Astera Labs Is Gaining Market Share, 2 Analysts Recommend The Stock Despite IPO Rally

Shares of semiconductor connectivity solutions provider Astera Labs Inc ALAB made its public debut with a rally on the first day of trading.

Here are some key analyst insights into the Santa Clara, California-based company, which raised $700 million in its initial public offering.

• Needham analyst Quinn Bolton initiated coverage with a Buy rating and price target of $85.
• JPMorgan analyst Harlan Sur initiated coverage with an Overweight rating and price target of $85.

Check out other analyst stock ratings.

Needham: The stock represents a “unique investment,” as the company's complete product suite “targets connectivity challenges in cloud and AI infrastructure” and offers “interoperability and observability, which we believe drive customer stickiness and share retention,” Bolton said in the initiation note.
Although the stock valuation is high, the company is “among the fastest growers in the semiconductor industry with industry-leading margins, and we expect estimates to rise, specifically from higher AI server shipments and/or higher retimer attach rates,” the analyst added.

JPMorgan: Being a leader in the high-speed compute connectivity semiconductors for accelerated compute/AI servers, Astera Labs is “leveraging its core expertise in high-speed circuit design, digital signal processing, and system-level/software expertise to move into other areas of the datacenter connectivity market like traditional networking and memory,” Sur said in another initiation note.

Increasing compute complexity is "driving performance bottlenecks" across the data center, especially around compute/networking connectivity, the analyst wrote. The company’s share is growing in the connectivity semiconductor market, which represents a SAM (serviceable addressable market) of around $1 billion that is projected to expand to $7 billion by 2027.

ALAB Price Action: Shares of Astera Labs had risen by 5.37% to $76.64 at the time of publication on Monday.

Image: Pixabay/Astera