The latest performance triggers reflections, Wall Street collectively optimistic about "small NVIDIA Corporation" Astera Labs (ALAB.US), AI prospects continue to shine.

After Astera Labs (ALAB.US) announced its performance, Wall Street analysts expressed optimism for this Silicon Valley artificial intelligence infrastructure unicorn, which is known as the "little NVIDIA Corporation." They believe that with its latest quarterly results, the company has firmly established itself as a beneficiary of the AI spending boom, and this trend is expected to continue. The company, which provides semiconductor-based connectivity solutions, reported fourth-quarter performance and guidance that exceeded expectations. Needham analyst N. Quinn Bolton attributed this to the company's "robust product diversification," especially its Taurus Ethernet smart cable modules. "Astera Labs' performance exceeded expectations (10.4% above market expectations) and guidance was raised significantly (14.9% above market expectations), primarily driven by increased production of Taurus (smart cable modules) and Aries (smart cable modules), as well as ongoing demand for Aries re-timers in the market," Bolton wrote in a research report to clients. "Demand for Aries products remains strong in both horizontal and vertical network expansions. The company witnessed strong growth in Taurus products in the fourth quarter of 2024, primarily driven by 400G applications, followed by 200G applications. Looking ahead to the first quarter of 2025, multiple customers will drive sequential revenue growth for Aries products, while Taurus will continue to be driven by 400G applications." Bolton gave Astera Labs a "buy" rating with a target price of $140. Additionally, the company stated that it expects its Scorpio product line to gradually become the largest revenue DRIVER, partly due to the growing demand for NVIDIA Corporation's (NVDA.US) custom racks. Management downplayed the potential risks that DeepSeek might bring to AI capital spending, with Bolton explaining that new models will drive broader applications. "While inference may not require clusters as large as training, Astera Labs believes that both training and inference computational units will move from server level to rack level. Over time, Aries re-timers/(smart cable modules), Taurus (smart cable modules), Leo CXL, and Scorpio products will enhance the value of each rack," Bolton added. Evercore ISI analyst Mark Lipacis reiterated his "outperform" rating on Astera Labs and raised his target price to $123 as the company showed sustained growth momentum. Lipacis explained, "We maintain our buy rating as Astera Labs will benefit from the growth momentum of multiple products: Taurus is expected to grow by over 60% year-on-year in 2025, Leo will ramp up gradually in the second half of 2025 to 2026, Scorpio will contribute approximately 10% of revenue in 2025 (about $65 million) and is expected to become the largest product in 2026/27 (with re-timer revenue exceeding $300 million in 2024), and there may be new product launches in the next 12-18 months." "We still believe that our forecasts for 2025/26 may be conservative."