Astera Labs jumps 76% in May as Q1 earnings beat and new switch ramps

Astera Labs reported Q1 revenue of $308.4 million, up 93% from a year earlier and beating consensus by 5.4%, as AI connectivity demand accelerated.

"The ramp for Scorpio X is progressing faster than anticipated, and we expect it to become our largest product by sales by the end of the year," Chief Executive Officer Jitendra Mohan said at the J.P. Morgan Global Technology, Media and Communications Conference.

Non-GAAP earnings reached 61 cents per share, up 85% year over year and topping the average analyst estimate by 13.7%. Gross margin expanded 150 basis points to 76.4%, driven by a favorable product mix shift away from lower-margin hardware within the signal conditioning portfolio. The company guided for $360 million in current-quarter revenue, implying 26% sequential growth.

Shares of the Santa Clara, California-based company surged 76% in May, extending a 12-month gain of more than 250%. The stock trades at roughly 105 times this year's earnings estimates, reflecting investor expectations that AI infrastructure spending will sustain its rapid growth trajectory.

The PCIe Gen 6 connectivity portfolio contributed more than one-third of total revenue in the quarter, showing the pace of adoption as AI platforms transition to higher-speed interconnect standards. Astera said it has shipped millions of PCIe Gen 6 ports to date.

The Scorpio X-Series, introduced in early May, began shipping in initial production volumes during the quarter. Management expects shipments to rise in the second quarter alongside initial shipments of the newly announced 320-lane Scorpio X device, before ramping to full volume production in the second half of 2026. The broader Scorpio portfolio includes features such as Hypercast and in-network compute, aimed at reducing networking overhead in large-scale training and inference workloads.

Evercore ISI raised its price target on Astera shares to $297 from $215 following the results, citing positive channel checks. The analysts noted that the progression of agentic AI is placing a premium on low-cost-per-token inference, which requires optimization across GPUs, CPUs, ASICs and memory — driving demand for Astera's connectivity products.

Research and development expenses rose 95% to $125.6 million as the company invested in expanding its product lineup. Sales and marketing costs increased 0.9% to $21.9 million, while general and administrative expenses climbed 18% to $25.8 million.

The strong quarter positions Astera to benefit from the broader AI infrastructure build-out, with companies such as Alphabet committing $80 billion to fund their AI initiatives. The guidance raise signals management expects AI demand to accelerate further. Investors will watch the Q2 earnings report for updates on Scorpio X production ramp and gross margin trajectory.

This article is for informational purposes only and does not constitute investment advice.