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ALAB vs. CSCO: Which Stock Offers Greater AI Infrastructure Upside?
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Key Takeaways
ALAB posts triple-digit yearly revenue growth and strong margins as AI infrastructure demand accelerates.
PCIe Gen6, 800G modules and Scorpio products boost ALAB's value across major hyperscaler deployments.
CSCO reports rising AI networking demand with $1.3B hyperscaler orders and FY26 growth expectations.
AI infrastructure demand is accelerating rapidly, pushing Astera Labs (ALAB - Free Report) and Cisco Systems (CSCO - Free Report) into the spotlight as key beneficiaries of growing investment in modern data center and AI-driven network architectures. Astera Labs specializes in high-speed, low-latency connectivity solutions that link GPUs, CPUs and memory inside AI servers, while Cisco Systems provides a broad, end-to-end portfolio of networking, switching and security technologies for enterprises and data centers.
Their strongest commonality lies in enabling the massive build-out of AI and cloud data center infrastructure. Both companies supply technologies essential for high-performance connectivity, data flow and workload scalability across hyperscale and enterprise environments.
With AI infrastructure investment surging, the key question now becomes: Which stock offers greater upside from here? Let’s dig into their fundamentals to see which one stands out as a stronger AI infrastructure play.
The Case for Astera Labs Stock
Astera Labs has emerged as a specialized connectivity leader for AI and cloud infrastructure, delivering rack-scale silicon, smart cable modules and fabric switches designed for low-latency, high-bandwidth AI racks. The company delivered strong third-quarter 2025 results, with revenues reaching $230.6 million (up 20% sequentially and 104% year over year). Profitability also remained robust, with a 76% non-GAAP gross margin and a 41.7% non-GAAP operating margin. Astera Labs’ cash and marketable securities totaled $1.13 billion, underscoring solid demand and a strong balance sheet.
The Zacks Consensus Estimate for ALAB’s fourth-quarter 2025 earnings is pegged at 51 cents per share, up 21.4% over the past 30 days, indicating a 37.84% increase year over year.
Image Source: Zacks Investment Research
Astera Labs has several strong growth opportunities ahead. The shift to PCIe Gen6, the move from 400G to 800G Ethernet smart cable modules and new scale-up fabric wins with its Scorpio P and X products are increasing its value per AI accelerator. The company is also expanding its reach with major hyperscaler customers. In addition, ALAB’s planned acquisition of aiXscale/Xscale photonics would extend its technology into optical scale-up for multi-rack AI clusters — a major future market as AI data centers continue to grow rapidly.
Astera Labs still faces several challenges. Its revenues rely heavily on hyperscalers, and it must compete across different scale-up standards. Supply-chain and geopolitical risks add uncertainty. The company must execute smoothly on new product launches like Scorpio X and photonics, as well as upcoming acquisitions.
The Case for Cisco Systems Stock
Cisco Systems is becoming a key backbone for global AI and cloud infrastructure, driven by solid financial performance. In first-quarter fiscal 2026, the company generated $14.9 billion in revenues (up 8% year over year) and $1.00 in non-GAAP EPS (up 10% year over year), fueled by 15% growth in its Networking segment, the core of its AI strategy. AI infrastructure demand is surging, with hyperscaler orders reaching $1.3 billion in the quarter. Cisco Systems expects about $3 billion in AI infrastructure revenues for fiscal 2026, underscoring fast-growing adoption of its Silicon One systems and Acacia optics.
The consensus mark for CSCO’s second-quarter fiscal 2026 earnings is pegged at $1.01 per share, up by a couple of pence over the past 30 days and implying 7.45% year-over-year growth.
Image Source: Zacks Investment Research
Strengths include Cisco Systems’ broad, end-to-end AI networking portfolio (switching, routing, pluggable optics and security), leadership in Silicon One and growing relevance in hyperscale training and inference clusters. Momentum is also supported by a multiyear, multibillion-dollar global campus networking refresh cycle, with next-gen products ramping faster than previous generations.
Opportunities span sovereign cloud deployments, neocloud providers, edge AI workloads, Unified Edge platforms and deeper partnerships (NVIDIA, AMD, G42). Cisco Systems sees over $2 billion in enterprise/neocloud pipeline for high-performance AI networking over the next three quarters, alongside global expansion into Europe, the Middle East and Asia through sovereign and hyperscaler partnerships.
Challenges for Cisco Systems include tighter supply conditions for components like DRAM and optics, rising competition from custom silicon and other networking vendors, timing impacts from Splunk’s shift to cloud subscriptions, and tougher year-over-year comparisons in the second half.
Price Performance & Valuation of ALAB & CSCO
Over the past six months, Astera Labs shares have rallied 48.4%, markedly outperforming the broader sector’s 26.7% gain. Meanwhile, Cisco Systems shares have risen 19.7%, trailing both ALAB’s rally and the sector’s performance during the same time period.
Price Performance ALAB and CSCO
Image Source: Zacks Investment Research
On the valuation front, Astera Labs trades at a forward 12-month P/S multiple of 21.71, far above Cisco Systems’ 4.94. While ALAB does look expensive relative to Cisco Systems, the premium largely reflects its stronger growth trajectory and higher expected upside in AI infrastructure.
Image Source: Zacks Investment Research
Why Is Astera Labs a Preferred Stock Right Now?
Astera Labs offers the higher-growth, higher-upside opportunity in AI infrastructure, fueled by accelerating hyperscaler demand, rapid product expansion and exceptional financial momentum. Cisco Systems, while slower-growing, provides broader diversification, stronger stability and a significant multiyear AI networking runway backed by its Silicon One and optics portfolio. Despite a premium valuation, ALAB’s growth profile and strategic positioning make it the more compelling choice for investors seeking higher AI-driven returns.
Image: Bigstock
ALAB vs. CSCO: Which Stock Offers Greater AI Infrastructure Upside?
Key Takeaways
AI infrastructure demand is accelerating rapidly, pushing Astera Labs (ALAB - Free Report) and Cisco Systems (CSCO - Free Report) into the spotlight as key beneficiaries of growing investment in modern data center and AI-driven network architectures. Astera Labs specializes in high-speed, low-latency connectivity solutions that link GPUs, CPUs and memory inside AI servers, while Cisco Systems provides a broad, end-to-end portfolio of networking, switching and security technologies for enterprises and data centers.
Their strongest commonality lies in enabling the massive build-out of AI and cloud data center infrastructure. Both companies supply technologies essential for high-performance connectivity, data flow and workload scalability across hyperscale and enterprise environments.
With AI infrastructure investment surging, the key question now becomes: Which stock offers greater upside from here? Let’s dig into their fundamentals to see which one stands out as a stronger AI infrastructure play.
The Case for Astera Labs Stock
Astera Labs has emerged as a specialized connectivity leader for AI and cloud infrastructure, delivering rack-scale silicon, smart cable modules and fabric switches designed for low-latency, high-bandwidth AI racks. The company delivered strong third-quarter 2025 results, with revenues reaching $230.6 million (up 20% sequentially and 104% year over year). Profitability also remained robust, with a 76% non-GAAP gross margin and a 41.7% non-GAAP operating margin. Astera Labs’ cash and marketable securities totaled $1.13 billion, underscoring solid demand and a strong balance sheet.
The Zacks Consensus Estimate for ALAB’s fourth-quarter 2025 earnings is pegged at 51 cents per share, up 21.4% over the past 30 days, indicating a 37.84% increase year over year.
Image Source: Zacks Investment Research
Astera Labs has several strong growth opportunities ahead. The shift to PCIe Gen6, the move from 400G to 800G Ethernet smart cable modules and new scale-up fabric wins with its Scorpio P and X products are increasing its value per AI accelerator. The company is also expanding its reach with major hyperscaler customers. In addition, ALAB’s planned acquisition of aiXscale/Xscale photonics would extend its technology into optical scale-up for multi-rack AI clusters — a major future market as AI data centers continue to grow rapidly.
Astera Labs still faces several challenges. Its revenues rely heavily on hyperscalers, and it must compete across different scale-up standards. Supply-chain and geopolitical risks add uncertainty. The company must execute smoothly on new product launches like Scorpio X and photonics, as well as upcoming acquisitions.
The Case for Cisco Systems Stock
Cisco Systems is becoming a key backbone for global AI and cloud infrastructure, driven by solid financial performance. In first-quarter fiscal 2026, the company generated $14.9 billion in revenues (up 8% year over year) and $1.00 in non-GAAP EPS (up 10% year over year), fueled by 15% growth in its Networking segment, the core of its AI strategy. AI infrastructure demand is surging, with hyperscaler orders reaching $1.3 billion in the quarter. Cisco Systems expects about $3 billion in AI infrastructure revenues for fiscal 2026, underscoring fast-growing adoption of its Silicon One systems and Acacia optics.
The consensus mark for CSCO’s second-quarter fiscal 2026 earnings is pegged at $1.01 per share, up by a couple of pence over the past 30 days and implying 7.45% year-over-year growth.
Image Source: Zacks Investment Research
Strengths include Cisco Systems’ broad, end-to-end AI networking portfolio (switching, routing, pluggable optics and security), leadership in Silicon One and growing relevance in hyperscale training and inference clusters. Momentum is also supported by a multiyear, multibillion-dollar global campus networking refresh cycle, with next-gen products ramping faster than previous generations.
Opportunities span sovereign cloud deployments, neocloud providers, edge AI workloads, Unified Edge platforms and deeper partnerships (NVIDIA, AMD, G42). Cisco Systems sees over $2 billion in enterprise/neocloud pipeline for high-performance AI networking over the next three quarters, alongside global expansion into Europe, the Middle East and Asia through sovereign and hyperscaler partnerships.
Challenges for Cisco Systems include tighter supply conditions for components like DRAM and optics, rising competition from custom silicon and other networking vendors, timing impacts from Splunk’s shift to cloud subscriptions, and tougher year-over-year comparisons in the second half.
Price Performance & Valuation of ALAB & CSCO
Over the past six months, Astera Labs shares have rallied 48.4%, markedly outperforming the broader sector’s 26.7% gain. Meanwhile, Cisco Systems shares have risen 19.7%, trailing both ALAB’s rally and the sector’s performance during the same time period.
Price Performance ALAB and CSCO
Image Source: Zacks Investment Research
On the valuation front, Astera Labs trades at a forward 12-month P/S multiple of 21.71, far above Cisco Systems’ 4.94. While ALAB does look expensive relative to Cisco Systems, the premium largely reflects its stronger growth trajectory and higher expected upside in AI infrastructure.
Image Source: Zacks Investment Research
Why Is Astera Labs a Preferred Stock Right Now?
Astera Labs offers the higher-growth, higher-upside opportunity in AI infrastructure, fueled by accelerating hyperscaler demand, rapid product expansion and exceptional financial momentum. Cisco Systems, while slower-growing, provides broader diversification, stronger stability and a significant multiyear AI networking runway backed by its Silicon One and optics portfolio. Despite a premium valuation, ALAB’s growth profile and strategic positioning make it the more compelling choice for investors seeking higher AI-driven returns.
Both Astera Labs and Cisco Systems carry a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.