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ALAB Rises 146% in Three Months: Should You Buy the Stock Now or Wait?

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Key Takeaways

  • ALAB shares soared 146% in three months, far outpacing its sector and industry.
  • Strong demand for Aries, Taurus and Scorpio products is driving ALAB's revenue growth.
  • Despite portfolio gains, ALAB faces stiff competition from PCIe and trades at a premium valuation.

Astera Labs (ALAB - Free Report) shares have surged 146.4% in the past three-month period, outperforming the broader Zacks Computer & Technology sector’s rise of 15% and the Zacks Internet - Software industry’s growth of 1.3%. 

The outperformance of ALAB stock can be attributed to its robust and diversified product portfolio, as well as its expanding partner base, which have significantly contributed to its strong revenue growth. 

Strong demand across ALAB’s Aries, Taurus, and Scorpio product lines has been noteworthy. The three-product line collectively contributed about 10% of total sales in the second quarter of 2025. 

The Scorpio P-Series switches entered volume production during the second quarter of 2025, becoming the fastest-growing product line in the company’s history and accounting for more than 10% of total revenues.

ALAB Stock's Performance

Zacks Investment Research
Image Source: Zacks Investment Research

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 is noteworthy. 

Building on this momentum, in 2025, Astera Labs announced that its PCIe 6 connectivity portfolio is ramping production to fast-track the deployment of modern AI platforms at scale. 

The offerings include new Aries 6 PCIe Smart Gearbox, Scorpio P-Series Smart Fabric Switches, Aries 6 PCIe/CXL Smart DSP Retimers, Aries 6 PCIe/CXL Smart Cable Modules (Aries 6 SCMs), and PCIe 6 over Optics Technology.

Astera Labs is benefiting from strong demand for Aries and Taurus product families. Diversification across both GPU and custom ASIC-based systems for various applications, including scale-up and scale-out connectivity, is a key catalyst for ALAB’s Aries product family. The Aries 6 solution, which supports PCIe 6, began volume ramping within rack-scale merchant GPU-based systems during the second quarter of 2025.

ALAB Expands Partner Base With Top Chipmakers

Astera Labs is benefiting from a rich partner base that includes top chipmakers, such as NVIDIA (NVDA - Free Report) , Advanced Micro Devices, Micron Technology and Intel.

In the second quarter of 2025, ALAB expanded its collaboration with NVIDIA to advance the NVLink Fusion ecosystem, giving hyperscalers more options for high-performance, scale-up networks. Astera Labs will provide NVLink connectivity solutions within its Intelligent Connectivity Platform, integrating PCIe, CXL and Ethernet with the COSMOS suite in partnership with NVIDIA to optimize data center performance.

ALAB Offers Strong Q3 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 third quarter of 2025.

Astera Labs expects third-quarter 2025 revenues between $203 million and $210 million. 

Earnings are expected to be between 38 cents and 39 cents per share for the third quarter.

ALAB’s Earnings Estimates Show Upward Movement

The Zacks Consensus Estimate for third-quarter 2025 revenues is pegged at $206.73 million, indicating a year-over-year increase of 82.80%.

The Zacks Consensus Estimate for third-quarter 2025 earnings is pegged at 39 cents per share, which has remained unchanged in the past 30 days. The figure calls for a year-over-year increase of 69.57%.

ALAB Faces Stiff Competition

Despite an expanding portfolio and strong partner base, ALAB is facing stiff competition from other industry players, such as Marvell Technology (MRVL - Free Report) and Broadcom (AVGO - Free Report) , which are also making strong efforts in the PCIe retimers market.

Marvell Technology is actively innovating in the PCIe market by offering advanced PCIe retimers by leveraging its industry-leading Pulse-Amplitude Modulation technology. Marvell Technology’s solutions ensure high-bandwidth, reliable communication between GPUs, CPUs and other server components, catering to AI and data center applications. 

Broadcom is expanding its footprint in the PCIe retimer market by developing advanced solutions that enhance signal quality and extend the reach of PCIe connections in high-speed data environments. The introduction of Broadcom’s PCIe Gen 6 portfolio, which includes high-port switches and retimers tested for interoperability with partners like Micron and Teledyne LeCroy, is a noteworthy development.

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 38.90X, higher than the Computer & Technology sector’s 6.94X.

Price/Sales (F12M)

Zacks Investment Research
Image Source: Zacks Investment Research

Conclusion

Astera Labs’ innovative portfolio, along with a rich partner base, is expected to drive prospects despite a premium valuation.

However, macroeconomic challenges, including higher tariffs and uncertainty over trade policy, pose a headwind for semiconductor companies, such as Astera Labs. These, along with changing export restrictions, are expected to negatively impact demand across the AI and cloud infrastructure markets. Stiff competition and stretched valuation also remain a concern.

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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