Why Astera Labs Stock Surged on Monday
Key Points
It announced an important expansion project abroad.
This is an R&D facility in the Middle East.
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Semiconductor stock Astera Labs (NASDAQ: ALAB) notched a nearly 10% price gain on Monday, the day before it's slated to publish its latest earnings release. Optimism about the numbers the company will post, plus news of expansion abroad, helped drive that near-double-digit lift.
Researching how to grow
That morning, California-based Astera announced that it had opened an advanced research and development (R&D) center in Israel.
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Among other advantages, the company touted this as an effort that would advance artificial intelligence (AI) technology. It wrote in a press release that the facility "will accelerate the development of Astera Lab's next-generation scale-up fabrics for high-bandwidth connectivity protocols, while also advancing technical research and development to address memory bottlenecks in AI training and inference applications."
The center is to be managed by Astera's senior vice president of engineering and general manager of its Israel operations, Guy Azrad.
In the press release, the company touted collaboration activities with top universities in the country and entities within the vibrant Israeli venture capital community.
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Astera didn't provide any financial details of the Israel facility. Although we can assume it's fairly costly -- it's designed to be an "end-to-end" R&D shop, after all -- it could bolster the company's offerings considerably. This is a boom period for any hardware manufacturer involved in the global AI build-out, and Astera's launch of this new center is particularly well-timed.
Meanwhile, investors tracking the company's stock anticipate it will boost per-share earnings by 38% year over year to $0.51 in its fourth quarter, on the back of a nearly 77% rise in sales. Astera has a history of topping analyst bottom-line estimates, so we shouldn't be surprised if it repeats this accomplishment on Tuesday.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Astera Labs. The Motley Fool has a disclosure policy.
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