Should You Buy, Sell, or Hold Astera Lab Stock at 38.80X PS?

Astera Lab ALAB shares are overvalued, as suggested by a Value Score of F. In terms of the forward 12-month Price/Sales, ALAB is currently trading at 38.80X compared with the broader Zacks Computer and Technology sector’s 6.73X.

Price/Sales (F12M)

In terms of share price performance, ALAB shares have surged 63.2% in the year-to-date period, outperforming the broader Zacks Computer & Technology sector’s rise of 15.4% and the Zacks Internet - Software industry’s increase of 20.5%. 

The outperformance of ALAB stock can be attributed to its robust and diversified product portfolio, as well as its expanding partner base, which have significantly contributed to its strong revenue growth. In the second quarter of 2025, the company achieved revenues of $191.9 million, representing a 20% sequential increase and a 150% year-over-year increase. 

ALAB stock has also outperformed its peer, Broadcom AVGO, which is also making strong efforts in the PCIe retimers market. Broadcom’s launch of PCIe Gen 6 portfolio, featuring high-port switches and retimers tested for interoperability with partners like Micron and Teledyne LeCroy, is a noteworthy development. Broadcom shares have rallied 49.2% in the year-to-date period.

ALAB Stock's Performance

Strong demand across ALAB’s Aries, Taurus, and Scorpio product lines has been noteworthy. The three-product line collectively contributed about 10% of total sales in the second quarter of 2025. The Scorpio P-Series switches entered volume production during the second quarter of 2025, becoming the fastest-growing product line in the company’s history and accounting for more than 10% of total revenues.

ALAB Benefits From Expanding Portfolio

ALAB’s increasing demand for AI platforms, particularly those leveraging high-performance GPUs and AI accelerators, drove strong design wins and sales for products like Aries Retimers, Taurus Smart Cable Modules, and Scorpio Fabric Switches.

The company’s expanding portfolio has been a major growth driver. In May 2025, Astera Labs announced that its PCIe 6 connectivity portfolio is ramping production to fast-track the deployment of modern AI platforms at scale. 

The offerings include new Aries 6 PCIe Smart Gearbox, Scorpio P-Series Smart Fabric Switches, Aries 6 PCIe/CXL Smart DSP Retimers, Aries 6 PCIe/CXL Smart Cable Modules (Aries 6 SCMs), and PCIe 6 over Optics Technology.

UA Link offers a significant growth opportunity for Astera Labs. UA Link combines the memory semantics of PCIe and the fast speed of Ethernet, but is devoid of the software complexity and performance limitations of Ethernet. 

ALAB expects to deliver UA Link solutions in 2026 to solve scale-up connectivity challenges for next-generation AI infrastructure. The growing proliferation of UA Link is expected to be a multibillion-dollar additional market opportunity for Astera Labs by 2029.

ALAB Expands Partner Base With Top Chipmakers

Astera Labs is benefiting from a rich partner base that includes top chipmakers, including NVIDIA NVDA, Advanced Micro Devices AMD, Micron Technology and Intel.

In the second quarter of 2025, ALAB expanded its collaboration with NVIDIA to advance the NVLink Fusion ecosystem, giving hyperscalers more options for high-performance, scale-up networks. Astera Labs will provide NVLink connectivity solutions within its Intelligent Connectivity Platform, integrating PCIe, CXL, and Ethernet with the COSMOS suite in partnership with NVIDIA to optimize data center performance.

ALAB also joined Advanced Micro Devices on stage at its Advancing AI 2025 keynote, showcasing collaboration on next-gen AI infrastructure. Together with Advanced Micro Devices, ALAB highlighted how UALink open-standard connectivity will drive scalable, flexible, and efficient architectures for the AI era.

In the second quarter of 2025, Astera Labs also secured new design wins across multiple customers for its Scorpio P-Series and X-Series PCIe Fabric Switches, further expanding its customer base.

ALAB Offers Strong Q3 Guidance

Astera Lab is benefiting from strong demand for Aries, Taurus, and Scorpio product families, all expected to drive growth in the third quarter of 2025.

Astera Labs expects third-quarter 2025 revenues between $203 million and $210 million. 

Earnings are expected between 38 cents and 39 cents per share for the third quarter.

ALAB’s Earnings Estimates Show Upward Movement

The Zacks Consensus Estimate for third-quarter 2025 revenues is pegged at $206.73 million, indicating a year-over-year increase of 82.80%.

The Zacks Consensus Estimate for third-quarter 2025 earnings is pegged at 39 cents per share, which has remained unchanged in the past 30 days. The figure calls for a year-over-year increase of 69.57%.

Astera Labs, Inc. Price and Consensus

Astera Labs, Inc. price-consensus-chart | Astera Labs, Inc. Quote

Conclusion

Astera Labs’ innovative portfolio, along with a rich partner base, is expected to drive prospects despite a premium valuation. 

ALAB currently sports a Zacks Rank #1 (Strong Buy) and has a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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