest levels since COVID-19. And while the world was on fire, quietly new trends began to emerge out of the ashes. Uncertainty began to lessen. It was easy to miss the constructive action given all of the “tape bomb” headlines. But when the CBOE Volatility Index (VIX) began to spiral lower, igniting a rare bear killer signal, that’s when risks shifted to the upside. And boy, it didn’t disappoint. Incredibly, from the market low on April 8 to May 2, the S&P 500 rallied a mind-numbing 14.1% over 17 sessions. Check it out:  From the eyeball test, this may not appear as anything special. But it’s been five years since the last time 14% rally over 17 days – when a new trend emerged out of the COVID crash. You can see it below:  | Recommended Link | | | | According to this billion-dollar fund manager, AI is way more advanced than most people realize… Thanks to a radical new development, folks who aren’t positioned correctly are about to get blindsided. Click here for his urgent AI warning. |  | | All the way back to 1984, I found 25 discrete instances where the S&P 500 climbed 14% or more over 17 trading days. Here are two facts my study turned up: - First, these monster breadth moves tend to ignite following nasty sell-offs like 2002, 2008, and 2009
- Second, stocks were NEVER lower a year later
Below details the stunning forward performance after the S&P 500 jumps 14% or more over 17 sessions: - Three months later, stocks rip 8.9%
- Six months later, stocks fly 18.7%
- 12 months later, the average gain is 36.3%
- 24 months later, stocks soar 48%
 This is not the time to play defense. It’s the opposite. This study suggests a rising tide is coming. With this powerful backdrop, you want to lean into one of the biggest themes globally: the rise of AI. One AI Summertime Bet to Make Now When the world is upside down, stories get spun out of thin air. During the latest meltdown, there were stories of reduced AI spend and investments from the hyperscalers. The bears wanted you to believe that this groundbreaking technology was slowing down. But be careful with these narratives. We learned from tech giants like Microsoft (MSFT) that Azure revenues are accelerating with clear AI contribution. (Disclosure: I hold a long position in MSFT.) And Meta Platforms (META) raised capex guidance from $62.5 billion at the mid-point to $68 billion at the mid-point for its fiscal-year 2025. (Disclosure: I also hold a long position in META.) Spending on AI is not slowing at all… It’s rising! Business as we know it today will look vastly different a few years from now. Content providers are using AI… Advertisers are using AI… Retailers, restaurants, and just about every other industry are, too. The rate of technological change is accelerating. This is where focusing on a pick-and-shovel play makes a lot of sense. Arista Networks (ANET) is a networking company for large-scale environments like data centers and cloud computing. Reliably fast and reliable networking is paramount for scaling AI needs. The company recently beat Q1 earnings with EPS of $0.65 versus $0.59 estimates. More importantly, it gave strong Q2 revenue guidance of $2.1 billion versus $2.03 billion estimates. As for the stock price, the five-year chart tells the story: a 533% return. It exemplifies why I always say to find a hot trend and lean in:  But what makes ANET interesting today is the seasonal picture. Using TradeSmith’s Seasonality tool, I was able to find how Arista is beginning a new bullish seasonal pattern from May 7 through July 31. That green area below has returned 14.23% in the last 11 years:  This has been a very strong repeating pattern in the summertime for Arista Networks. Incredibly the stock has gained inside this window every year:  That’s a lot of green if you ask me! Let’s bring this all home… Stocks are up violently from the lows a month ago. It’s one of the biggest rips in the last 40 years. And stocks have never been lower a year later! As a trader, take advantage of this new bull trend focused on companies that are part of the biggest theme out there… the rise of AI. And Arista Networks fits the bill. It’s a high-quality asset that’s primed for gains in the coming months. If you’re looking for more ways to play the 2025 bull run, check out my Alpha Signals newsletter – one of the exclusive perks for our Platinum members. Just yesterday, we took profits on four winners: - Apollo Global Management (APO): +3.82% in two months
- Broadcom (AVGO): +7.20% in four months
- Celestica (CLS): +7.86% in four months
- Restoration Hardware (RH): +0.54% in two months
Considering the market crash stocks had to contend with from April, that’s something for subscribers who bought into that massive volatility to be proud of! My Alpha Signals are exclusively for TradeSmith Platinum members at this point... along with all the latest acquisitions we made this spring, plus the improvements and upgrades our developers have been making to each of our 24 tools and advisories. Click here to get caught up on all the new perks that Platinum members enjoy and take advantage of a special discount. I believe the offer expires tomorrow, so you’d want to lock that in now. Regards, 
Lucas Downey
Editor, TradeSmith’s Alpha Signals | 
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