Astera Labs (NASDAQ: ALAB) is highlighted as one of the top AI stocks on Wall Street, with RBC Capital initiating coverage with an Outperform rating and a $225 price target. Despite recent underperformance, the company’s fundamentals remain strong with robust retimer growth and Scorpio-P switch ramps.

The company’s Scorpio-X scale-up switch is on track for a 2026 ramp, presenting a major multi-year opportunity. Analysts see potential for Astera Labs to participate in Ethernet/ESU standards, justifying a premium valuation with 40% growth, $10-15B SAM, and 70%+ gross margins. Initiate at Outperform.

Astera Labs is a semiconductor-based connectivity solutions provider for cloud and AI infrastructure. While the company shows promise as an investment, some AI stocks offer greater upside potential with less downside risk. For an undervalued AI stock poised to benefit from tariffs and onshoring trends, check out the best short-term AI stock.

For more insights on AI stocks, explore “12 Hot AI Stocks to Keep on Your Radar” and “11 AI Stocks Analysts Are Watching Closely.” Disclosure: None.

Read more at Yahoo Finance: RBC Initiates Astera Labs (ALAB) at Outperform, Sees Retimer Growth and Scorpio Ramp Driving Upside