Rising Connectivity Demand Lifts ALAB: Can Its Platform Keep Growing?

Astera Labs ALAB is gaining strong momentum as hyperscalers boost investments in high-speed data movement. Its Connectivity Platform — built on the Aries, Scorpio, Leo and Taurus product families and managed through the COSMOS software suite — has become vital for running large AI data centers. This rising demand for fast, low-latency connectivity pushed the company’s third-quarter 2025 revenues to $230.6 million, up 104% year over year, highlighting its growing importance in next-gen AI infrastructure.

Growth in the quarter was broad-based across signal-conditioning, smart cable module and switch-fabric products. The Scorpio P-Series ramped at a lead hyperscaler, with new design wins across multiple AI platforms set to expand adoption. The Scorpio X-Series is moving through preproduction ahead of a 2026 volume ramp. Astera’s Aries PCIe 6 retimer portfolio — the only high-volume PCIe 6 solution in the market — delivered strong growth, while Taurus SCMs continued to gain traction across AI and general-purpose systems. The Leo CXL memory expansion line is also seeing early interest for AI inference workloads, broadening its potential footprint.

Astera Labs is also expanding into optical connectivity. Its planned acquisition of Xscale Photonics will enhance its ability to deliver photonic scale-up solutions by combining optical coupling technologies with the company’s connectivity expertise. Additionally, ALAB’s open-rack ecosystem showcased at the OCP Global Summit 2025 reinforced its leadership in standards-based technologies such as PCIe 6, CXL and UALink.

Still, maintaining momentum requires addressing the concentration risks associated with hyperscale customers and the implementation challenges as new products scale. Even so, with fourth-quarter 2025 revenue guidance of $245-$253 million, ALAB’s expanding connectivity platform and rising market demand position it well for continued growth.

ALAB Faces Increased Competitive Pressure

Broadcom AVGO is a key competitor to Astera Labs, expanding its dominance in high-speed interconnects, PCIe Gen 6 retimers and CXL-enabled solutions. Broadcom offers a broad range of high-performance networking solutions, including PCIe switches, optical interconnect solutions (co-packaged optics, 200G/lane DSPs, 400G optics) and high-port retimers. Broadcom is known for its high-capacity Ethernet switches like the Tomahawk series.

Marvell MRVL has emerged as a fierce competitor to Astera Labs by strengthening its leadership in high-speed interconnects. Marvell’s PCIe Gen 6/CXL retimers and advanced SerDes/PAM4 expertise give it a technical edge where Astera also competes. In October, the company expanded its connectivity lineup with active copper-cable linear equalizers, reinforcing Marvell’s push to dominate next-generation AI and data-center interconnect solutions.

ALAB’s Share Price Performance, Valuation & Estimates

ALAB shares have risen 7.2% year to date compared with the broader Zacks Computer & Technology sector’s return of 21.6% and the Zacks Internet - Software industry’s gain of 2.2%.

ALAB’s YTD Price Performance

ALAB stock is trading at a premium, with a forward 12-month Price/Sales of 21.4X compared with the industry’s 4.64X. ALAB has a Value Score of F.

ALAB’s Valuation

The consensus mark for 2025 earnings is pegged at $1.78 per share, up 12.7% over the past 30 days, suggesting 111.9% year-over-year growth.

Astera Labs 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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