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Should You Buy, Sell, or Hold ALAB Stock Before Q3 Earnings Release?
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Key Takeaways
{\"0\":\"Astera Labs expects Q3 2025 revenues of $203-$210 million, up 6%-9% year over year.\",\"1\":\"Strong AI server demand and growth across Aries, Taurus, and Scorpio products may drive results.\\r\\n\",\"2\":\"Higher R&D spending and tariff risks could pressure margins amid intense industry competition.\\r\\n\"}
Astera Labs expects third-quarter 2025 revenues between $203 million and $210 million, suggesting an increase of 6% to 9% year over year. Earnings are expected to be between 38 cents and 39 cents per share for the third quarter.
The Zacks Consensus Estimate for third-quarter revenues is currently pegged at $206.73 million, indicating an increase of 82.80% from the figure reported in the year-ago quarter.
The consensus mark for earnings is currently pegged at 39 cents per share, unchanged over the past 30 days, and suggests 69.57% growth over the figure reported in the year-ago quarter.
ALAB’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average earnings surprise being 32.20%.
Let’s see how things are shaping up prior to this announcement.
Factors to Note for ALAB’s Q3 Earnings
Astera Labs’ third-quarter 2025 revenues are likely to have benefited from increasing demand for artificial intelligence (AI) servers and data center infrastructure. Strong momentum across its three key product families, Aries, Taurus, and Leo, is likely to have contributed well.
Astera Labs expects accelerated shipments of Scorpio P-Series switches and Aries 6 retimers on a customized rack-scale AI platform based on market-leading GPUs to boost top-line growth. In the third quarter of 2025, the Aries product line is expected to have witnessed increased adoption across various end-customer platforms, supporting both scale-up and scale-out connectivity.
The Taurus product line is also expected to have contributed significantly to the top-line growth in the to-be-reported quarter. New designs for scale-out connectivity are entering volume production, which are likely to have driven revenues in the to-be-reported quarter.
The Scorpio product line, particularly the P-Series, will continue to play a key role in the to-be-reported quarter. The P-Series solutions are being deployed for scale-out applications on third-party GPU platforms, and the company expects this product line to grow sequentially in the third quarter.
However, uncertainty over tariff-related issues and stiff competition from the likes of Credo Technology (CRDO - Free Report) and Broadcom (AVGO - Free Report) are major headwinds. The company continues to invest in product development to stay ahead of the competition. In second-quarter 2025, research and development (R&D) expenses jumped 66.4% year over year to $66.7 million. Operating expense is expected to be between $76 million and $80 million in the third quarter of 2025, driven by higher R&D expenses.
ALAB Shares Underperform Sector
Astera Labs shares have rallied 28% year to date, underperforming the broader Zacks Computer and Technology sector’s return of 30.9%. However, it has outperformed the Zacks Internet Software industry’s return of 21.3%.
ALAB Stock's 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 29.12X, higher than the industry’s 5.66X.
Price/Sales (F12M)
Image Source: Zacks Investment Research
Strong Portfolio Aids Astera Labs Amid Growing Competition
Astera Labs is rapidly expanding its portfolio to address the growing demands of AI infrastructure and connectivity solutions. It benefits from strong demand for its PCIe solutions, which is noteworthy. The company has emerged as a key player in next-gen data center connectivity with a full-stack portfolio spanning PCIe 6.0, Ultra Accelerator (UA) Link, and CXL 3.0.
ALAB’s expanding portfolio has been noteworthy. ALAB recently became part of the Arm Total Design ecosystem. This allows its Intelligent Connectivity Platform to work with Arm Neoverse Compute Subsystems. It enables chiplet-based custom AI infrastructure solutions with improved PCIe, Ethernet, CXL, and UALink connectivity. This leads to faster and more compatible system development. Benefits from this partnership are likely to have been reflected in the to-be-reported quarter’s performance.
With the AI industry projected to grow significantly, Astera Labs is well-positioned to address the $5 billion market opportunity in scale-up connectivity by 2030. Its strategic partnerships with major players like NVIDIA (NVDA - Free Report) , AMD and Alchip Technologies, along with its focus on innovation, ensure that the company remains at the forefront of the AI infrastructure revolution.
In the second quarter of 2025, ALAB expanded its collaboration with NVIDIA to advance the NVLink Fusion ecosystem, giving hyperscalers more options for high-performance, scale-up networks. Astera Labs will provide NVLink connectivity solutions within its Intelligent Connectivity Platform, integrating PCIe, CXL, and Ethernet with the COSMOS suite in partnership with NVIDIA to optimize data center performance.
However, Astera Labs is facing stiff competition from both Broadcom and Credo Technology. Broadcom’s launch of PCIe Gen 6 portfolio, featuring high-port switches and retimers tested for interoperability with partners like Micron and Teledyne LeCroy, is a noteworthy development. Credo Technology has a healthy pipeline of PCIe Gen6 AECs and retimers, with further customer wins expected to support fiscal 2026 growth.
Conclusion
Astera Labs benefits from a strong portfolio and partner base amid rising competition and tariff uncertainties. A stretched valuation somewhat dims the stock’s appeal ahead of third-quarter 2025 results.
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 2025 results on Nov. 4.
Astera Labs expects third-quarter 2025 revenues between $203 million and $210 million, suggesting an increase of 6% to 9% year over year. Earnings are expected to be between 38 cents and 39 cents per share for the third quarter.
The Zacks Consensus Estimate for third-quarter revenues is currently pegged at $206.73 million, indicating an increase of 82.80% from the figure reported in the year-ago quarter.
The consensus mark for earnings is currently pegged at 39 cents per share, unchanged over the past 30 days, and suggests 69.57% growth over the figure reported in the year-ago quarter.
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 all the trailing four quarters, the average earnings surprise being 32.20%.
Let’s see how things are shaping up prior to this announcement.
Factors to Note for ALAB’s Q3 Earnings
Astera Labs’ third-quarter 2025 revenues are likely to have benefited from increasing demand for artificial intelligence (AI) servers and data center infrastructure. Strong momentum across its three key product families, Aries, Taurus, and Leo, is likely to have contributed well.
Astera Labs expects accelerated shipments of Scorpio P-Series switches and Aries 6 retimers on a customized rack-scale AI platform based on market-leading GPUs to boost top-line growth. In the third quarter of 2025, the Aries product line is expected to have witnessed increased adoption across various end-customer platforms, supporting both scale-up and scale-out connectivity.
The Taurus product line is also expected to have contributed significantly to the top-line growth in the to-be-reported quarter. New designs for scale-out connectivity are entering volume production, which are likely to have driven revenues in the to-be-reported quarter.
The Scorpio product line, particularly the P-Series, will continue to play a key role in the to-be-reported quarter. The P-Series solutions are being deployed for scale-out applications on third-party GPU platforms, and the company expects this product line to grow sequentially in the third quarter.
However, uncertainty over tariff-related issues and stiff competition from the likes of Credo Technology (CRDO - Free Report) and Broadcom (AVGO - Free Report) are major headwinds. The company continues to invest in product development to stay ahead of the competition. In second-quarter 2025, research and development (R&D) expenses jumped 66.4% year over year to $66.7 million. Operating expense is expected to be between $76 million and $80 million in the third quarter of 2025, driven by higher R&D expenses.
ALAB Shares Underperform Sector
Astera Labs shares have rallied 28% year to date, underperforming the broader Zacks Computer and Technology sector’s return of 30.9%. However, it has outperformed the Zacks Internet Software industry’s return of 21.3%.
ALAB Stock's 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 29.12X, higher than the industry’s 5.66X.
Price/Sales (F12M)
Image Source: Zacks Investment Research
Strong Portfolio Aids Astera Labs Amid Growing Competition
Astera Labs is rapidly expanding its portfolio to address the growing demands of AI infrastructure and connectivity solutions. It benefits from strong demand for its PCIe solutions, which is noteworthy. The company has emerged as a key player in next-gen data center connectivity with a full-stack portfolio spanning PCIe 6.0, Ultra Accelerator (UA) Link, and CXL 3.0.
ALAB’s expanding portfolio has been noteworthy. ALAB recently became part of the Arm Total Design ecosystem. This allows its Intelligent Connectivity Platform to work with Arm Neoverse Compute Subsystems. It enables chiplet-based custom AI infrastructure solutions with improved PCIe, Ethernet, CXL, and UALink connectivity. This leads to faster and more compatible system development. Benefits from this partnership are likely to have been reflected in the to-be-reported quarter’s performance.
With the AI industry projected to grow significantly, Astera Labs is well-positioned to address the $5 billion market opportunity in scale-up connectivity by 2030. Its strategic partnerships with major players like NVIDIA (NVDA - Free Report) , AMD and Alchip Technologies, along with its focus on innovation, ensure that the company remains at the forefront of the AI infrastructure revolution.
In the second quarter of 2025, ALAB expanded its collaboration with NVIDIA to advance the NVLink Fusion ecosystem, giving hyperscalers more options for high-performance, scale-up networks. Astera Labs will provide NVLink connectivity solutions within its Intelligent Connectivity Platform, integrating PCIe, CXL, and Ethernet with the COSMOS suite in partnership with NVIDIA to optimize data center performance.
However, Astera Labs is facing stiff competition from both Broadcom and Credo Technology. Broadcom’s launch of PCIe Gen 6 portfolio, featuring high-port switches and retimers tested for interoperability with partners like Micron and Teledyne LeCroy, is a noteworthy development. Credo Technology has a healthy pipeline of PCIe Gen6 AECs and retimers, with further customer wins expected to support fiscal 2026 growth.
Conclusion
Astera Labs benefits from a strong portfolio and partner base amid rising competition and tariff uncertainties. A stretched valuation somewhat dims the stock’s appeal ahead of third-quarter 2025 results.
ALAB currently has a Zacks Rank #3 (Hold), which implies that investors should 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.