Astera Labs: The AI Connectivity Thesis Is Stronger, But The Valuation Is Full
Latest close: $362.76 Date: Sep. 29, 2026 Updated rating: Hold
Summary
Downgrading Astera Labs (ALAB) from Strong Buy to Hold. The company is performing well, but the market has already accounted for much of the upcoming product ramp. Q2 2026 revenue was $392.4Mn, up 104% year-over-year, with a non-GAAP diluted EPS of $0.80. Q3 revenue guidance is $540Mn-$560Mn.
The original operating thesis strengthened: Aries remained strong, Scorpio X-Series entered the volume ramp, and Astera said Scorpio should become its largest product family in Q3.
My base valuation is $340 per share using 2027E non-GAAP EPS of $6.20, a 60x P/E, and a 10% discount rate. That implies about 6% downside from the latest close.
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