We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Should You Hold on to Astera Labs Stock Despite Its 36% Dip in YTD?
Read MoreHide Full Article
Key Takeaways
ALAB shares dipped 36% YTD, hurt by macro uncertainty, competition and margin pressure.
Astera Labs sees strong PCIe demand, with Aries retimers up 70% YoY and driving AI growth.
ALAB guides Q1 revenue up 83% YoY, but faces rivals like MRVL and trades at a premium.
Astera Labs (ALAB - Free Report) shares have plunged 36.1% in the year-to-date period, underperforming the broader Zacks Computer & Technology sector’s decline of 7.5% and the Zacks Internet - Software industry’s decline of 18.5% over the same time frame. The underperformance can be attributed to challenging macroeconomic uncertainties and stiff competition in the PCIe retimers market.
ALAB also suffered from a shift toward a higher mix of hardware sales, which impacted its profit margins. Increased operating expenses from expanded R&D efforts and recent acquisitions also impacted performance.
ALAB Stock's Performance
Image Source: Zacks Investment Research
However, the company is benefiting from its robust and diversified product portfolio to address the growing demands of AI infrastructure and connectivity solutions, as well as its expanding partner base. It benefits from strong demand for its PCIe solutions, which have also been a major growth driver.
ALAB Benefits From Strong Demand for PCIe Solution
ALAB is rapidly expanding its portfolio to address the growing demands of AI infrastructure and connectivity solutions. Its product portfolio, including Scorpio, Aries and Taurus, has been a key catalyst.
A standout performer in ALAB’s portfolio is its Aries PCIe 6 DSP retimer solutions, which are currently the only PCIe 6 DSP retimer products shipping in high volume. The Aries portfolio saw 70% year-over-year growth in 2025, driven by the increasing deployment of custom AI accelerators at major hyperscalers. With the PCIe 6 transition cycle still in its early stages, ALAB expects further growth as more customers launch PCIe 6-capable AI accelerators and systems in 2026 and beyond.
The Scorpio P-Series family has also been a key growth driver, contributing more than 15% of revenues in 2025. As the only PCIe 6 fabric available in large quantities, Scorpio P-Series is poised to grow in 2026, with shipments to more hyperscalers for next-generation AI platforms. The Scorpio X-Series is likely to move to high-volume production in the second half of 2026, which will further boost revenues.
ALAB is set to expand its footprint in the AI connectivity market, which is projected to grow 10-fold to $25 billion over the next five years. The Scorpio P-Series continues to ramp up, with shipments expected to expand to additional hyperscalers in 2026. Meanwhile, the Scorpio X-Series is anticipated to enter high-volume production in late 2026, further boosting revenues.
ALAB Offers Strong Q1 Guidance
Aster Labs is benefiting from strong demand for its Aries, Taurus, and Scorpio product families, all of which are expected to drive growth in the first quarter of 2026.
Astera Labs expects first-quarter 2026 revenues between $286 million and $297 million. The Zacks Consensus Estimate for first-quarter revenues is pegged at $292.5 million, representing year-over-year growth of 83.45%.
Earnings are expected to be between 53 cents and 54 cents per share for the first quarter. The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at 54 cents per share, unchanged over the past 30 days. The figure implies a year-over-year increase of 63.64%.
Despite an expanding portfolio and strong partner base, ALAB is facing stiff competition from other industry players like Marvell Technology (MRVL - Free Report) , Credo Technology (CRDO - Free Report) , and Cisco Systems (CSCO - Free Report) . Marvell Technology, Credo Technology, and Cisco Systems are all expanding their footprints in the AI infrastructure space.
Marvell Technology’s expanding portfolio has been noteworthy. In March 2026, the company introduced the Structera S 60260, the first 260-lane PCIe 6.0 switch in the industry. It allows for higher-density, lower-latency AI data center scaling by replacing several smaller switches with a single high-radix solution.
Cisco has been integrating AI into its product portfolios across networking, security, collaboration and observability. Strong demand for Cisco’s products in developing AI infrastructure has been a game-changer for the company. In the second quarter of fiscal 2026, AI infrastructure orders from hyperscalers hit $2.1 billion, and Cisco expects more than $3 billion in AI infrastructure revenues from hyperscalers in fiscal 2026.
Credo Technology’s expanding portfolio has been noteworthy. In February 2026, Credo Technology announced that its 7nm Toucan PCIe retimer achieved PCI-SIG compliance at 32.0 GT/s for PCIe 5.0 speeds, validating interoperability, signal integrity and low-power performance for next-generation AI and HPC platforms.
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 12.58X, higher than the Computer & Technology sector’s 5.72X.
ALAB's Valuation
Image Source: Zacks Investment Research
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.
View the Zacks #1 Rank List
Image: Bigstock
Should You Hold on to Astera Labs Stock Despite Its 36% Dip in YTD?
Key Takeaways
Astera Labs (ALAB - Free Report) shares have plunged 36.1% in the year-to-date period, underperforming the broader Zacks Computer & Technology sector’s decline of 7.5% and the Zacks Internet - Software industry’s decline of 18.5% over the same time frame. The underperformance can be attributed to challenging macroeconomic uncertainties and stiff competition in the PCIe retimers market.
ALAB also suffered from a shift toward a higher mix of hardware sales, which impacted its profit margins. Increased operating expenses from expanded R&D efforts and recent acquisitions also impacted performance.
ALAB Stock's Performance
Image Source: Zacks Investment Research
However, the company is benefiting from its robust and diversified product portfolio to address the growing demands of AI infrastructure and connectivity solutions, as well as its expanding partner base. It benefits from strong demand for its PCIe solutions, which have also been a major growth driver.
ALAB Benefits From Strong Demand for PCIe Solution
ALAB is rapidly expanding its portfolio to address the growing demands of AI infrastructure and connectivity solutions. Its product portfolio, including Scorpio, Aries and Taurus, has been a key catalyst.
A standout performer in ALAB’s portfolio is its Aries PCIe 6 DSP retimer solutions, which are currently the only PCIe 6 DSP retimer products shipping in high volume. The Aries portfolio saw 70% year-over-year growth in 2025, driven by the increasing deployment of custom AI accelerators at major hyperscalers. With the PCIe 6 transition cycle still in its early stages, ALAB expects further growth as more customers launch PCIe 6-capable AI accelerators and systems in 2026 and beyond.
The Scorpio P-Series family has also been a key growth driver, contributing more than 15% of revenues in 2025. As the only PCIe 6 fabric available in large quantities, Scorpio P-Series is poised to grow in 2026, with shipments to more hyperscalers for next-generation AI platforms. The Scorpio X-Series is likely to move to high-volume production in the second half of 2026, which will further boost revenues.
ALAB is set to expand its footprint in the AI connectivity market, which is projected to grow 10-fold to $25 billion over the next five years. The Scorpio P-Series continues to ramp up, with shipments expected to expand to additional hyperscalers in 2026. Meanwhile, the Scorpio X-Series is anticipated to enter high-volume production in late 2026, further boosting revenues.
ALAB Offers Strong Q1 Guidance
Aster Labs is benefiting from strong demand for its Aries, Taurus, and Scorpio product families, all of which are expected to drive growth in the first quarter of 2026.
Astera Labs expects first-quarter 2026 revenues between $286 million and $297 million. The Zacks Consensus Estimate for first-quarter revenues is pegged at $292.5 million, representing year-over-year growth of 83.45%.
Earnings are expected to be between 53 cents and 54 cents per share for the first quarter. The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at 54 cents per share, unchanged over the past 30 days. The figure implies a year-over-year increase of 63.64%.
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 Marvell Technology (MRVL - Free Report) , Credo Technology (CRDO - Free Report) , and Cisco Systems (CSCO - Free Report) . Marvell Technology, Credo Technology, and Cisco Systems are all expanding their footprints in the AI infrastructure space.
Marvell Technology’s expanding portfolio has been noteworthy. In March 2026, the company introduced the Structera S 60260, the first 260-lane PCIe 6.0 switch in the industry. It allows for higher-density, lower-latency AI data center scaling by replacing several smaller switches with a single high-radix solution.
Cisco has been integrating AI into its product portfolios across networking, security, collaboration and observability. Strong demand for Cisco’s products in developing AI infrastructure has been a game-changer for the company. In the second quarter of fiscal 2026, AI infrastructure orders from hyperscalers hit $2.1 billion, and Cisco expects more than $3 billion in AI infrastructure revenues from hyperscalers in fiscal 2026.
Credo Technology’s expanding portfolio has been noteworthy. In February 2026, Credo Technology announced that its 7nm Toucan PCIe retimer achieved PCI-SIG compliance at 32.0 GT/s for PCIe 5.0 speeds, validating interoperability, signal integrity and low-power performance for next-generation AI and HPC platforms.
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 12.58X, higher than the Computer & Technology sector’s 5.72X.
ALAB's Valuation
Image Source: Zacks Investment Research
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.
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.