Should You Buy Astera Labs Stock Right Now?
Key Points
Astera Labs provides data center connectivity solutions, including retimers, switches, and ethernet smart cable modules.
Demand for its products is growing, as evidenced by revenue more than doubling year over year.
- 10 stocks we like better than Astera Labs ›
Although Astera Labs (NASDAQ: ALAB) is doing well this year, the last couple months have been rocky. Deals between other artificial intelligence (AI) companies have led to concerns about competition for Astera Labs' data center connectivity solutions.
Is the recent pullback a sign to stay away or a buying opportunity? Here's why there's still reason to be bullish on it.
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The numbers look good for Astera Labs
Astera Labs reported third-quarter earnings on Nov. 4, and the top and bottom lines surpassed analyst expectations. Quarterly revenue hit a record high of $231 million, a 20% increase from Q2 and a 104% year-over-year increase. Its net income was $91 million, compared to a loss of $8 million a year ago.
The results demonstrate growing demand for Astera Labs' product portfolio, which includes Aries retimers, Scorpio fabric switches, and Taurus ethernet smart cable modules. Scorpio switches, in particular, have done well for Astera Labs. They exceeded 10% of total revenue in Q2 2025, making them the fastest-ramping product in the company's history.
Astera Labs hasn't been a public company long -- it completed an initial public offering (IPO) in March 2024. And its stock is expensive, trading at about 40 times trailing sales (as of Nov. 8). For those reasons, it's a riskier investment than larger, more established tech stocks.
However, Astera Labs is also doing exactly what investors like to see. It's growing revenue at a rapid pace, building demand for its products, and has transitioned to profitability. If you're looking for AI stocks with plenty of room to grow, you may want to pick up some shares for your portfolio.
Should you invest $1,000 in Astera Labs right now?
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Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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