ALAB Expands Portfolio on Acquisitions: What's Ahead for the Stock?

Astera Labs ALAB is benefiting from its strategic focus on expanding its portfolio through acquisitions and innovation, positioning itself as a leader in the rapidly growing AI infrastructure market. The acquisition of aiXscale Photonics GmbH, a company that offers fiber-chip coupling technologies, has been a major growth driver.  

The acquisition of aiXscale Photonics GmbH helps advance AI Infrastructure 2.0 by providing larger optical connectivity solutions that meet strict demands for speed, power, reach and reliability in rack-scale systems. Combining aiXscale’s photonics expertise with Astera Labs’ connectivity and signal processing capabilities, the company aims to address the massive bandwidth needs of AI systems with hundreds of accelerators.

Astera Labs plans to combine Xscale’s glass components and packaging technologies with its own expertise in signal conditioning and switching. This will help them create new optical solutions. The company expects its Scorpio family of products to support optical technology, which will offer higher data rates and longer reach for scale-up networks. While this acquisition is an important advancement, Astera Labs anticipates that significant revenue from optical products will start in the 2028-2029 timeframe, as the market shifts from copper to optical interconnects for scale-up applications.

Aster Lab’s expanding portfolio and strategic acquisitions 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, representing a year-over-year increase of 77.03%.

ALAB Faces Stiff Competition

ALAB is facing stiff competition from other industry players like Marvell Technology MRVL and Broadcom AVGO in the connectivity space.

Marvell Technology recently announced a deal to acquire XConn Technologies. This move expands its PCIe and CXL switching portfolio. Marvell Technology also strengthens its UALink scale-up fabric capabilities for next-generation AI data center designs. Revenue from this acquisition is expected to begin in the second half of fiscal 2027, reaching around $100 million in fiscal 2028.

Broadcom is benefiting from strong demand for its networking products and custom AI accelerators. Broadcom's AI revenue increased 65% year over year in fiscal 2025, reaching $20 billion. This growth is driven by AI semiconductors and infrastructure software, with AI revenue expected to double year over year to $8.2 billion in the first quarter of fiscal 2026.

ALAB’s Share Price Performance, Valuation, and Estimates

ALAB shares have risen 44.9% in the past six-month period, outperforming the broader Zacks Computer & Technology sector’s return of 13.8%. The Zacks Internet - Software industry has declined 14.5% in the same time frame.

ALAB Stock's Performance

ALAB stock is trading at a premium, with a forward 12-month Price/Sales of 25.08X compared with the  Internet - Software industry’s 4.35X. ALAB has a Value Score of F.

ALAB's Valuation

The Zacks Consensus Estimate for 2025 earnings is pegged at $1.78 per share, unchanged over the past 30 days. This suggests 111.90% year-over-year growth.

Astera Labs, Inc. Price and Consensus

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

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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