ALAB Stock Soars 51% in the Past 6 Months: Should You Buy Now or Wait?

Astera Labs ALAB shares have surged 51.2% in the past six-month period, outperforming the broader Zacks Computer & Technology sector’s rise of 27.1% and the Zacks Internet - Software industry’s decline of 4.4%.

The company has also outperformed its closest peer, Broadcom AVGO. Broadcom is expanding its footprint in the PCIe retimers market by developing advanced solutions that enhance signal quality and extend the reach of PCIe connections in high-speed data environments. Broadcom shares have rallied 48.6% in the past six-month period.

The outperformance of ALAB stock can be attributed to its robust and diversified product portfolio, as well as its expanding partner base. 

The company is also benefiting from the broad-based demand across its product lines, including Scorpio P-Series fabric switches, Aries PCIe 6 retimers, and Taurus Ethernet smart cable modules. Aries PCIe 6 solutions contributed more than 20% of third-quarter revenues, highlighting ALAB’s leadership in the PCIe 6 retimer market.

ALAB Stock's Performance

ALAB Benefits From Expanding Portfolio

Astera Labs is rapidly expanding its portfolio to address the growing demands of AI infrastructure and connectivity solutions. It benefits from strong demand for its PCIe solutions, which have also been a major growth driver.

Building on this momentum, the company recently announced plans to deliver custom connectivity solutions designed for the complex needs of next-generation AI infrastructure. After entering the NVIDIA NVLink Fusion Ecosystem in May 2025, the company is working with hyperscalers to support NVLink connectivity. 

These custom solutions expand ALAB’s standards-based Intelligent Connectivity Platform, allowing for diverse, high-performance rack-scale systems. Using its COSMOS software-defined architecture and new photonic chiplet features, ALAB aims to provide a complete offering for standard, custom and hybrid AI deployments.

ALAB Benefits From Expanding Partner Base

Astera Labs is benefiting from a rich partner base that includes top companies like Microsoft MSFT, NVIDIA, Advanced Micro Devices, Micron Technology, and Intel.

In November, ALAB announced that its Leo CXL Smart Memory Controllers enable customers to test Compute Express Link (CXL) based memory expansion on Microsoft Azure’s M-series virtual machines. This marks the industry’s first deployment of CXL-attached memory. 

These controllers support CXL 2.0 and offer up to 2TB of expandable memory per unit. This helps tackle the traditional memory wall. The improvement allows cloud providers like Microsoft to scale memory capacity by more than 1.5 times, which boosts performance for in-memory databases, big data analytics, AI inference, KV cache for LLMs, and other memory-heavy workloads.

In the third quarter of 2025, ALAB announced new partnerships in GPU, CPU, interconnect, ODM, IP, and software. They aim to speed up AI Infrastructure 2.0 using open standards. ALAB is collaborating with companies like AMD, Arm, Amphenol, Cadence, Synopsys, Quanta, and others to promote rack-scale innovation.

ALAB Offers Strong Q4 Guidance

Aster Lab is benefiting from strong demand for its Aries, Taurus, and Scorpio product families, all of which are expected to drive growth in the fourth quarter of 2025.

Astera Labs expects fourth-quarter 2025 revenues between $245 million and $253 million. The Zacks Consensus Estimate for fourth-quarter 2025 revenues is pegged at $249.79 million, indicating a year-over-year increase of 77.03%.

Earnings are expected to be approximately 51 cents per share for the fourth quarter. The Zacks Consensus Estimate for fourth-quarter 2025 earnings is pegged at 51 cents per share, which has increased 21.4% over the past 30 days. The figure calls for a year-over-year increase of 37.84%.

Astera Labs, Inc. Price and Consensus

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

ALAB Faces Stiff Competition

Despite an expanding portfolio and strong partner base, ALAB is facing stiff competition from other industry players like Credo Technology CRDO and Broadcom in the connectivity space.

Credo Technology has a healthy pipeline of PCIe Gen6 AECs and retimers, with further customer wins expected to support fiscal 2026 growth. Credo Technology's shares have surged 162% outperforming ALAB in the past six months.

ALAB Shares Trading at a Premium

Astera Labs’ stock is trading at a premium, as suggested by the Value Score of F.

In terms of the forward 12-month Price/Sales, ALAB is trading at 21.22X, higher than the Computer & Technology sector’s 6.68X.

Price/Sales (F12M)

Conclusion

Astera Labs’ strong fundamentals, expanding partnerships and rising AI demand reinforce its leadership in connectivity solutions. However, challenging macroeconomic uncertainties and stiff competition remain a headwind. Stretched valuation also remains a concern.

In the fourth quarter, Astera Labs expects a slight decline in non-GAAP gross margins to approximately 75%, down from 76.4% in the third quarter of 2025.  This is primarily due to an increased mix of Taurus hardware modules, which are margin-dilutive compared to silicon products 

Astera Labs currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research