ALAB Rides on Accelerating AI Infrastructure Demand: What's Ahead?

Astera Labs ALAB is rapidly expanding its portfolio to address the growing demands of AI infrastructure and connectivity solutions. 

The company has emerged as a key player in next-generation data center connectivity, with a full-stack portfolio spanning PCIe 6.0, Ultra Accelerator (UA) Link and CXL 3.0. An innovative portfolio supported by strong demand from hyperscalers is expected to drive top-line growth over the long term.

ALAB’s expanding portfolio has been noteworthy. ALAB recently became part of the Arm Total Design ecosystem. This allows its Intelligent Connectivity Platform to work with Arm Neoverse Compute Subsystems. It enables chiplet-based custom AI infrastructure solutions with improved PCIe, Ethernet, CXL and UALink connectivity. This leads to faster and more compatible system development.

With the AI industry projected to grow significantly, Astera Labs is well-positioned to address the $5 billion market opportunity in scale-up connectivity by 2030. Its strategic partnerships with major players like NVIDIA, AMD and Alchip Technologies, along with its focus on innovation, ensure that the company remains at the forefront of the AI infrastructure revolution.

Strong demand for Aries, Taurus and Scorpio product families is expected to drive growth in the third quarter of 2025. The company expects third-quarter 2025 revenues between $203 million and $210 million, suggesting an increase in the range of 6% to 9% sequentially.

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 AI Infrastructure market.

Broadcom’s expanding portfolio has been noteworthy. The company announced that Tomahawk 6 – Davisson (TH6-Davisson), Broadcom’s third-generation Co-Packaged Optics Ethernet switch, is now being shipped. TH6-Davisson is specifically designed for the accelerating demands of AI networking, as it delivers an unprecedented 102.4 terabits per second of optically enabled switching capacity.

Marvell Technology recently expanded its connectivity portfolio with its new active copper cable linear equalizers. These devices use Marvell’s PAM4 technology to improve signal reach and efficiency for 800G and 1.6T copper connections in next-generation AI data centers.

ALAB’s Share Price Performance, Valuation, and Estimates

ALAB shares have risen 19% year to date, underperforming the broader Zacks Computer & Technology sector’s return of 23.9%. The Zacks Internet - Software industry has increased 19.3% in the same time frame.

ALAB Stock's Performance

ALAB stock is trading at a premium, with a forward 12-month Price/Sales of 27.21X compared with the  Internet - Software industry’s 5.58X. 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 carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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