After announcing better-than-expected third-quarter results, Astera Labs, often referred to as the 'little NVIDIA,' has once again received positive reviews from Wall Street.
After announcing better-than-expected third-quarter results, the company dubbed 'Little NVIDIA' $Astera Labs (ALAB.US)$ has once again received positive reviews from Wall Street.
The earnings report shows that Astera Labs, which focuses on providing semiconductor connectivity solutions for cloud and AI infrastructure, achieved record-high revenue of $230.6 million in the third quarter, representing a 20% increase quarter-over-quarter and a 104% surge year-over-year. The non-GAAP diluted earnings per share (EPS) were $0.49, compared to a loss per share of $0.05 in the same period last year, marking a turnaround to profitability. Looking ahead to the fourth quarter, the company expects revenue to reach between $245 million and $253 million, with non-GAAP diluted EPS estimated at approximately $0.51.
In a research note, Needham maintained its "Buy" rating for the stock and raised its price target from $205 to $220. The analyst team led by Quinn Bolton stated: "Astera Labs once again delivered significantly better-than-expected results and upward guidance revisions, driven by comprehensive growth across its Scorpio, Aries, and Taurus product lines. Our key takeaways include: 1) The company secured new Scorpio P design wins with multiple hyperscale cloud vendors and gained support from both commercial and custom accelerators. The Scorpio X series is expected to begin shipping in the fourth quarter of 2025 and ramp up in 2026; 2) PCIe Gen 6 products accounted for over 20% of third-quarter revenue, boosting average selling prices. For the PCIe version of the Scorpio X series, the company is currently collaborating with more than 10 AI platform providers." It is understood that the Scorpio X series refers to Astera Labs’ intelligent optical switch products.
The analysts added that Astera Labs' UALink project collaboration remains active, with management viewing it as an incremental opportunity for its PCIe customer base.
Citi also maintained its "Buy" rating and $275 price target for Astera Labs, highlighting that the company delivered an impressive set of results with "better-than-expected performance and upward guidance revisions."
The analyst team led by Atif Malik commented: "Management generally expects the Scorpio X series to become the largest revenue contributor by 2026, driven by factors including higher per-accelerator value, UALink beginning to generate revenue in 2027, and optical products scaling up in sales by 2028-29. Revenue growth is projected to be in the mid-single digits in the first half of 2026, accelerating in the second half. We remain optimistic about the stock, believing it has the potential to exceed market expectations of a 38% sales growth rate in 2026, with sales potentially doubling under an optimistic scenario."
The analysts noted that Astera Labs is well-positioned to benefit from the long-term development trends in AI infrastructure. The company aims to achieve above-industry-average growth through increased sales volume and enhanced product value.
The analysts also mentioned that Astera Labs' management believes investors have underestimated its opportunities for scale expansion. Management commented that compared to 90 days ago, the company’s outlook has only improved, and they are highly enthusiastic about the vast array of market opportunities ahead.
Malik and his team stated: 'In the early stages of AI infrastructure deployment, the scale expansion topology or network architecture has already been determined, providing opportunities for Astera Labs' new products (such as copper cable or optical solutions). As a result, the company has been continuously securing more design wins, with strong growth momentum in the Scorpio product line, while actively expanding into the optical domain.'
Editor/Doris
