Astera Labs (ALAB), valued at $15.5 billion by market cap, designs and manufactures semiconductor-based connectivity solutions for cloud and AI infrastructure. It offers an intelligent connectivity platform featuring PCIe/CXL retimes, Ethernet cable modules, CXL memory controllers, and fabric switches, integrated with COSMOS software for fleet management. Founded in 2017, it serves hyperscalers and system manufacturers. 

ALAB stock went public in March 2024 and has since returned 33% to shareholders. However, the tech stock also trades 35% below all-time highs, making it attractive to contrarian investors. Let’s see if you should own Astera Labs stock right now. 

Astera Labs Expands Partnership with Nvidia

Earlier this week, Astera Labs announced it is collaborating with Nvidia (NVDA) to provide scale-up connectivity solutions for the new NVIDIA NVLink Fusion ecosystem, expanding opportunities in the rapidly growing AI infrastructure market.

The semiconductor company will add NVLink solutions to its Intelligent Connectivity Platform, which integrates PCIe, CXL, and Ethernet technologies. This collaboration aims to help hyperscalers efficiently deploy AI infrastructure with Nvidia GPUs and custom accelerators.

“To keep pace with rapidly growing AI models which have reached trillions of parameters, AI infrastructure providers must adopt scale-up platforms that deliver both high performance and high efficiency,” said Sanjay Gajendra, Astera Labs’ president and COO.

The partnership builds on years of collaboration, with Astera Labs’ solutions already deployed across NVIDIA’s Hopper and HGX platforms.

Is Astera Labs Stock a Good Buy Right Now?

Astera Labs has evolved from providing PCIe retimes to hyperscalers into a comprehensive platform spanning multiple protocols. Through its COSMOS software suite, its intelligent connectivity platform integrates PCIe, CXL, Ethernet, and emerging technologies like UALink and NVLink. These solutions provide unified management across data center fleets. This holistic approach allows Astera Labs to offer everything from signal conditioning devices to smart fabric switches.

Astera Labs is particularly well-positioned for the transition from scale-out to scale-up AI architectures, where hundreds or thousands of GPUs must function as a single supercomputer. Its leadership in the UALink consortium, an open standard for rack-scale AI connectivity, demonstrates its commitment to addressing industry challenges around power efficiency, total cost of ownership, and accelerator diversity.

With production deployments expected by 2027 and multibillion-dollar market opportunities ahead, Astera Labs represents a strategic bet on the infrastructure backbone that will enable the next generation of AI computing at unprecedented scale.

Astera Labs has established itself as the dominant force in AI infrastructure connectivity, with silicon and software integrated into 90% of the world’s AI compute servers and clusters. The company delivered exceptional Q1 results with $159 million in revenue, up 144% year-over-year, driven primarily by strong adoption of its Aries retimer and Taurus Ethernet product families across both scale-up and scale-out applications.

Astera’s comprehensive product portfolio includes PCIe retimes, Ethernet connectivity solutions, and the newly launched Scorpio fabric switches. The company estimates its total addressable market at more than $12 billion, which gives it enough room to grow sales in the upcoming decade.

Astera’s competitive moat lies in its COSMOS software platform, which provides real-time diagnostics, telemetry, and fleet management capabilities that are integrated into customers’ data center operations.

Key growth drivers include the transition to PCIe Gen6 with Blackwell platform qualifications, expanding Scorpio switch deployments starting in Q2, and increasing content per GPU as architectures scale to rack-level implementations. The company maintains commanding market share in retimers while positioning itself as the connectivity backbone for both merchant GPUs and custom ASIC accelerators.

What Is the Target Price for ALAB Stock?

Analysts tracking ALAB stock expect sales to rise from $396 million in 2024 to $1.92 billion in 2029. In this period, adjusted earnings are forecast to expand from $0.84 per share to $4.35 per share.

Today, ALAB stock trades at 69x forward earnings, which is quite steep. If the chip stock is priced at 50x forward earnings, it will trade around $220 per share in early 2029, indicating upside potential of over 100% from current levels. 

Out of the 14 analysts covering Astera Labs stock, 10 recommend “Strong Buy,” two recommend “Moderate Buy,” and two recommend “Hold.” The average target price for Astera Labs stock is $99.28, indicating marginal upside potential from current prices.