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 Buy, Sell, or Hold ALAB Stock After a 118% YTD Rise?
Read MoreHide Full Article
Key Takeaways
Astera Labs has surged 117.8% YTD, driven by strong demand for its AI connectivity portfolio.
PCIe 6 products made up over 50% of Q2 revenues, led by Scorpio switches and Aries Retimers.
Q3 revenue is guided at $540M-$560M, while valuation, costs and competition remain concerns.
Astera Labs (ALAB - Free Report) shares have appreciated 117.8% in the year-to-date period, outperforming the broader Zacks Computer & Technology sector’s 24.2% rise and the Zacks Internet - Software industry’s 7.1% growth in the year-to-date period.
The company’s shares have also outperformed its peers, which include Cisco Systems (CSCO - Free Report) and Credo Technology (CRDO - Free Report) . Both Cisco Systems and Credo Technology are expanding their footprint in the AI infrastructure space. Shares of Cisco Systems and Credo Technology have rallied 46.5% and 47.7%, respectively, in the year-to-date period.
ALAB’s outperformance can be attributed to its robust, diversified product portfolio that addresses growing demand for AI infrastructure and connectivity solutions, as well as its expanding partner base. Strong demand for its PCIe solutions has also been a major growth driver.
ALAB Stock Performance
Image Source: Zacks Investment Research
ALAB Gains From Robust AI Connectivity Portfolio
ALAB is rapidly expanding its portfolio to address the growing demands of AI infrastructure and connectivity solutions. The company’s product portfolio, including Scorpio, Aries and Taurus, has been a key catalyst. In the second quarter of 2026, PCIe 6 products, including the Scorpio AI Fabric Switches and Aries Retimers, accounted for more than 50% of total revenues, highlighting the market leadership of ALAB’s Gen 6 portfolio.
In the second quarter of 2026, the company reported record revenue growth, driven by strong adoption of its Scorpio AI Fabric Switches, Aries Retimers and Taurus Smart Cable Modules. The Leo CXL memory controller line is gaining traction, with new design wins at major U.S. hyperscalers and expectations for volume shipments in 2027.
The company’s expansion of its Leo CXL memory controller portfolio strengthens its position in the rapidly growing AI infrastructure connectivity market. The company recently expanded its Leo Smart Memory Controller family with the Leo X-Series and Leo 2 E and P Series, targeting agentic AI and general-purpose cloud workloads. The new solutions support fabric-attached GPU memory, CPU-attached memory expansion and pooled/shared memory architectures.
Leo X-Series can deliver up to 62% faster time to first token and 22% higher tokens per second for KV-cache-intensive AI workloads. Meanwhile, Leo 2 E and P-Series double memory bandwidth and capacity versus the prior generation while supporting PCIe 6 and CXL 3.2. The products are currently sampling with hyperscaler customers.
ALAB Offers Strong Q3 Guidance
Astera Labs is benefiting from strong demand for its expanding AI connectivity portfolio, which is expected to drive growth in the third quarter of 2026.
For the third quarter of 2026, revenues are expected to be between $540 million and $560 million. The midpoint implies sequential growth of approximately 40%, driven by the Scorpio X-Series production ramp, continued Aries PCIe 6 retimer strength and preproduction Taurus shipments for 800-gigabit Ethernet applications. The Zacks Consensus Estimate for third-quarter revenues is pegged at $550.39 million, representing year-over-year growth of 138.71%.
Management projects non-GAAP earnings between $1.16 and $1.21 per share in the third quarter of 2026. The Zacks Consensus Estimate for third-quarter 2026 earnings is pegged at $1.19 per share, which has been unchanged over the past 30 days. The figure implies a year-over-year increase of 142.86%.
Despite an expanding connectivity portfolio, ALAB is facing stiff competition from other industry players like Marvell Technology (MRVL - Free Report) , which is making strong efforts in the connectivity space. The company has also suffered from higher operating expenses in the second quarter of 2026 due to continued investment in its product roadmap.
Marvell Technology is benefiting from strong AI-driven demand for its high-speed data center connectivity solutions, including optical interconnects and networking products. Data center revenues represented 79% of total revenues in the second quarter of fiscal 2027. This underscores the growing weight of connectivity, switching, and custom silicon in the company’s sales mix. In the second quarter of fiscal 2027, Marvell Technology reported revenues of $2.74 billion, up 36.6% year over year.
ALAB Shares Trade 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 22.66X, higher than the Computer & Technology sector’s 6.18X.
ALAB Valuation
Image Source: Zacks Investment Research
Conclusion
Astera Labs is well-positioned to benefit from strong AI infrastructure spending, supported by the rapid adoption of its Scorpio, Aries, Leo and Taurus product families. However, its stretched valuation, rising operating expenses, and intensifying competition remain concerns.
View the Zacks #1 Rank List
Image: Bigstock
Should You Buy, Sell, or Hold ALAB Stock After a 118% YTD Rise?
Key Takeaways
Astera Labs (ALAB - Free Report) shares have appreciated 117.8% in the year-to-date period, outperforming the broader Zacks Computer & Technology sector’s 24.2% rise and the Zacks Internet - Software industry’s 7.1% growth in the year-to-date period.
The company’s shares have also outperformed its peers, which include Cisco Systems (CSCO - Free Report) and Credo Technology (CRDO - Free Report) . Both Cisco Systems and Credo Technology are expanding their footprint in the AI infrastructure space. Shares of Cisco Systems and Credo Technology have rallied 46.5% and 47.7%, respectively, in the year-to-date period.
ALAB’s outperformance can be attributed to its robust, diversified product portfolio that addresses growing demand for AI infrastructure and connectivity solutions, as well as its expanding partner base. Strong demand for its PCIe solutions has also been a major growth driver.
ALAB Stock Performance
Image Source: Zacks Investment Research
ALAB Gains From Robust AI Connectivity Portfolio
ALAB is rapidly expanding its portfolio to address the growing demands of AI infrastructure and connectivity solutions. The company’s product portfolio, including Scorpio, Aries and Taurus, has been a key catalyst. In the second quarter of 2026, PCIe 6 products, including the Scorpio AI Fabric Switches and Aries Retimers, accounted for more than 50% of total revenues, highlighting the market leadership of ALAB’s Gen 6 portfolio.
In the second quarter of 2026, the company reported record revenue growth, driven by strong adoption of its Scorpio AI Fabric Switches, Aries Retimers and Taurus Smart Cable Modules. The Leo CXL memory controller line is gaining traction, with new design wins at major U.S. hyperscalers and expectations for volume shipments in 2027.
The company’s expansion of its Leo CXL memory controller portfolio strengthens its position in the rapidly growing AI infrastructure connectivity market. The company recently expanded its Leo Smart Memory Controller family with the Leo X-Series and Leo 2 E and P Series, targeting agentic AI and general-purpose cloud workloads. The new solutions support fabric-attached GPU memory, CPU-attached memory expansion and pooled/shared memory architectures.
Leo X-Series can deliver up to 62% faster time to first token and 22% higher tokens per second for KV-cache-intensive AI workloads. Meanwhile, Leo 2 E and P-Series double memory bandwidth and capacity versus the prior generation while supporting PCIe 6 and CXL 3.2. The products are currently sampling with hyperscaler customers.
ALAB Offers Strong Q3 Guidance
Astera Labs is benefiting from strong demand for its expanding AI connectivity portfolio, which is expected to drive growth in the third quarter of 2026.
For the third quarter of 2026, revenues are expected to be between $540 million and $560 million. The midpoint implies sequential growth of approximately 40%, driven by the Scorpio X-Series production ramp, continued Aries PCIe 6 retimer strength and preproduction Taurus shipments for 800-gigabit Ethernet applications. The Zacks Consensus Estimate for third-quarter revenues is pegged at $550.39 million, representing year-over-year growth of 138.71%.
Management projects non-GAAP earnings between $1.16 and $1.21 per share in the third quarter of 2026. The Zacks Consensus Estimate for third-quarter 2026 earnings is pegged at $1.19 per share, which has been unchanged over the past 30 days. The figure implies a year-over-year increase of 142.86%.
Astera Labs, Inc. Price and Consensus
Astera Labs, Inc. price-consensus-chart | Astera Labs, Inc. Quote
ALAB Faces Rising Competition and Cost Pressures
Despite an expanding connectivity portfolio, ALAB is facing stiff competition from other industry players like Marvell Technology (MRVL - Free Report) , which is making strong efforts in the connectivity space. The company has also suffered from higher operating expenses in the second quarter of 2026 due to continued investment in its product roadmap.
Marvell Technology is benefiting from strong AI-driven demand for its high-speed data center connectivity solutions, including optical interconnects and networking products. Data center revenues represented 79% of total revenues in the second quarter of fiscal 2027. This underscores the growing weight of connectivity, switching, and custom silicon in the company’s sales mix. In the second quarter of fiscal 2027, Marvell Technology reported revenues of $2.74 billion, up 36.6% year over year.
ALAB Shares Trade 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 22.66X, higher than the Computer & Technology sector’s 6.18X.
ALAB Valuation
Image Source: Zacks Investment Research
Conclusion
Astera Labs is well-positioned to benefit from strong AI infrastructure spending, supported by the rapid adoption of its Scorpio, Aries, Leo and Taurus product families. However, its stretched valuation, rising operating expenses, and intensifying competition remain 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.