From Nasdaq: 2025-02-14 13:17:00

Astera Labs (ALAB) shares plunged 36.2% after reporting lower-than-expected gross margin in Q4 2024. Despite this, record revenues of $141 million were driven by strong demand for Aries PCIe Retimer and Taurus Ethernet Smart Cable Module products, with ALAB shares surging 94.6% in the last six months, outperforming the sector and industry.

ALAB’s strong performance is attributed to high demand for Aries and Taurus Smart Cable Modules, driving revenue growth despite a shift towards lower-margin hardware products. The company’s AI scale-up connectivity solutions have led to significant design wins and sales, particularly in PCIe Retimers and Smart Fabric Switches for AI infrastructure.

Astera Labs collaborates with top chipmakers like NVIDIA, AMD, Micron, and Intel, impacting the AI industry significantly. Products like PCIe switches used in NVIDIA’s GB200 product showcase ALAB’s role in advancing AI technologies, enhancing efficiency for companies like AMD. The collaboration strengthens both companies’ positions in the AI market.

ALAB projects strong growth in Q1 2025, expecting revenues between $151 million and $155 million with non-GAAP earnings ranging from 28 to 29 cents per share. Earnings estimates for Q1 2025 show significant upward movement, with revenue expected to increase by 135.6% and earnings by 170% year-over-year.

Astera Labs stock is currently considered overvalued, with a Value Score of F and a forward 12-month Price/Sales ratio of 21.92X, higher than the sector average. Despite this, the company is poised for continued growth in the AI and cloud connectivity markets, supported by a strong product portfolio and expanding customer base. The stock carries a Zacks Rank #2 (Buy) and Growth Score of A, offering a promising investment opportunity.



Read more at Nasdaq: ALAB Plunges 36% Post Q4 Earnings: Is the Stock Worth Buying on the Dip?