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Astera Labs ALAB is scheduled to report first-quarter 2025 results on May 6.
For the first quarter of 2025, the company expects revenues between $151 million and $155 million. The Zacks Consensus Estimate for first-quarter revenues is pegged at $153.34 million, indicating a year-over-year increase of 134.97%.
For the first quarter of 2025, the company expects non-GAAP earnings between 28 cents and 29 cents per share. The consensus mark for earnings is pegged at 28 cents per share, unchanged in the past 30 days. The figure calls for a year-over-year increase of 180%.
ALAB’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 61.45%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar)
Astera Labs, Inc. price-eps-surprise | Astera Labs, Inc. Quote
Let’s see how things have shaped up for the upcoming earnings announcement.
Astera Labs’ first-quarter 2025 revenues are likely to have benefited from increasing demand for artificial intelligence (AI) servers and data center infrastructure. Strong momentum across its three key product families, Aries, Taurus, and Leo, is likely to have contributed well.
The Aries peripheral component interface express (PCIe) retimers and Taurus Ethernet product lines are expected to have driven significant revenue growth in the to-be-reported quarter. With continued adoption across AI platforms and general-purpose compute systems, these products are likely to have sustained high demand in the first quarter.
Revenues from Taurus 400 gig Ethernet solutions are expected to have contributed significantly to the top line in the to-be-reported quarter, driven by both AI and general-purpose compute infrastructure applications.
The expansion of the Scorpio Smart Fabric Switch family, which is already generating preproduction shipments, is expected to have contributed positively in the first quarter.
ALAB shares have plunged 45.1% in the year-to-date period, underperforming the broader Zacks Computer & Technology sector’s decrease of 8.9% and the Zacks Electronics - Semiconductors industry’s decline of 15.2%.
The underperformance can be attributed to concerns over the lower-than-expected gross margin driven by a shift in product mix toward hardware-based solutions. Along with this, a broader market weakness in the tech sector and persistent fear over mounting tariffs by the current government have added to the pressure.
ALAB stock is not so cheap, as suggested by the Value Score of F.
In terms of the forward 12-month Price/Sales, ALAB is trading at 15.36X, higher than the Computer & Technology sector’s 5.71X.
ALAB’s expanding portfolio is expected to have been a key catalyst. The company recently announced the ramp-up of production for its purpose-built PCIe6 connectivity portfolio, which includes gearbox solutions, fabric switches, retimers, and active cable modules. It aims to enhance the performance, scalability, and efficiency of AI and cloud infrastructure systems while supporting longer-distance connectivity with optical media for advanced AI platforms. Benefits from this announcement are likely to have been reflected in the to-be-reported quarter.
ALAB’s expanding portfolio is expected to have helped it fend off competition from other industry players like Broadcom AVGO, which is also making strong efforts in the PCIe Retimer market.
In February 2025, Broadcom announced the availability of its end-to-end PCIe Gen6 portfolio, advancing AI infrastructure solutions through successful interoperability testing with Micron and Teledyne LeCroy.
Additionally, Broadcom’s introduction of scalable, high-performance, and low-power 400G PCIe Gen 5.0 Ethernet adapters aims to transform data centers by resolving connectivity bottlenecks.
Astera Labs has made a significant impact on the AI industry with collaborations with top chipmakers, including NVIDIA NVDA, Advanced Micro Devices AMD, Micron Technology, and Intel. This is likely to have driven growth during the first quarter.
ALAB recently introduced its Scorpio Smart Fabric Switches for PCIe 6-ready NVIDIA Blackwell-based MGX platforms, delivering high-performance, modular scalability for AI and cloud infrastructure.
With comprehensive design-in collateral and interoperability validation in its Cloud-Scale Interop Lab, ALAB enhances NVIDIA MGX platform integration by optimizing GPU utilization, improving energy efficiency, and enabling advanced rack-level management through its COSMOS software.
Advanced Micro Devices also continues to utilize Astera Labs solutions to enhance the efficiency and scalability of its AI-driven products. The partnership between Advanced Micro Devices and Astera Labs strengthens both companies’ positions in the AI market, fueling advancements in next-gen technologies.
Despite a strong product portfolio, ALAB faces increasing competition in the AI and cloud markets, particularly from larger semiconductor companies that are ramping up their product offerings for AI infrastructure. This competition is expected to hurt the company’s financial performance. Moreover, macroeconomic uncertainties and stretched valuations are concerns.
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.
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This article originally published on Zacks Investment Research (zacks.com).
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