Wall Street analysts take a positive view of AI-driven Astera

By Thomson Reuters Apr 15, 2024 | 7:59 AM

(Reuters) – Wall Street brokerages started coverage of Astera Labs mostly on a bullish note as they see the company benefiting from a burgeoning market for artificial intelligence (AI) tools.

The Santa Clara, California-based company sells high-speed semiconductor-based data transfer technology for AI and data center applications and is positioned to gain from the AI boom.

Shares of the chip firm rose 2.8% at $74.74 in premarket trading on Monday after most of the ten brokerages assigned it a top rating.

J.P.Morgan and Barclays rated it “overweight” with a price target of $85, following the expiry of the mandated quiet period.

The firm, which had its IPO last month, competes with chip companies such as Broadcom, Marvell Technology and Parade Technologies.

Most brokerages cited the company’s AI infrastructure offerings, new market opportunities, and rising average selling price (ASP) in their notes for the mostly positive views.

Jefferies said the company has a path to over $1 billion in annual revenue on back of multiple company-specific drivers apart from its robust double-digit AI server unit growth.

Morgan Stanley believes Astera’s products are leveraged to the most important trends in computing, and has initiated coverage of the stock with an “equal weight” rating.

Astera’s stock closed nearly 4% lower on Friday after rising as much as 81% on March 26 since it started trading on March 20. The stock traded as low as $50.61 on its debut.

Earlier in March, Northland Capital had started coverage on Astera Labs with an ‘outperform’ rating and a price target of $85.

Brokerage Rating Price Target

J.P. Morgan Overweight $85

Morgan Stanley Equal-weight $81

Barclays Overweight $85

Deutsche Bank Buy $85

Roth MKM Buy $85

Jefferies Buy $85

Stifel Buy $81

(Reporting by Reshma Rockie George in Bengaluru; Editing by Tasim Zahid)