ALAB Rides on Strong Demand for PCIe Solution: A Sign of More Upside?

Astera Labs ALAB is benefiting from strong demand for its PCIe solutions, which have become a key growth driver for the company. In the second quarter of 2025, the company reported revenues of $191.9 million, marking a 20% sequential increase and a staggering 150% year-over-year growth.

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.

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.

Astera Labs’ rich partner base has been a key catalyst. 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 Suffers From Stiff Competition

ALAB is facing stiff competition from other industry players, such as Broadcom AVGO and Marvell Technology MRVL, which are also making strong efforts in the PCIe retimers market.

Broadcom is expanding its footprint in the PCIe retimer market by developing advanced solutions that enhance signal quality and extend the reach of PCIe connections in high-speed data environments. The introduction of Broadcom’s PCIe Gen 6 portfolio, which includes high-port switches and retimers tested for interoperability with partners like Micron and Teledyne LeCroy, is a noteworthy development.

Marvell Technology is actively innovating in the PCIe market by offering advanced PCIe retimers by leveraging its industry-leading Pulse-Amplitude Modulation technology. Marvell Technology’s solutions ensure high-bandwidth, reliable communication between GPUs, CPUs, and other server components, catering to AI and data center applications.

ALAB’s Share Price Performance, Valuation and Estimates

ALAB shares have risen 73.8% year to date, outperforming the broader Zacks Computer & Technology sector’s return of 23.7%. The Zacks Internet - Software industry has increased 25.4% in the same time frame.

ALAB Stock's Performance

ALAB stock is trading at a premium, with a forward 12-month Price/Sales of 40.90X compared with the  Internet - Software industry’s 5.91X. ALAB has a Value Score of F.

Price/Sales (F12M)

The consensus mark for 2025 earnings is pegged at $1.58 per share, which remained unchanged over the past 30 days, suggesting 88.10% year-over-year growth.

Astera Labs, Inc. Price and Consensus

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

Astera Lab currently sports a Zacks Rank #1 (Strong Buy). 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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