Astera Labs upgraded to Overweight on AI connectivity demand: MS

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Blurred background of server room, Data center with racks servers and supercomputers. Neon lights and beautiful reflections of computer lights. 3D rendering illustration — IR_Stone/iStock through Getty Photographs

Astera Labs (NASDAQ:ALAB) was upgraded to Obese from Equal-weight as demand stays sturdy for its synthetic intelligence connectivity options and its cheaper price creates a pretty entry level, in line with Morgan Stanley.

Astera Labs simply went public not too long ago on March 20. Shares have been up 6% throughout late morning buying and selling on Wednesday.

Morgan Stanley set a value goal of $55 on the inventory.

“Following the current pullback on GB200 content material considerations, the inventory is buying and selling +50% under post-IPO peaks, and we now see a compelling entry level,” mentioned Morgan Stanley analyst Joseph Moore, in a notice. “We proceed to imagine that their progress trajectory is powerful, and belief the administration group’s capacity to execute.”

Astera Labs is a pure-play datacenter connectivity firm, and its main prospects embody hyperscalers, AI accelerator distributors and system unique gear producers.

“Whereas retimer content material in Nvidia’s (NVDA) rackscale options probably decreases, a number of in-house chips from hyperscalers are ramping this 12 months, together with Amazon (AMZN), Google (GOOG)(GOOGL), Meta (META), and extra,” Moore added. “We have no idea Astera’s particular content material per buyer, however we do imagine that their closest relationship is with Amazon from their warrant agreements.”

Astera Labs has a Purchase ranking from In search of Alpha analysts and a Robust Purchase ranking from Wall Avenue analysts. It isn’t coated by In search of Alpha’s Quant system.