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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%. Management projects non-GAAP earnings between $1.16 and $1.21 per share.
The Zacks Consensus Estimate for third-quarter 2026 revenues is currently pegged at $550.39 million, indicating an increase of 138.71% from the figure reported in the year-ago quarter.
The consensus mark for earnings is currently pegged at $1.19 per share, which has been unchanged over the past 30 days. This implies 142.86% year-over-year growth.
ALAB’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average earnings surprise of 17.07%.
Let’s see how things have shaped up prior to this announcement.
Factors to Note for ALAB’s Q3 Earnings
Astera Labs is expected to have benefited from accelerating investments in artificial intelligence (AI) infrastructure, growing demand for high-speed connectivity solutions and increasing adoption of its Scorpio AI Fabric Switches in the third quarter of fiscal 2026. Expanding hyperscaler investments in AI training and inference infrastructure, coupled with increasing accelerator cluster sizes and bandwidth requirements, are likely to have supported demand for the company’s intelligent connectivity portfolio.
The transition of Scorpio X-Series high-radix AI Fabric Switches into volume production is expected to have been a major growth catalyst in the to-be-reported quarter. Strong demand from a leading hyperscaler customer, particularly for its 320-lane switching solutions, is likely to have accelerated revenue growth. Scorpio is expected to become Astera Labs’ largest product family by revenues in the third quarter, surpassing Aries. Growing adoption of Scorpio P-Series across AI networking, storage and scale-out applications is likely to have contributed to top-line expansion.
The Aries signal conditioning portfolio is expected to have benefited from accelerating adoption of PCIe 6 retimers and gearboxes across AI servers, GPUs and general-purpose computing platforms. Increasing AI accelerator cluster sizes, higher retimer attach rates, and improved average selling prices associated with PCIe 6 adoption are likely to have strengthened Aries revenues. Continued demand for PCIe 5 solutions across inference applications is also expected to have supported growth.
The Taurus portfolio is likely to have benefited from increasing demand for high-speed Ethernet connectivity across AI and general-purpose computing platforms. Strong adoption of 400G solutions, alongside initial preproduction shipments of 100-gigabit-per-lane Taurus Smart Cable Modules supporting 800G Ethernet connectivity, is expected to have boosted revenues. Expanding 800G deployments are likely to have supported improved attach rates and higher average selling prices.
However, Astera Labs’ third-quarter 2026 performance is likely to have faced pressure from declining gross margins due to an evolving product mix and rising operating expenses associated with continued investments in product development.
ALAB Shares Outperform Sector, Industry
Astera Labs shares have risen 74.6% in the year-to-date period, outperforming the broader Zacks Computer and Technology sector’s return of 14.2% and the Zacks Internet Software industry’s rise of 0.2%.
ALAB Stock Performance
Image Source: Zacks Investment Research
Astera Labs stock is not so cheap, as the Value Score of F suggests a stretched valuation at this moment.
In terms of the forward 12-month Price/Sales, ALAB is trading at 17.79X, higher than the Zacks Internet Software industry’s 3.98X.
ALAB Valuation
Image Source: Zacks Investment Research
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) . These companies are all expanding their footprints in the AI infrastructure space.
Marvell Technology has expanded its AI connectivity portfolio with the introduction of the Alaska E 3.2T protocol-aware retimer and second-generation Alaska A 1.6T active electrical cable DSP. Built on advanced 3nm technology, these solutions address growing bandwidth, latency and power-efficiency requirements in AI infrastructure. The Alaska E delivers 3.2 Tbps bandwidth across 16 lanes, supporting Ethernet, UALink and ESUN protocols. The Alaska A offers 1.6T throughput, more than six meters of copper reach and improved power efficiency. Both products are currently sampling to customers, strengthening Marvell Technology’s position in next-generation AI scale-up networking.
Credo Technology’s expanding portfolio has been noteworthy. In August 2026, the company announced that it is developing a new open interconnect standard within the Open Compute Project (OCP). It has established the OCP Open Chiplet Economy Lightweight Serial Interconnect (LSI) Workstream, aimed at developing efficient interconnect solutions for AI infrastructure. As part of the initiative, Credo Technology plans to contribute its OmniConnect lightweight AXI framer specification to OCP. The OCP LSI initiative is designed to support an open, interoperable ecosystem where compute, memory and other resources can be combined more efficiently. This could allow data-center operators and AI developers to tailor systems to specific workloads rather than relying on fixed architectures.
Cisco’s AI infrastructure business continues to gain momentum. In the fourth quarter of fiscal 2026, the company secured $4 billion in hyperscaler AI infrastructure orders, bringing fiscal 2026 orders to $9.3 billion, approximately 4.5 times the previous year’s level. The company’s Silicon One architecture, particularly its P200 and G200-powered systems and Acacia optical solutions, is strengthening its competitive position. Cisco expects hyperscaler AI infrastructure revenues to reach $7.5 billion in fiscal 2027 compared with approximately $4 billion in fiscal 2026.
Conclusion
Astera Labs’ expanding AI connectivity portfolio and accelerating Scorpio adoption are likely to drive strong third-quarter growth. However, stretched valuation, intensifying competition and margin pressures remain risks.
View the Zacks #1 Rank List
Image: Bigstock
Should You Buy, Sell, or Hold ALAB Stock Before Q3 Earnings Release?
Key Takeaways
Astera Labs (ALAB - Free Report) is set to report its third-quarter 2026 results on Nov. 3.
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%. Management projects non-GAAP earnings between $1.16 and $1.21 per share.
The Zacks Consensus Estimate for third-quarter 2026 revenues is currently pegged at $550.39 million, indicating an increase of 138.71% from the figure reported in the year-ago quarter.
The consensus mark for earnings is currently pegged at $1.19 per share, which has been unchanged over the past 30 days. This implies 142.86% year-over-year growth.
Astera Labs, Inc. Price and EPS Surprise
Astera Labs, Inc. price-eps-surprise | Astera Labs, Inc. Quote
ALAB’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average earnings surprise of 17.07%.
Let’s see how things have shaped up prior to this announcement.
Factors to Note for ALAB’s Q3 Earnings
Astera Labs is expected to have benefited from accelerating investments in artificial intelligence (AI) infrastructure, growing demand for high-speed connectivity solutions and increasing adoption of its Scorpio AI Fabric Switches in the third quarter of fiscal 2026. Expanding hyperscaler investments in AI training and inference infrastructure, coupled with increasing accelerator cluster sizes and bandwidth requirements, are likely to have supported demand for the company’s intelligent connectivity portfolio.
The transition of Scorpio X-Series high-radix AI Fabric Switches into volume production is expected to have been a major growth catalyst in the to-be-reported quarter. Strong demand from a leading hyperscaler customer, particularly for its 320-lane switching solutions, is likely to have accelerated revenue growth. Scorpio is expected to become Astera Labs’ largest product family by revenues in the third quarter, surpassing Aries. Growing adoption of Scorpio P-Series across AI networking, storage and scale-out applications is likely to have contributed to top-line expansion.
The Aries signal conditioning portfolio is expected to have benefited from accelerating adoption of PCIe 6 retimers and gearboxes across AI servers, GPUs and general-purpose computing platforms. Increasing AI accelerator cluster sizes, higher retimer attach rates, and improved average selling prices associated with PCIe 6 adoption are likely to have strengthened Aries revenues. Continued demand for PCIe 5 solutions across inference applications is also expected to have supported growth.
The Taurus portfolio is likely to have benefited from increasing demand for high-speed Ethernet connectivity across AI and general-purpose computing platforms. Strong adoption of 400G solutions, alongside initial preproduction shipments of 100-gigabit-per-lane Taurus Smart Cable Modules supporting 800G Ethernet connectivity, is expected to have boosted revenues. Expanding 800G deployments are likely to have supported improved attach rates and higher average selling prices.
However, Astera Labs’ third-quarter 2026 performance is likely to have faced pressure from declining gross margins due to an evolving product mix and rising operating expenses associated with continued investments in product development.
ALAB Shares Outperform Sector, Industry
Astera Labs shares have risen 74.6% in the year-to-date period, outperforming the broader Zacks Computer and Technology sector’s return of 14.2% and the Zacks Internet Software industry’s rise of 0.2%.
ALAB Stock Performance
Image Source: Zacks Investment Research
Astera Labs stock is not so cheap, as the Value Score of F suggests a stretched valuation at this moment.
In terms of the forward 12-month Price/Sales, ALAB is trading at 17.79X, higher than the Zacks Internet Software industry’s 3.98X.
ALAB Valuation
Image Source: Zacks Investment Research
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) . These companies are all expanding their footprints in the AI infrastructure space.
Marvell Technology has expanded its AI connectivity portfolio with the introduction of the Alaska E 3.2T protocol-aware retimer and second-generation Alaska A 1.6T active electrical cable DSP. Built on advanced 3nm technology, these solutions address growing bandwidth, latency and power-efficiency requirements in AI infrastructure. The Alaska E delivers 3.2 Tbps bandwidth across 16 lanes, supporting Ethernet, UALink and ESUN protocols. The Alaska A offers 1.6T throughput, more than six meters of copper reach and improved power efficiency. Both products are currently sampling to customers, strengthening Marvell Technology’s position in next-generation AI scale-up networking.
Credo Technology’s expanding portfolio has been noteworthy. In August 2026, the company announced that it is developing a new open interconnect standard within the Open Compute Project (OCP). It has established the OCP Open Chiplet Economy Lightweight Serial Interconnect (LSI) Workstream, aimed at developing efficient interconnect solutions for AI infrastructure. As part of the initiative, Credo Technology plans to contribute its OmniConnect lightweight AXI framer specification to OCP. The OCP LSI initiative is designed to support an open, interoperable ecosystem where compute, memory and other resources can be combined more efficiently. This could allow data-center operators and AI developers to tailor systems to specific workloads rather than relying on fixed architectures.
Cisco’s AI infrastructure business continues to gain momentum. In the fourth quarter of fiscal 2026, the company secured $4 billion in hyperscaler AI infrastructure orders, bringing fiscal 2026 orders to $9.3 billion, approximately 4.5 times the previous year’s level. The company’s Silicon One architecture, particularly its P200 and G200-powered systems and Acacia optical solutions, is strengthening its competitive position. Cisco expects hyperscaler AI infrastructure revenues to reach $7.5 billion in fiscal 2027 compared with approximately $4 billion in fiscal 2026.
Conclusion
Astera Labs’ expanding AI connectivity portfolio and accelerating Scorpio adoption are likely to drive strong third-quarter growth. However, stretched valuation, intensifying competition and margin pressures remain risks.
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.