Astera Labs in focus as Deutsche sees continued AI strength

Astera Labs (NASDAQ:ALAB) was in focus on Tuesday as Deutsche Bank said the company is optimistic on its positioning in artificial intelligence.

Shares fell 3.7% in premarket trading.

At a recent Deutsche Bank conference, Astera Labs highlighted its impressive capex from hyperscalers as continuing, as well as a diversification of its customer base and product offerings, analyst Ross Seymore wrote in a note to clients. The continued expansion of AI cluster sizes has increased the need for seamless connectivity and real-time diagnostics within data centers to focus on limiting processor idle time and increasing efficiency, Seymore added.

The company also highlighted the emergence of an increased focus on total cost of ownership, which provides an intriguing opportunity, given the greater mix of custom silicon among hyperscalers, Seymore added.

The culmination of these impacts has led to an impressive content increase from the inception of the company, going from ~$100 per accelerator on the back of its retimer business to now multiple thousands of dollars as its Scorpio series ramps, Seymore posited.

As such, Seymore reiterated his Buy rating and upped his price target to $200 from $160.