Astera Labs shares surged on Wednesday after the chipmaker introduced a new family of data center switches built for artificial intelligence infrastructure. ALAB stock advanced over 15% on the news.
Late Tuesday, the Santa Clara, Calif.-based company announced its Scorpio Smart Fabric Switch portfolio, including the industry's first PCIe 6 switch. The PCIe 6 specification doubles the bandwidth and power efficiency of the PCIe 5 specification. PCIe stands for Peripheral Component Interconnect Express, a type of connection used for high-speed data transfer between electronic components.
Astera Labs specializes in making semiconductor-based connectivity solutions for AI and cloud computing infrastructure.
Astera Labs said its Scorpio switches are "optimized for AI dataflows to deliver maximum predictable performance per watt, high reliability, easy cloud-scale deployment, reduced time-to-market, and lower total cost of ownership."
ALAB Stock Pops On News
On the stock market today, ALAB stock jumped 15.6% to close at 61.22.
Astera Labs started trading on March 20 with its initial public offering priced at $36 a share. ALAB stock hit a record high of 95.21 on March 26.
Morgan Stanley analyst Joseph Moore on Wednesday reiterated his overweight, or buy, rating on Astera Labs. He also raised his price target on ALAB stock to 74 from 55.
Astera Labs Competes With Broadcom
Broadcom dominates the data center switch market today with its PCIe 5 switches, but Astera Labs looks to jump ahead of it with the first sixth-generation PCIe switches, Moore said in a client note.
"Announcing first is encouraging, but we are likely to see announcements from connectivity peers in the coming weeks," Moore said. "The market for switches is very large (estimated $5 billion) and we do think Astera has an opportunity to compete here."
Needham analyst Quinn Bolton kept his buy rating on ALAB stock with a price target of 65.
"The new product line competes directly with incumbents, including Broadcom, which have less efficient, traditionally architected PCIe switches," he said in a client note.
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