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It has been about a month since the last earnings report for Astera Labs, Inc. (ALAB - Free Report) . Shares have lost about 13.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Astera Labs, Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Astera Labs Q2 Earnings Beat on PCIe 6 and Scorpio StrengthAstera Labs reported second-quarter 2026 non-GAAP earnings of 80 cents per share, up 81.8% year over year. The figure beat the Zacks Consensus Estimate by 15.94%.

Revenues surged 104.4% year over year to $392.4 million, surpassing the Zacks Consensus Estimate by 8.93%. Broad-based demand across AI fabrics and signal-conditioning products drove the upside, while PCIe 6 offerings generated more than half of quarterly revenues.

ALAB Posts Broad-Based Portfolio GrowthThe top line increased 27% sequentially, reflecting strength across the company’s product portfolio. Management cited expanding design activity across customers and product categories as AI infrastructure deployments require greater connectivity bandwidth and more complex switching architectures.

Aries generated record quarterly revenues on solid adoption of PCIe 6 retimers across scale-up and scale-out applications. Demand also benefited from continued PCIe 5 deployments, particularly for inference workloads and higher attach rates associated with newer AI server platforms.

Astera Labs Scales Scorpio X-SeriesThe Scorpio product family delivered significant growth as the X-Series began shipping in initial production volumes across multiple lane configurations. The high-radix Scorpio X-Series entered volume production and is expected to scale materially during the second half of 2026.

Management expects Scorpio to become the company’s largest product family in the third quarter, one quarter earlier than previously projected. The transition will be led by the 320-lane Scorpio X-Series fabric switch, which supports larger accelerator clusters and includes hardware-based Hypercast and in-network compute capabilities.

ALAB Expands Taurus and CXL OpportunitiesTaurus revenues grew strongly on increased unit shipments across AI and general-purpose computing platforms. The company also delivered preproduction volumes of 100-gigabit-per-lane Taurus Smart Cable Modules for 800-gigabit active electrical cables.

Astera Labs expanded the Taurus portfolio with 3.2-terabit Smart Retimers and Smart Redrivers supporting 200-gigabit-per-lane Ethernet and UALink connectivity. Management expects the new offerings to double the Taurus market opportunity to more than $4 billion by 2030.

The company also reported renewed momentum for its Leo CXL memory controllers. ALAB secured a new standard Leo design win with a U.S. hyperscaler and expects standard and custom products to enter volume production at two U.S. hyperscalers in 2027.

Astera Labs’ Margin and Expense DetailsNon-GAAP gross margin was 73.7% in the second quarter of 2026, contracting 230 basis points year over year. The margin performance reflected a broader product mix as Astera Labs scaled its AI fabric and signal-conditioning portfolios.

Non-GAAP operating expenses totaled $135.8 million, rising 10% sequentially as Astera Labs continued investing in its product roadmap. Research and development expenses surged 103.7% year over year to $135.9 million. Sales and marketing expenses increased 41.7% year over year to $26.4 million, while general and administrative expenses rose 76.2% year over year to $36 million.

In the second quarter of 2026, non-GAAP operating margin expanded 290 basis points sequentially to 39.1%.

Astera Labs Maintains Strong Liquidity and Operating CashAstera Labs ended June 30, 2026, with $1.25 billion in cash, cash equivalents, and marketable securities, up $68.5 million from the prior quarter.

Cash provided by operating activities was $87.7 million, supporting continued investments in technology development and portfolio expansion.

Astera Labs Issues Strong Q3 OutlookFor the third quarter of 2026, revenues are expected to be between $540 million and $560 million. The midpoint implies sequential growth of approximately 40%, driven by the Scorpio X-Series production ramp, continued Aries PCIe 6 retimer strength and preproduction Taurus shipments for 800-gigabit Ethernet applications.

Non-GAAP gross margin is projected to be approximately 72%. Non-GAAP operating expenses are expected to be between $156 million and $160 million, with the operating margin forecasted to be roughly 43%.

Management projects non-GAAP earnings between $1.16 and $1.21 per share. The outlook assumes interest and other income of approximately $12 million, a 12% non-GAAP tax rate and about 185 million shares outstanding.

How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in estimates review.

The consensus estimate has shifted 71.68% due to these changes.

VGM ScoresCurrently, Astera Labs, Inc. has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock has a grade of F on the value side, putting it in the fifth quintile for value investors.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Astera Labs, Inc. has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry PlayerAstera Labs, Inc. belongs to the Zacks Internet - Software industry. Another stock from the same industry, EverQuote (EVER - Free Report) , has gained 8.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.

EverQuote reported revenues of $195.09 million in the last reported quarter, representing a year-over-year change of +24.6%. EPS of $0.65 for the same period compares with $0.39 a year ago.

EverQuote is expected to post earnings of $0.67 per share for the current quarter, representing a year-over-year change of +34%. Over the last 30 days, the Zacks Consensus Estimate has changed +24.4%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for EverQuote. Also, the stock has a VGM Score of A.

Bank of Nova Scotia purchased a new stake in shares of Astera Labs, Inc. (NASDAQ:ALAB – Free Report) during the 2nd quarter, according to its most recent Form 13F filing with the Securities and Exchange Commission. The institutional investor purchased 105,089 shares of the company’s stock, valued at approximately $50,760,000. Bank of Nova Scotia owned approximately 0.06% of Astera Labs at the end of the most recent quarter.

Several other large investors have also recently added to or reduced their stakes in ALAB. BlackRock Inc. bought a new stake in shares of Astera Labs during the 2nd quarter valued at about $6,609,581,000. Atreides Management LP grew its holdings in shares of Astera Labs by 108.9% during the first quarter. Atreides Management LP now owns 3,365,787 shares of the company’s stock valued at $368,890,000 after purchasing an additional 1,754,593 shares during the last quarter. Amundi raised its position in shares of Astera Labs by 1,298.6% during the 3rd quarter. Amundi now owns 1,421,263 shares of the company’s stock worth $278,283,000 after purchasing an additional 1,319,643 shares during the period. Artisan Partners Limited Partnership acquired a new stake in shares of Astera Labs during the 4th quarter worth approximately $148,980,000. Finally, Goldman Sachs Group Inc. lifted its holdings in shares of Astera Labs by 189.0% in the 4th quarter. Goldman Sachs Group Inc. now owns 1,312,927 shares of the company’s stock worth $218,419,000 after purchasing an additional 858,693 shares during the last quarter. 60.47% of the stock is currently owned by institutional investors.

Analyst Upgrades and Downgrades ALAB has been the subject of a number of recent research reports. Susquehanna upped their price objective on Astera Labs from $230.00 to $275.00 and gave the stock a “neutral” rating in a research note on Friday, July 31st. Barclays raised their target price on Astera Labs from $200.00 to $325.00 and gave the company an “equal weight” rating in a research note on Monday, July 20th. Jefferies Financial Group boosted their price target on shares of Astera Labs from $270.00 to $450.00 and gave the company a “buy” rating in a report on Wednesday, August 5th. Morgan Stanley increased their price objective on shares of Astera Labs to $335.00 and gave the stock an “overweight” rating in a report on Monday, August 3rd. Finally, Needham & Company LLC lifted their price objective on shares of Astera Labs from $260.00 to $425.00 and gave the company a “buy” rating in a research report on Wednesday, August 5th. One analyst has rated the stock with a Strong Buy rating, fourteen have issued a Buy rating and eight have given a Hold rating to the stock. Based on data from MarketBeat, Astera Labs presently has a consensus rating of “Moderate Buy” and a consensus price target of $333.00.

Get Our Latest Stock Analysis on ALAB Astera Labs Price Performance NASDAQ ALAB opened at $284.97 on Monday. Astera Labs, Inc. has a 12 month low of $97.89 and a 12 month high of $499.48. The company’s 50 day simple moving average is $352.70 and its 200 day simple moving average is $245.57. The firm has a market capitalization of $49.44 billion, a PE ratio of 141.07 and a beta of 3.84.

Astera Labs (NASDAQ:ALAB – Get Free Report) last announced its quarterly earnings data on Tuesday, August 4th. The company reported $0.80 earnings per share for the quarter, beating the consensus estimate of $0.69 by $0.11. Astera Labs had a return on equity of 19.24% and a net margin of 30.74%.The business had revenue of $392.40 million during the quarter, compared to analyst estimates of $360.85 million. During the same quarter in the prior year, the firm posted $0.44 earnings per share. The company’s revenue was up 104.5% on a year-over-year basis. Astera Labs has set its Q3 2026 guidance at 1.160-1.210 EPS. Sell-side analysts anticipate that Astera Labs, Inc. will post 2.7 earnings per share for the current fiscal year.

Insider Buying and Selling In other Astera Labs news, Director Manuel Alba sold 136,974 shares of the firm’s stock in a transaction dated Wednesday, July 1st. The shares were sold at an average price of $442.01, for a total value of $60,543,877.74. Following the completion of the transaction, the director directly owned 1,287,524 shares in the company, valued at $569,098,483.24. This trade represents a 9.62% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is available through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Stefan A. Dyckerhoff sold 8,994 shares of the firm’s stock in a transaction dated Wednesday, July 1st. The stock was sold at an average price of $450.00, for a total value of $4,047,300.00. Following the sale, the director owned 4,631 shares of the company’s stock, valued at $2,083,950. The trade was a 66.01% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last 90 days, insiders sold 419,244 shares of company stock valued at $163,135,169. Company insiders own 10.40% of the company’s stock.

About Astera Labs (Free Report)

Astera Labs is a fabless semiconductor company that develops connectivity solutions for data center and cloud infrastructure. The firm focuses on addressing signal integrity and link management challenges that arise as server architectures incorporate higher-bandwidth processors and accelerators. Its technology is aimed at improving reliability and performance for high-speed interconnects used in servers, storage systems and compute accelerators.

The company’s product portfolio centers on silicon devices and accompanying firmware and software that enhance and manage high-speed links.

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Key Takeaways Astera Labs posted 104% revenue growth as PCIe 6 products surpassed half of total revenue.Arista Networks surpassed 100 AI fabric customers as Ethernet-based AI infrastructure expands.Both companies expect strong 2026 growth, with ALAB and ANET seeing improving earnings estimates. The rapid expansion of AI infrastructure has created a strong opportunity for companies that supply computing and networking systems required to develop AI models. Moreover, AI infrastructure is moving toward faster links, larger accelerator clusters and more complex rack-scale topologies, significantly expanding connectivity content opportunity.

Here, we recommend two stocks — Astera Labs Inc. (ALAB - Free Report) and Arista Networks Inc. (ANET - Free Report) — from these spaces for investment in 2026. The stocks currently sport a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our two picks year to date.

Image Source: Zacks Investment Research

Astera Labs Inc.Astera Labs develops semiconductor-based connectivity solutions tailored for cloud and AI infrastructure. ALAB is benefiting from surging demand for PCIe (Peripheral Component Interconnect Express) solutions, particularly as AI infrastructure investments accelerate globally.  

In the second quarter of 2026, ALAB reported record revenues of $392.4 million, up 104% year over year, with PCIe 6 products representing more than 50% of total revenues compared with 33% in the first quarter. This growth is driven by the adoption of its Scorpio AI Fabric Switches and Aries Retimers, which are critical for high-speed, low-latency connectivity in hyperscale data centers and AI clusters.

Diversified Product PortfolioIn the last quarter, Aries signal conditioning products reached record quarterly revenue, while Taurus grew across AI and general-purpose platforms. Management expects the transition to continue as PCIe 6 adoption broadens and 800-gig Ethernet deployments expand along with next-generation 200-gig per lane solutions.

High-radix Scorpio X-Series is entering volume production with an initial customer, while additional X-Series customers are expected to begin revenue shipments by year-end. Scorpio P-Series is also expanding across hyperscalers and AI infrastructure providers, with several programs expected to ramp more materially in 2027. 

ALAB  expects future Scorpio X-Series content to exceed $1,000 per XPU as next-generation systems adopt more complex switching topologies, larger clusters and higher bandwidth. Hypercast and In-Network Compute also deepen COSMOS integration within customers’ AI fabrics.

Astera Labs’ COSMOS software platform, which enables dynamic traffic shaping and real-time performance management, adds a layer of differentiation by making its hardware solutions more integrated and stickier for customers. 

The company is also investing in optical interconnects, with plans to deliver near-packaged optics and co-packaged optics solutions in 2027 and beyond, unlocking new multi-billion-dollar market opportunities.

Strong OutlookFor the third quarter of 2026, revenues are expected to be between $540 million and $560 million. The midpoint implies sequential growth of approximately 40%. Management projects non-GAAP earnings between $1.16 and $1.21 per share. Non-GAAP gross margin and operating margin are projected to be approximately 72% and 43%.

Solid Estimate RevisionsAstera Labs has an expected revenue and earnings growth rate of more than 100%, each, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 33.7% over the last 30 days. 

ALAB has an expected revenue and earnings growth rate of 60.9% and 56.9%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 53.6% over the last 30 days. 

Image Source: Zacks Investment Research

Robust Price Upside PotentialThe short-term average price target of brokerage firms represents an increase of 32.1% from the last closing price of $321.61. The brokerage target price is currently in the range of $310-$500. This indicates a maximum upside of 55.5% and a downside of mere 3.6%.

Arista Networks Inc.Arista Networks provides cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for next-generation data center networks.

ANET strengthens its position in AI networking as enterprises and hyperscale customers expand Ethernet-based AI infrastructure. During the second quarter of 2026, the company exceeded 100 cumulative AI fabric customers using Etherlink switches, compared with only a handful of early adopters in 2024.

The new 7060XE7 family introduces 1.6-terabit platforms with liquid-cooled options, while Smart System Upgrade, Multipath Reliable Connection and SRv6 enhance AI cluster efficiency and utilization. These developments reinforce ANET’s long-term competitive position as AI networking architectures become increasingly Ethernet-centric.

Broad Product PortfolioArista Networks broaden its networking portfolio to address evolving AI, cloud and enterprise infrastructure requirements. ANET now offers switching platforms spanning traditional Ethernet deployments through emerging 1.6-terabit AI fabrics while expanding liquid-cooled networking solutions for next-generation data centers.

ANET expand its software platform beyond cloud data centers through automation, campus networking, routing and AI networking capabilities. The company's unified EOS architecture enables programmable networking across client, campus, cloud and AI environments while supporting advanced routing, observability and operational automation.

Strong OutlookFor the third quarter of 2026, management expects revenues to be approximately $3.3 billion, driven by healthy growth momentum and solid demand trends. Non-GAAP operating margin is expected to be 48-49%, and non-GAAP earnings per share are expected to be between $1.06 and $1.08. Management also expects AI revenue to reach at least $3.6 billion in 2026, supported by scale-up, scale-out and scale-across deployments.

Solid Estimate RevisionsArista Networks has an expected revenue and earnings growth rate of 37.7% 35.6%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 11.3% over the last 30 days. 

ANET has an expected revenue and earnings growth rate of 25.4% and 23.4%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 13.7% over the last 30 days. 

Image Source: Zacks Investment Research

Impressive Price Upside PotentialThe short-term average price target of brokerage firms represents an increase of 20.7% from the last closing price of $198.82. The brokerage target price is currently in the range of $179.15-$289. This indicates a maximum upside of 45.3% and a downside of mere 9.9%.

Key Takeaways Astera Labs posted record Q2 revenues of $392.4M, up 104%, with PCIe 6 above 50% of revenues. Scorpio X-Series is set to become ALAB's largest product family by the third quarter, ahead of schedule. ALAB expects Q3 revenues of $540M-$560M, driven by Scorpio, Aries and preproduction Taurus shipments. Astera Labs (ALAB - Free Report) is benefiting from surging demand for PCIe (Peripheral Component Interconnect Express) solutions, particularly as AI infrastructure investments accelerate globally.  In the second quarter of 2026, Astera Labs reported record revenues of $392.4 million, up 104% year over year, with PCIe 6 products representing more than 50% of total revenues. This growth is driven by the adoption of their Scorpio AI Fabric Switches and Aries Retimers, which are critical for high-speed, low-latency connectivity in hyperscale data centers and AI clusters.

The company’s diversified product portfolio is a key strength. Scorpio X-Series, now in volume production, is set to become ALAB’s largest product family by the third quarter of 2026, ahead of schedule. Aries signal conditioning products also delivered record revenues, driven by the transition to PCIe 6 and the increasing complexity of AI system deployments. Taurus, another product line, is ramping up with 800-gig deployments and next-generation 200-gig per lane solutions, expanding ALAB’s market reach.

Staying ahead of competitors like Marvell Technology (MRVL - Free Report) and Credo Technology Group (CRDO - Free Report) , ALAB needs to maintain its pace of innovation and execution. The company’s roadmap includes next-generation PCIe and UALink protocols, optical connectivity solutions and custom silicon for specialized AI workloads.

ALAB’s COSMOS software platform, which enables dynamic traffic shaping and real-time performance management, adds a layer of differentiation by making its hardware solutions more integrated and stickier for customers. The company is also investing in optical interconnects, with plans to deliver near-packaged optics and co-packaged optics solutions in 2027 and beyond, unlocking new multi-billion-dollar market opportunities.

ALAB’s strong financial performance, robust product pipeline and strategic focus on high-growth connectivity markets position it well to stay ahead of MRVL and CRDO. For the third quarter of 2026, revenues are expected to be between $540 million and $560 million. The midpoint implies sequential growth of approximately 40%, driven by the Scorpio X-Series production increase, continued Aries PCIe 6 retimer strength and preproduction Taurus shipments for 800-gigabit Ethernet applications.

ALAB Faces Stiff CompetitionALAB is facing stiff competition from other industry players like Marvell Technology and Credo Technology Group. Both Marvell Technology and Credo Technology are making strong efforts in the connectivity space.

Marvell Technology’s expanding portfolio has been noteworthy. In June 2026, the company introduced the Teralynx T100, the industry’s first 102.4 Tbps AI-optimized switch silicon, delivering up to 25% lower power consumption and ultra-low latency to improve efficiency and scalability in large AI data center networks.

Credo Technology’s expanding portfolio has been noteworthy. In May 2026, the company completed the acquisition of DustPhotonics, adding industry-leading silicon photonics technology to strengthen its optical interconnect portfolio across 800G, 1.6T and 3.2T solutions. The acquisition enhances Credo Technology’s vertically integrated AI connectivity stack and is expected to be a significant growth driver in fiscal 2027, supported by increasing hyperscale AI adoption.

ALAB’s Share Price Performance, Valuation, and EstimatesALAB shares have surged 87.6% in the year-to-date period, outperforming the broader Zacks Computer & Technology sector’s increase of 17.7%. The Zacks Internet - Software industry has decreased 1.8% in the same time frame.

ALAB Stock’s Performance
Image Source: Zacks Investment Research

ALAB stock is trading at a premium, with a forward 12-month Price/Sales of 20.81X compared with the  Internet - Software industry’s 4.09X. ALAB has a Value Score of F.

ALAB’s Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for 2026 earnings is pegged at $ 3.09 per share, which has increased 4.04% over the past 30 days. This suggests 67.93% year-over-year growth.

ALAB’s Zacks RankAstera Labs currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Takeaways Microchip will showcase an end-to-end PCIe Gen 6 storage architecture with Micron's 9650 NVMe SSDs.The platform offers higher bandwidth, lower latency and scalable connectivity for AI, HPC and cloud workloads.Microchip's broader portfolio may shorten development cycles and improve interoperability. Microchip Technology (MCHP - Free Report) announced on Tuesday (Aug. 4) that it will showcase an end-to-end PCIe Gen 6 storage architecture, which combines its Switchtec PCIe Gen 6 switches with Micron’s (MU - Free Report) 9650 NVMe solid-state drives (SSDs). The architecture will strengthen MCHP’s prospects in the rapidly expanding AI and enterprise data-center market. The collaboration with Micron expands MCHP’s opportunity across hyperscalers, enterprise-server manufacturers, storage vendors and semiconductor companies building CPU- and GPU-based platforms. It also strengthens Microchip’s competitive prowess against Broadcom (AVGO - Free Report) and Astera Labs (ALAB - Free Report) .

The combination of Microchip’s Switchtec PCIe Gen 6 switches with Micron’s high-performance 9650 NVMe SSDs offers greater bandwidth, lower latency and scalable storage connectivity for AI, high-performance computing (HPC) and cloud workloads. Micron’s 9650 is positioned as the first PCIe Gen 6 data-center SSD and offers as much as twice the performance of PCIe Gen 5 drives. Pairing these drives with MCHP’s Switchtec switches allows multiple high-speed storage devices to connect efficiently with processors, accelerators and memory resources. This is particularly relevant in disaggregated computing architectures, where data must move rapidly among increasingly distributed compute and storage components.

The combination also highlights the performance advantages of Microchip’s latest Switchtec platform. The company’s PCIe Gen 6 switches are manufactured using a 3-nanometer process, support configurations of up to 160 lanes and are designed to deliver lower power consumption in high-density AI systems. Microchip offers Switchtec switches along with storage controllers, memory controllers, retimers, power-management devices and timing products, which reflects the company’s focus on offering a broader system-level solution rather than competing with a stand-alone switching component.

This broader portfolio could give Microchip an important competitive advantage. Customers adopting PCIe Gen 6 must address switching, signal integrity, storage control, timing, power and management-software requirements simultaneously. MCHP can potentially supply several of these elements, supported by its ChipLink tools, unified management software and cross-product visibility. Such integration can shorten customer development cycles, improve interoperability and raise the amount of Microchip content in each platform. It also supports MCHP’s Total System Solutions strategy, under which an anchor-product design win can lead to the attachment of several complementary Microchip products.

MCHP Faces Tough CompetitionBroadcom competes with Microchip in PCIe switches, PCIe retimers, networking, and storage connectivity, while Astera Labs offers PCIe Gen 6 fabric switches, PCIe retimers and CXL memory connectivity.

Broadcom is rapidly strengthening its position across AI infrastructure, creating competitive pressure for Microchip in high-performance data centers. The company expects AI semiconductor revenue to reach $56 billion in FY2026, up approximately 180% year over year, with revenue projected to exceed $100 billion in FY2027, driven by custom AI accelerators (XPUs) and networking solutions for six major hyperscale AI customers.

Astera Labs’ close alignment with hyperscale cloud providers and GPU platform roadmaps position it to capture an increasing share of next-generation AI server designs. One of the company's biggest competitive strengths is its Scorpio AI Fabric Switch portfolio. Astera Labs said Scorpio X-Series has entered volume production and is expected to become its largest product family in the third quarter, one quarter earlier than previously expected. The company is already shipping multiple Scorpio X configurations into hyperscale AI platforms and expects deployments to expand across additional customers by year-end.

MCHP’s Share Price Performance, Valuation & EstimatesShares of Microchip have appreciated 21.8% year to date, outperforming the broader Zacks Computer and Technology sector’s rise of 18.6%.

MCHP Stock’s Price Performance
Image Source: Zacks Investment Research

The MCHP stock is trading at a premium, with a forward 12-month price/earnings of 23.44X compared with the broader sector’s 21.96X. Microchip has a Value Score of D.

MCHP’s Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Microchip’s fiscal 2027 earnings is currently pegged at $3.14 per share, up by a nickel over the past 30 days, suggesting 91.46% growth from fiscal 2026’s reported figure.
 

Microchip currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Record quarterly revenue of $392.4 million, up 27% QoQ and up 104% year-over-yearQ2 revenue strength reflects diversified growth across AI fabrics and signal conditioningQ3 revenue inflection to be driven by Scorpio™ X-Series 320-lane fabric switch production ramp SAN JOSE, Calif., Aug. 04, 2026 (GLOBE NEWSWIRE) -- Astera Labs, Inc. (Nasdaq: ALAB), a leader in semiconductor-based connectivity solutions for rack-scale AI infrastructure, today announced preliminary financial results for the second quarter of fiscal year 2026, ended June 30, 2026.

“Astera Labs delivered outstanding Q2 2026 results, with record revenue of $392.4 million, up 27% sequentially and 104% year-over-year, driven by broad-based strength across our portfolio, including record quarterly revenue for our Aries product line,” said Jitendra Mohan, Astera Labs’ Chief Executive Officer. “We expect momentum to accelerate in Q3 as Scorpio fabric switches become our largest product family, one quarter ahead of our prior expectations. This milestone will mark our evolution into a complete AI fabric infrastructure provider. New design wins across a broadening set of customers coupled with our expansion into optical interconnects and custom solutions further expand our growth opportunity in 2027 and beyond.”

Second Quarter of Fiscal 2026 Financial Highlights
GAAP Financial Results:  

Revenue of $392.4 million, up 27% sequentially and up 104% year-over-yearGAAP gross margin of 73.3%GAAP operating income of $89.2 millionGAAP operating margin of 22.7%GAAP net income of $153.1 millionGAAP diluted net income per share of $0.83 Non-GAAP Financial Results (1):

Non-GAAP gross margin of 73.7%Non-GAAP operating income of $153.5 millionNon-GAAP operating margin of 39.1%Non-GAAP net income of $145.8 millionNon-GAAP diluted net income per share of $0.80 ____________________
(1) See “Reconciliation of GAAP to Non-GAAP Financial Measures” table included below.

Q2 2026 and Recent Business Highlights

Expanded Taurus signal conditioning portfolio to include 3.2T Smart Retimers and Smart Redrivers for 224G Ethernet and UALink connectivity, purpose-built for AI infrastructure. The new Taurus Smart Signal Conditioners are the industry’s first OCP standard footprint compatible design to enable Smart Swap, which will give architects the flexibility to choose between low-power Smart Redrivers and long-reach Smart Retimers without board re-design. The expanded portfolio leverages Astera Labs’ Unified COSMOS software capabilities and will integrate telemetry, diagnostics, and intelligent link management to deliver advanced observability across high-speed interconnects.Showcased comprehensive portfolio updates at Computex 2026 in Taiwan highlighting current AI rack-scale connectivity strategy and the first public demonstration of the Scorpio X-Series 320 Lane Smart Fabric Switch. Additional demonstrations included ultra-low latency optical connectivity, NVIDIA MGX-based reference designs, 200G/lane technology with SerDes diagnostics, COSMOS-enabled rack-level validation, and production ready systems from Astera Labs and ecosystem partners.Demonstrated ecosystem partnership and compatibility at AMD Advancing AI 2026 with multiple exhibits highlighting Astera Labs’ solutions to resolve data movement bottlenecks across PCIe, CXL, and Ethernet. Joint architectures included AMD Instinct platforms operating with Scorpio P-Series 320L for fabric optimization, Leo CXL memory controller for smart memory tiering, and Taurus 1.6T Smart Ethernet Retimers for scale-out connectivity, all with full-stack interop validated from end to end.Announced significant expansion of Astera Labs’ Taiwan operations and Cloud-Scale Interop Lab, deepening the company’s presence within one of the world’s most important semiconductor ecosystems. Astera Labs’ expanded Taiwan footprint positions the company to bring together broader engineering, cross-functional support, and closer business coordination with key AI platform providers including AMD, Arm, Intel, and NVIDIA. Third Quarter of Fiscal 2026 Financial Outlook
Based on current business trends and conditions, Astera Labs estimates the following:

GAAP Financial Outlook:

Revenue within a range of $540 million to $560 millionGAAP gross margin of approximately 72%GAAP operating expenses within a range of approximately $232 million to $236 millionGAAP tax rate of approximately 4%GAAP diluted net income per share of approximately $0.87 to $0.92 on weighted-average diluted shares outstanding of approximately 185 million Non-GAAP Financial Outlook(2):

Non-GAAP gross margin of approximately 72%Non-GAAP operating expenses within a range of approximately $156 million to $160 millionNon-GAAP tax rate of approximately 12%Non-GAAP diluted net income per share of approximately $1.16 to $1.21 on weighted-average diluted shares outstanding of approximately 185 million ____________________
(2) See “Reconciliation of GAAP to Non-GAAP Outlook” table included below.

Earnings Webcast and Conference Call
Astera Labs will host a conference call to review its financial results for the second quarter of 2026 and to discuss our financial outlook today at 1:30 p.m. Pacific Time. Interested parties may join the conference call by dialing 1-833-461-5787 and using conference ID 622 676 657. The call will also be webcast and can be accessed at the Astera Labs website at https://ir.asteralabs.com/. The webcast will be recorded and available for replay on the company’s website for the next six months.

Discussion of Non-GAAP Financial Measures
We use certain non-GAAP financial measures, including those concerning our financial outlook, to supplement the performance measures in our consolidated financial statements, which are presented in accordance with GAAP. A reconciliation of these non-GAAP measures to the closest GAAP measure can be found later in this release. The timing and impact of any adjustments to arrive at the corresponding GAAP financial measures concerning our financial outlook are inherently dependent on future events that are typically uncertain or that may be outside of our control. These non-GAAP financial measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, non-GAAP tax rate, non-GAAP net income, and non-GAAP diluted net income per share. We use these non-GAAP financial measures for financial and operational decision-making and as a means to assist us in evaluating period-to-period comparisons. By excluding certain items that may not be indicative of our recurring core operating results, we believe that, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, non-GAAP tax rate, non-GAAP net income, and non-GAAP diluted net income per share provide meaningful supplemental information regarding our performance. Accordingly, we believe these non-GAAP financial measures are useful to investors and others because they allow for additional information with respect to financial measures used by management in its financial and operational decision-making and they may be used by our institutional investors and the analyst community to help them analyze the health of our business. However, there are a number of limitations related to the use of non-GAAP financial measures, and these non-GAAP measures should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with GAAP. Other companies, including companies in our industry, may calculate these non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures.

We adjust the following items from one or more of our non-GAAP financial measures:

Stock-based compensation expense
We exclude non-cash stock-based compensation expense from certain of our non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance. In particular, companies calculate non-cash stock-based compensation expense using a variety of valuation methodologies and subjective assumptions. Moreover, stock-based compensation expense is a non-cash charge that can vary significantly from period to period for reasons that are unrelated to our core operating performance, and therefore excluding this item provides investors and other users of our financial information with information that allows meaningful comparisons of our business performance across periods.

Acquisition-related costs
We exclude acquisition-related costs incurred in connection with our acquisitions, which we generally would have not otherwise incurred in the periods presented as part of our continuing operations. Acquisition-related costs include certain incremental expenses incurred to effect a business combination such as third-party costs: advisory, legal, accounting, valuation, and other professional fees. We believe that providing the non-GAAP measures excluding these costs assists our investors because such costs are not reflective of our ongoing operating results.

Income tax effect
This represents the impact of the non-GAAP adjustments on an after-tax basis and one-off discrete tax adjustments that are unrelated to our core operating performance in connection with the presentation of non-GAAP net income and non-GAAP net income per diluted share. This approach is designed to enhance investors’ ability to understand the impact of our non-GAAP tax expense on our current operations, provide improved modeling accuracy, and substantially reduce fluctuations caused by GAAP to non-GAAP adjustments.

Other
We exclude other adjustments, including non-cash fair value adjustments related to equity investments without readily determinable fair values. These investments are measured at cost and adjusted for observable price changes or impairment on a nonrecurring basis only upon the occurrence of certain events. Accordingly, these adjustments are not indicative of our core operating performance. 

Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements based on Astera Labs' current expectations. The words “accelerating,” “advance,” “ahead,” “aim,” “anticipate,” “beginning,” “believe," “capabilities,” “coming,” “commence,” “committed,” “confidence,” “continue,” “could,” “deliver,” “designed,” “drive,” “early stages,” “enable,” “estimates," “expanding,” “expect," “forecasting,” “forthcoming,” “forward,” “future,” “goal,” “going forward,” “growth,” “guidance,” “intend," “interest,” “long-term,” “look,” “may,” “mission,” “momentum,” “multi-year,” “next,” “on track,” “opportunity,” “outlook,” “paths,” “planning,” “poised,” “positions,” “potential,” “progressing,” “project,” “proliferate,” “proposed,” “prospects,” “provide,” “pursuing,” “ramp,” “represent,” “roadmap,” “should,” “strategy,” “targeted,” “track,” “trajectory,” “trends,” “upcoming,” “upside,” “ultimately,” “vision,” “well positioned,” “will,” “would,” and similar phrases as they relate to Astera Labs are intended to identify such forward-looking statements. These forward-looking statements reflect the current views and assumptions of Astera Labs as of August 4, 2026, and are subject to various assumptions, beliefs, risks and uncertainties that could cause actual results to differ materially from expectations. These forward-looking statements include, but are not limited to, statements regarding market trends, dynamics and expectations (including cloud and AI infrastructure and connectivity market trends and the industry’s build out); our and our ultimate customers’ future demand, product purchases, deployment of systems incorporating our products, business, operating results, cash flow, financial position, outlook and guidance (and any underlying drivers), including for the third quarter of fiscal 2026; our business strategy, plans and market, revenue or other forms of opportunities, our absolute or relative market share or growth profile or rate and our timing and ability to further build upon our revenue base, expand our product offerings, portfolio and features or performance, increase and service our market opportunity (including the timing and extent of such market opportunities), remain at the forefront of an AI infrastructure transformation, and scale or expand our connectivity platform; our objectives or strategies for future operations (such as our optical and custom solutions businesses), organizational investments and changes, and the drivers, timing and impacts associated therewith; our production, development, shipping/shipments and delivery of (including timing and customers), activity, applications and demand for, availability of, as well as absolute and relative revenue, growth (including the drivers), ramping and roadmap (e.g., optical) for, existing, new, growing or enhanced (whether technologically or otherwise) products or software, including the high volume deployment of Scorpio X-Series solutions, production volume deployment of Scorpio X-Series 320-L, additional growth catalysts across our Scorpio P-Series, Aries, Taurus and Leo portfolios, and the comparative capabilities, performance and results of those products or software for our customers; the benefits, timing, impact, proliferation and customer adoption of different connectivity standards and demands; the design wins at and diversification, activity, engagements and expectations of our customers; the plans and potential success of our announced and ongoing collaborations, partnerships and strategic relationships, including our warrant agreement with Amazon; the ability of UALink 2.0 to provide for a purpose-built AI compute fabric capable of scaling with industry needs over time and the timing of any initial programs; our competitive positioning and the impacts thereof; our R&D, technology and strategic IP plans; our expanded global footprint with our new Israel Design Center, and the anticipated effects and benefits associated with the design center; the strategies associated with, investments in and size of our team, as well as the associated impacts; and maximize and future industry and macroeconomic conditions, events and trends such as in cloud and AI infrastructure as well as our preparedness and solutions for them. A variety of risks and factors that are beyond our control could cause actual results to differ materially from those in the forward-looking statements including, without limitation: the competitive and cyclical nature of the semiconductor industry; the concentration of our customer base; the changes in demand for AI; the macroeconomic and/or geopolitical environment, including economic uncertainty and volatility in the capital markets; risks that demand for our products and the supply chain may be adversely affected, including by the imposition of tariffs by the United States or any other jurisdiction and any corresponding retaliatory tariffs, changes in political policies, military conflict (such as between Russia/Ukraine and in Israel, Iran and the Middle East), terrorism, sanctions or other geopolitical events globally (including conflict between Taiwan and China); quarterly fluctuations in revenues and operating results; difficulties developing new products that achieve market acceptance; risks associated with managing international activities (including trade barriers, particularly with respect to China); our ability to successfully complete acquisitions and to integrate newly acquired businesses and offerings; absence of long-term commitments from customers; risks that Astera Labs may not be able to manage strains associated with its growth; credit risks associated with its accounts receivable; stock price volatility; information technology risks, including cyber-attacks against Astera Labs' products and its networks; and other risks and uncertainties that are detailed under the caption “Risk Factors” and elsewhere in our Annual Report on 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on February 20, 2026, and in subsequent Quarterly Reports on Form 10-Q filed with the SEC and the other SEC filings and reports Astera Labs may make from time to time. Moreover, we operate in a very competitive and rapidly changing environment, and new risks may emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor(s) may cause actual results or outcomes to differ materially from those contained in any forward-looking statements we may make. Accordingly, you should not unduly rely on any of the forward-looking statements. Astera Labs disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

About Astera Labs
Astera Labs (Nasdaq: ALAB) provides rack-scale AI infrastructure through purpose-built connectivity solutions. By collaborating with hyperscalers and ecosystem partners, Astera Labs enables organizations to unlock the full potential of modern AI. Astera Labs' Intelligent Connectivity Platform integrates CXL®, Ethernet, NVLink Fusion, PCIe®, and UALink™ semiconductor-based technologies with the company's COSMOS software suite to unify diverse components into cohesive, flexible systems that deliver end-to-end scale-up and scale-out connectivity. The company's custom connectivity solutions business complements its standards-based portfolio, enabling customers to deploy tailored architectures to meet their unique infrastructure requirements. Discover more at www.asteralabs.com.

  ASTERA LABS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands)

   As of June 30,
2026 December 31,
2025Assets   Current assets   Cash and cash equivalents$111,453  $167,611Marketable securities 1,141,505   1,021,205Accounts receivable, net 192,469   83,202Inventory 113,781   58,979Prepaid expenses and other current assets 92,687   31,033Total current assets 1,651,895   1,362,030Property and equipment, net 119,284   92,038Goodwill 91,557   19,015Other assets 68,765   58,740Total assets$1,931,501  $1,531,823    Liabilities and Stockholders’ EquityCurrent liabilities   Accounts payable$53,930  $42,362Accrued expenses and other current liabilities 110,377   90,680Total current liabilities 164,307   133,042Other liabilities 41,490   35,147Total liabilities 205,797   168,189    Stockholders’ equity   Common stock 17   17Additional paid-in capital 1,485,320   1,348,969Accumulated other comprehensive (loss) income (3,369)  4,310Retained earnings 243,736   10,338Total stockholders’ equity 1,725,704   1,363,634Total liabilities and stockholders’ equity$1,931,501  $1,531,823        ASTERA LABS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)

     Three Months Ended Six Months Ended June 30,
2026 March 31,
2026 June 30,
2025 June 30,
2026 June 30,
2025Revenue$392,400 $308,361 $191,925 $700,761 $351,367Cost of revenue 104,833  73,220  46,362  178,053  86,393Gross profit 287,567  235,141  145,563  522,708  264,974          Operating expenses         Research and development 135,898  125,634  66,724  261,532  131,278Sales and marketing 26,372  21,899  18,609  48,271  40,311General and administrative 36,049  25,775  20,456  61,824  42,326Total operating expenses 198,319  173,308  105,789  371,627  213,915Operating income 89,248  61,833  39,774  151,081  51,059Interest and other income 13,577  11,581  10,885  25,158  21,317Income before income taxes 102,825  73,414  50,659  176,239  72,376Income tax benefit 50,263  6,896  560  57,159  10,662Net income$153,088 $80,310 $51,219 $233,398 $83,038          Net income per share attributable to common stockholders:    Basic$0.89 $0.47 $0.31 $1.36 $0.51Diluted$0.83 $0.44 $0.29 $1.28 $0.47Weighted-average shares used in calculating net income per share attributable to common stockholders:         Basic 172,378  170,726  165,428  171,557  164,316Diluted 183,340  181,157  178,100  182,254  178,281                ASTERA LABS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)

   Six Months Ended
June 30,  2026   2025 Cash flows from operating activities   Net income$233,398  $83,038 Adjustments to reconcile net income to net cash provided by operating activities   Stock-based compensation 112,905   77,920 Depreciation and amortization 7,639   2,517 Non-cash operating lease expense 2,718   1,522 Warrants contra revenue 12,313   2,136 Accretion of discounts on marketable securities (2,180)  (4,489)Other, net (2,961)  734 Changes in operating assets and liabilities:   Accounts receivable, net (109,461)  14,491 Inventory (53,127)  (14,577)Prepaid expenses and other assets (41,422)  (18,474)Accounts payable 2,811   4,607 Accrued expenses and other liabilities (357)  (3,555)Net cash provided by operating activities 162,276   145,870 Cash flows from investing activities   Purchases of property and equipment (28,054)  (6,562)Purchases of marketable securities (359,732)  (404,682)Sales and maturities of marketable securities 233,933   343,611 Payments for business combinations, net of cash acquired (69,214)  — Other investing activities (2,500)  — Net cash used in investing activities (225,567)  (67,633)Cash flows from financing activities   Proceeds from exercises of stock options 836   778 Proceeds from employee stock purchase plan 6,294   4,345 Net cash provided by financing activities 7,130   5,123 Net (decrease) increase in cash, cash equivalents, and restricted cash (56,161)  83,360 Cash, cash equivalents, and restricted cash   Beginning of the period 167,684   80,044 End of the period$111,523  $163,404          ASTERA LABS, INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (Unaudited)
(In thousands, except percentages and per share amounts)

     Three Months Ended Six Months Ended June 30,
2026 March 31,
2026 June 30,
2025 June 30,
2026 June 30,
2025GAAP gross profit$287,567  $235,141  $145,563  $522,708  $264,974 Stock-based compensation expense 1,692   499   353   2,191   315 Non-GAAP gross profit$289,259  $235,640  $145,916  $524,899  $265,289           GAAP gross margin 73.3%  76.3%  75.8%  74.6%  75.4%Stock-based compensation expense 0.4   0.2   0.2   0.3   0.1 Non-GAAP gross margin(1) 73.7%  76.4%  76.0%  74.9%  75.5%          GAAP operating income$89,248  $61,833  $39,774  $151,081  $51,059 Stock-based compensation expense 63,992   48,913   35,474   112,905   77,920 Acquisition-related costs(2) 232   983   —   1,213   — Non-GAAP operating income$153,472  $111,729  $75,248  $265,199  $128,979           GAAP operating margin 22.7%  20.1%  20.7%  21.6%  14.5%Stock-based compensation expense 16.3   15.9   18.5   16.1   22.2 Acquisition-related costs(2) 0.1   0.3   —   0.2   — Non-GAAP operating margin(1) 39.1%  36.2%  39.2%  37.8%  36.7%          GAAP net income$153,088  $80,310  $51,219  $233,398  $83,038 Stock-based compensation expense 63,992   48,913   35,474   112,905   77,920 Acquisition-related costs(2) 232   983   —   1,213   — Other(3) (1,500)  —   —   (1,500)  — Income tax effect(4) (69,996)  (20,137)  (8,670)  (90,133)  (23,308)Non-GAAP net income$145,816  $110,069  $78,023  $255,883  $137,650           Net income per share attributable to common stockholders:    GAAP - basic$0.89  $0.47  $0.31  $1.36  $0.51 GAAP - diluted$0.83  $0.44  $0.29  $1.28  $0.47 Non-GAAP - diluted$0.80  $0.61  $0.44  $1.40  $0.77           Weighted average shares used to compute net income per share attributable to common stockholders:GAAP - basic 172,378   170,726   165,428   171,557   164,316 GAAP - diluted 183,340   181,157   178,100   182,254   178,281                      ____________________
(1) Total may not sum due to rounding.
(2) Acquisition-related costs included certain incremental expenses incurred to effect a business combination such as third-party costs: advisory, legal, accounting, valuation, and other professional fees.
(3) Other included non-cash and nonrecurring fair value adjustments on equity investments without readily determinable fair values.
(4) Income tax effect is calculated based on the tax laws in the jurisdictions in which we operate and is calculated to exclude the impact of stock-based compensation expense and one-off discrete tax adjustments that are unrelated to our core operating performance. For the three months ended June 30, 2026, March 31, 2026, and June 30, 2025, the non-GAAP tax expense rate was approximately 12%, 11%, and 9%, respectively. For the six months ended June 30, 2026 and 2025, the non-GAAP tax expense rate was approximately 11% and 8%, respectively.   

ASTERA LABS, INC.,RECONCILIATION OF GAAP TO NON-GAAP OUTLOOK (Unaudited)
(In millions, except percentages and per share amounts)

   Outlook for
Three Months Ending
September 30, 2026 Low HighGAAP gross margin 72%  72%Stock-based compensation expense —   — Non-GAAP gross margin 72%  72%    GAAP operating expense$232  $236 Stock-based compensation expense (76)  (76)Non-GAAP operating expense$156  $160     GAAP tax rate 4%  4%Income tax effect 8   8 Non-GAAP tax rate 12%  12%    GAAP net income per share - diluted$0.87  $0.92 Stock-based compensation expense 0.40   0.40 Income tax effect (0.11)  (0.11)Non-GAAP net income per share - diluted$1.16  $1.21          ASTERA LABS, INC.SUPPLEMENTAL FINANCIAL INFORMATION

STOCK-BASED COMPENSATION EXPENSE (Unaudited)
(In thousands)

     Three Months Ended Six Months Ended June 30,
2026 March 31,
2026 June 30,
2025 June 30,
2026 June 30,
2025Cost of revenue$1,692 $499 $353 $2,191 $315Research and development 36,413  29,404  17,852  65,817  37,038Sales and marketing 11,419  9,892  9,194  21,311  21,513General and administrative 14,468  9,118  8,075  23,586  19,054Total stock-based compensation expense$63,992 $48,913 $35,474 $112,905 $77,920                               IR CONTACT: Leslie Green
[email protected]

Key Takeaways APH benefits from record orders, diversified demand and the CommScope acquisition to support growth. ALAB posted strong revenue growth as PCIe Gen 6 products gained traction in AI infrastructure. APH stands out over ALAB with broader revenue streams and stronger business momentum. Astera Labs (ALAB - Free Report) and Amphenol (APH - Free Report) are major players in the connectivity and data center infrastructure space. While Astera Labs develops semiconductor-based connectivity solutions tailored for cloud and AI infrastructure, Amphenol specializes in interconnect and sensor technologies across diverse industries.

So, ALAB or APH — Which of these Connectivity stocks has the greater upside potential? Let’s find out.

The Case for ALABAstera Labs is rapidly expanding its portfolio to address the growing demands of AI infrastructure and connectivity solutions. It benefits from strong demand for its PCIe solutions, which is noteworthy.

In the first quarter of 2026, Astera Labs delivered strong financial results, with revenues reaching $308 million, up 14% sequentially and 93% year over year. PCIe Gen 6 revenues accounted for more than one-third of the company’s total revenues in the quarter, underscoring the centrality of this product line to Astera Labs’ growth. Millions of PCIe Gen 6 ports have been shipped to date, demonstrating the maturity and adoption of Astera Labs’ portfolio across AI fabric and signal conditioning applications.

ALAB is diversifying its customer base with new design wins and is well-positioned to capitalize on the industry’s transition to PCIe 6, 800 gigs and 1.6T Ethernet connectivity. Management expects continued strong revenue growth through 2026 and into 2027, driven by the proliferation of AI fabrics and the ongoing shift to higher-speed connectivity standards.

Astera Labs’ strong fundamentals, expanding partnerships and rising AI demand reinforce its leadership in connectivity solutions. However, elevated R&D spending, acquisition-related investments and aggressive expansion efforts are pressuring profitability in the near term.

The Case for APHAmphenol benefits from a diversified business model. Its strong portfolio of solutions, including high-technology interconnect products, is a key catalyst. The company is seeing strong demand for high-speed, power and fiber interconnect products, led by AI-related IT datacom programs and supported by defense, commercial air and diversified industrial applications.

The recent acquisition of CommScope has further strengthened APH’s position in the connectivity space. This move has expanded APH’s product offerings to include the industry’s broadest range of high-speed copper, power and fiber optics interconnect products. It also opened new growth avenues in building connectivity, enabling APH to serve commercial buildings, smart factories, and other infrastructure projects that require robust, future-ready connectivity solutions. The integration of CommScope’s global distribution channels and expertise is expected to create additional synergies and long-term value.

Customer engagement and order trends point to more upside ahead. APH booked a record $9.4 billion in orders in the first quarter of 2026, with a strong book-to-bill ratio of 1.24:1. Customers, especially hyperscalers and enterprise/cloud providers, are seeking more products and are increasingly willing to make commitments that support APH’s capacity investments.

Amphenol continues to benefit from diversified demand across defense, industrial, commercial aerospace and automotive markets. In the first quarter of 2026, defense sales increased 44%, industrial sales rose 52% and commercial aerospace grew 22% on a year-over-year basis. APH expects continued sequential growth in defense and industrial markets during the second quarter, supported by rising defense spending, industrial automation, factory digitization and building connectivity investments.

Price Performance and Valuation of ALAB and APHIn the year-to-date period, ALAB and APH’s shares have gained 117.7% and 15.5%, respectively. The outperformance of ALAB stock can be attributed to its expanding portfolio to address the growing demands of AI infrastructure and connectivity solutions. Its product portfolio, including Scorpio, Aries, and Taurus, has been a key catalyst.

Despite APH’s expanding portfolio sensitivity to telecom and mobile cycles, recent China tax determinations that lift the effective tax rate outlook, macro uncertainty and intense competition are headwinds.

ALAB and APH Stock Performance
Image Source: Zacks Investment Research

Valuation-wise, ALAB and APH shares are currently overvalued as suggested by a Value Score of D and F, respectively.

In terms of forward 12-month Price/Sales, ALAB shares are trading at 33.39X, higher than Amphenol’s 5.34X.

ALAB and APH Valuation
Image Source: Zacks Investment Research

How Do Earnings Estimates Compare for ALAB & APH?The Zacks Consensus Estimate for ALAB’s 2026 earnings is currently pegged at $2.97 per share, which has increased by a couple of pennies over the past 30 days. This indicates a 61.41% year-over-year rise.

The Zacks Consensus Estimate for Amphenol’s 2026 earnings is currently pegged at $4.76 per share, which has remained unchanged over the past 30 days. This indicates a 42.51% year-over-year rise.  

ConclusionWhile both ALAB and Amphenol are well-positioned to capitalize on the booming connectivity and data center infrastructure space, Amphenol appears to be the stronger bet given its diversified revenue streams, strong order growth and broader market exposure.

Despite ALAB’s expanding portfolio and strong AI-driven demand, its elevated spending and near-term profitability pressures make the stock riskier at current levels.

Currently, Amphenol has a Zacks Rank #2 (Buy), making the stock a stronger pick than Astera Labs, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways ALAB is riding on PCIe demand as AI infrastructure spending accelerates across data centers. ALAB posted $308M in Q1 revenues, up 14% sequentially and 93% year over year. Scorpio X-Series supports up to 320 lanes for scale-up networking in large AI clusters. Astera Labs (ALAB - Free Report) is benefiting from surging demand for its PCIe (Peripheral Component Interconnect Express) solutions, particularly as the AI infrastructure market accelerates and hyperscalers, AI labs and sovereign entities invest heavily in next-generation data center technologies.

In the first quarter of 2026, Astera Labs delivered strong financial results, with revenues reaching $308 million, up 14% sequentially and 93% year over year. PCIe Gen 6 revenues accounted for more than one-third of the company’s total revenues in the quarter, underscoring the centrality of this product line to Astera Labs’ growth. Millions of PCIe Gen 6 ports have been shipped to date, demonstrating the maturity and adoption of Astera Labs’ portfolio across AI fabric and signal conditioning applications.

The company’s Scorpio product family, which includes both the X-Series and P-Series PCIe 6 switches, is at the forefront of this momentum. The newly launched Scorpio X-Series supports up to 320 lanes, enabling high-radix, scale-up networking for large AI clusters. These switches are purpose-built to maximize AI economics, featuring hardware-accelerated hypercast and in-network compute engines that can double collective operations performance.

ALAB is diversifying its customer base with new design wins and is well-positioned to capitalize on the industry’s transition to PCIe 6, 800 gigs, and 1.6T Ethernet connectivity. Management expects continued strong revenue growth through 2026 and into 2027, driven by the proliferation of AI fabrics and the ongoing shift to higher-speed connectivity standards.

For the second quarter of 2026, ALAB expects revenues between $355 million and $365 million, implying 15% to 18% sequential growth. The outlook is driven by the continued adoption of PCIe 6 across AI platforms, rising Taurus volumes for AI scale-out connectivity and a sustained early-stage ramp-up of Scorpio X-Series products for large-scale XPU clustering.

ALAB Faces Stiff CompetitionALAB is facing stiff competition from other industry players like Marvell Technology (MRVL - Free Report) and Credo Technology (CRDO - Free Report) . Both Marvell Technology and Credo Technology are making strong efforts in the connectivity space.

Marvell Technology’s expanding portfolio has been noteworthy. In June 2026, Marvell Technology introduced the Teralynx T100, a 102.4 Tbps AI-optimized switch silicon designed to enhance high-speed connectivity and networking efficiency in large-scale AI data centers through lower latency and reduced power consumption.

Credo Technology’s expanding portfolio has been noteworthy. In May 2026, Credo Technology completed its acquisition of DustPhotonics, adding industry-leading silicon photonics technology to strengthen its optical interconnect portfolio across 800G, 1.6T and 3.2T solutions. The acquisition enhances Credo Technology’s vertically integrated AI connectivity stack and is expected to be a significant growth driver in fiscal 2027, supported by increasing hyperscale AI adoption.

ALAB’s Share Price Performance, Valuation, and EstimatesALAB shares have surged 136.4% in the year-to-date period, outperforming the broader Zacks Computer & Technology sector’s increase of 14.8%. The Zacks Internet - Software industry has decreased 8% in the same time frame.

ALAB Stock’s Performance
Image Source: Zacks Investment Research

ALAB stock is trading at a premium, with a forward 12-month Price/Sales of 36.42X compared with the  Internet - Software industry’s 3.89X. ALAB has a Value Score of F.

ALAB’s Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for 2026 earnings is pegged at $2.94 per share, which has increased by a couple of pennies over the past 30 days. This suggests 59.78% year-over-year growth.

ALAB’s Zacks RankAstera Labs currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

Key Takeaways ALAB posted Q1 revenues of $308.4M, up 14% sequentially and 93% year over year. Astera Labs' PCIe Gen 6 revenues topped one-third of Q1 sales, driven by Aries adoption. ALAB expects Q2 revenues of $355M-$365M, implying 15% to 18% sequential growth. Astera Labs (ALAB - Free Report) is benefiting from robust demand for its Aries and Taurus product lines, which are central to the company’s strong performance in the AI infrastructure market. In the first quarter of 2026, Astera Labs reported revenues of $308.4 million, marking a 14% sequential increase and an impressive 93% year-over-year growth.

This surge was driven by broad-based adoption across the company’s signal conditioning and fabric switch portfolios, with Aries and Taurus playing pivotal roles in supporting both scale-up and scale-out connectivity for AI infrastructure and general-purpose compute platforms.

The Aries product line, focused on PCIe 6 signal conditioning, has seen strong early adoption, particularly as AI infrastructure spending accelerates. Aries solutions are now integral to both AI fabric and signal conditioning, with PCIe Gen 6 revenues contributing more than one-third of ALAB’s total revenues in the first quarter of 2026. The company has shipped millions of PCIe Gen 6 ports to date, demonstrating the maturity and robustness of its portfolio. Aries is set to expand into PCIe 7, positioning ALAB’s leadership in intelligent connectivity solutions for AI infrastructure.

Taurus, meanwhile, has delivered solid results through the broad adoption of its Active Electrical Cable technology, which extends connectivity reach in both AI and general compute environments. The Taurus portfolio is also poised for further expansion into 1.6T Ethernet, aligning with industry trends toward higher-speed networking.

Aster Labs is benefiting from strong demand for its Aries, Taurus, and Scorpio product families, all of which are expected to drive growth in the second quarter of 2026. For the same quarter, ALAB expects revenues between $355 million and $365 million, implying 15% to 18% sequential growth.

ALAB Faces Stiff CompetitionALAB is facing stiff competition from other industry players like Marvell Technology (MRVL - Free Report) and Credo Technology (CRDO - Free Report) . Both Marvell Technology and Credo Technology are making strong efforts in the connectivity space.

Marvell Technology’s expanding portfolio has been noteworthy. Marvell Technology recently introduced the Teralynx T100, a 102.4 Tbps AI-optimized switch silicon designed to enhance high-speed connectivity and networking efficiency in large-scale AI data centers through lower latency and reduced power consumption.

Credo Technology’s expanding portfolio has been noteworthy. In May 2026, Credo Technology completed its acquisition of DustPhotonics, adding industry-leading silicon photonics technology to strengthen its optical interconnect portfolio across 800G, 1.6T and 3.2T solutions. The acquisition enhances Credo Technology’s vertically integrated AI connectivity stack and is expected to be a significant growth driver in fiscal 2027, supported by increasing hyperscale AI adoption.

ALAB’s Share Price Performance, Valuation, and EstimatesALAB shares have surged 150.7% in the year-to-date period, outperforming the broader Zacks Computer & Technology sector’s increase of 20%. The Zacks Internet - Software industry has decreased 13.7% in the same time frame.

ALAB Stock’s Performance
Image Source: Zacks Investment Research

ALAB stock is trading at a premium, with a forward 12-month Price/Sales of 39.34X compared with the  Internet - Software industry’s 3.61X. ALAB has a Value Score of F.

ALAB’s Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for 2026 earnings is pegged at 69 cents per share, which has been unchanged over the past 30 days. This suggests 56.82% year-over-year growth.

ALAB’s Zacks RankAstera Labs currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.