ALAB

If they make the cut, the two companies will be the first energy inclusions in the index since 2022. Bloom and Cheniere are the largest companies by market value that are eligible for inclusion in the index, with market values of about $60 billion, well above the current minimum requirement of $22.7 billion. Apart from BE and LNG, Roberts has reportedly named Astera Labs and Everpure among the top candidates for admission to the index. The S&P 500 rebalancing for the third quarter is due at the end of the month, with announcements expected on Friday. As per market participants and investors, two energy companies are likely to make the list. Bloom Energy Corp. (BE) and Cheniere Energy Inc. (LNG) are two of the most likely inclusions in the benchmark index, according to Stephens analyst Melissa Roberts, a report from Barron’s said. See what 10M+ investors are talking about. Get the Stocktwits Daily Rip for what retail is watching right now, free to your inbox If they make the cut, the two companies will be the first energy inclusions in the index since 2022. The energy sector has boomed in recent months due to the ongoing energy supply crunch amid the Iran war. In a note to clients, Roberts said she expects two or three changes in the index to be announced along with the rebalancing. Bloom and Cheniere are the largest companies by market value that are eligible for inclusion in the index, with market values of about $60 billion, well above the current minimum requirement of $22.7 billion. As of Thursday’s close, Bloom Energy has a market capitalization of $69.25 billion, as per data from Robinhood. Cheniere has a market capitalization of $60.05 billion. According to Roberts, Cheniere has been eligible for some time and could finally be added this quarter, given the strength in the energy sector this year. To qualify for inclusion in the S&P 500, a company must be based in the U.S., have a market capitalization of at least $22.7 billion, have positive GAAP earnings in the latest quarter and cumulatively over the past four quarters, and have at least 10% of its shares available to the public. It must also meet minimum liquidity and trading-volume requirements, have been publicly traded for at least 12 months, issue common stock, and meet S&P’s requirements on multiple share classes. Companies added to the S&P 500 command prestige and often see their stock price rise after the announcement. For instance, Marvell Technology (MRVL), which was included in the index on June 22, saw its stock jump about 9% immediately after the announcement. The companies also benefit from index funds buying as part of requirements. As per Barron’s, an estimated 30% or more of the S&P 500 is held by index funds. Apart from BE and LNG, Roberts has reportedly named Astera Labs Inc. (ALAB) and Everpure Inc. (P) as being among the top candidates for admission into the index. Other possible companies that can make the cut include are Credo Technology Group Holdings Ltd. (CRDO), Heico Corp. (HEI), Rocket Companies Inc. (RKT), and Royalty Pharma Inc. (RPRX), Roberts reportedly noted. On Stocktwits, retail sentiment around BE stock improved from ‘neutral’ to ‘bullish’ over 24 hours amid ‘high’ message volumes. One user said, “$BE uhhhhh i think they might get included in s&p,apparently they sre the top runner. 44% chnace of inclusion! WOW!!” Retail sentiment around LNG stock improved from ‘bullish’ to ‘extremely bullish’ at the time of writing amid ‘normal’ message volumes. One user said, “SP500 rebalancing tomorrow and they are going to add $LNG.” BE stock is up more than 138% so far in 2026, while LNG stock has gained about 47% in the same time. For updates and corrections, email newsroom[at]stocktwits[dot]com. Aashika Suresh has no position in any of the stocks mentioned in this article. StockTwits' news team content is for informational purposes only and is not intended as investment advice. For more, see our editorial policy. This article was originally published on StockTwits. Related: SoFi's Kraken Deal Grows Its Stablecoin Reach — Analyst Calls It 'Another Positive Development' But Still Sees 13% Downside SoFi's Kraken Deal Grows Its Stablecoin Reach — Analyst Calls It 'Another Positive Development' But Still Sees 13% Downside TSLA Stock Slips Overnight As Safety Regulator Scrutinizes Cybercab — Retail Fumes Over Event Blackout

It has been about a month since the last earnings report for Astera Labs, Inc. (ALAB). 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 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. The 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. The 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. Taurus 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. Non-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 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. 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 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. In the past month, investors have witnessed a upward trend in estimates review. The consensus estimate has shifted 71.68% due to these changes. Currently, 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. Estimates 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. Astera Labs, Inc. belongs to the Zacks Internet - Software industry. Another stock from the same industry, EverQuote (EVER), 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. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Astera Labs, Inc. (ALAB) : Free Stock Analysis Report EverQuote, Inc. (EVER) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Credo Technology Group Holding Ltd CRDO reported stellar performance for the first quarter of fiscal 2027 yesterday, but investors seem wary. Shares are down 10% in pre-market trading today, despite quarterly revenues surpassing management’s guidance and the company maintaining an aggressive growth outlook for the year.Credo continues to benefit from the rapid buildout of artificial intelligence (AI) infrastructure, driving demand for its active electrical cables (“AEC”), optical solutions and retimers.However, the expectations now seem demanding as the next leg of growth hinges on a sharp ramp in the optical business. For investors evaluating CRDO today, the investment debate goes beyond the headline numbers and centers on whether its expanding opportunity set is sufficient to offset the associated execution risks. Credo reported fiscal first-quarter revenues of $479 million, up 10% sequentially and 115% year over year. It also beat the Zacks Consensus Estimate by 0.7%. The company has posted triple-digit year-over-year growth for seven consecutive quarters. Non-GAAP gross margin came in at 68%, compared with 67.6% in the prior-year quarter. Non-GAAP operating expenses increased to $95.2 million from $54.5 million in the prior-year quarter. The increase reflected continued investment in research and developmentNon-GAAP operating income rose to $230.6 million from $96.2 million, producing a non-GAAP operating margin of 48.2%. Non-GAAP net income margin reached 49.3% in the fiscal first quarter, compared with 44.1% in the year-ago quarter, underscoring the company’s ability to convert top-line growth into bottom-line profitability. Non-GAAP earnings per share came in at $1.20, up 130.8% and beat the consensus estimate by 2.6%. Image Source: Zacks Investment Research Cash flow from operations was $90.2 million, down from $92 million sequentially, primarily due to working-capital changes. Capital expenditures were $7.3 million, resulting in free cash flow of $82.9 millionCash and cash equivalents and short-term investments stood at $764.3 million, a decrease of $679 million from the previous quarter due to the cash outlay for the DustPhotonics acquisition.For the fiscal second quarter, management expects revenues between $525 million and $535 million. Non-GAAP gross margin is expected to be between 67% and 69%, and non-GAAP operating expenses are expected to be $100-$105 million. Credo continues to forecast more than 85% year-over-year revenue growth for fiscal 2027, aided by an expected second-half inflection CRDO’s focus on high-performance, energy-efficient connectivity solutions gives it strategic relevance as hyperscalers and cloud service providers overhaul their network architectures.As AI clusters grow to hundreds of thousands of GPUs, connectivity is emerging as a critical constraint. Management highlighted that the challenge is no longer just bandwidth, but also reliability, power efficiency, signal integrity, telemetry and serviceability.Credo believes its system-level approach, which combines silicon, firmware, manufacturing tests and qualification, remains a key differentiator. AEC is a system-level product for CRDO and its core growth engine. The company now has deep relationships with five hyperscalers, alongside expanding engagement with Neocloud customers. Credo continues to see higher AEC penetration within existing customers as deployments scale, while the shift toward 200-gig-per-lane 1.6T ports provides another growth opportunity. The most significant shift in Credo’s business mix is unfolding in its optical segment. Management continues to project more than $600 million in optical revenues, with ZeroFlap optics, silicon photonics PICs and optical DSPs each contributing more than $100 million. Credo added that its optical DSP business generated “record revenues” in the fiscal first quarter. The company also recognized its first silicon-photonics PIC revenues following the DustPhotonics acquisition, with initial wins involving 800-gig and 1.6T optical transceivers.ZeroFlap Optics represents another important opportunity. Management noted that production shipments are underway, and it expects additional fiscal 2027 customer ramps across both 800-gig and 1.6T products involving hyperscalers and Neocloud operators.Beyond AEC and optics, the retimer business is another lucrative opportunity. Management noted that the retimer business also delivered record quarterly revenues, supported by scale-up deployments of Screaming Eagle at 100-gig-per-lane and initial contributions from its 200-gig-per-lane Blue Heron retimer.Longer-term opportunities include Active LED Cables and OmniConnect. Credo continues to expect initial ALC revenues in fiscal 2028. Further, management added that OmniConnect could represent “thousands of dollars of Credo content per GPU”, with revenues also expected to begin in fiscal 2028. CRDO's growth does not come without meaningful risks. In the fiscal first quarter, four customers generated roughly 84% of quarterly revenues. Customer concentration is a major concern as it exposes the company to shifts in customer spending decisions and could materially affect results.Execution risk is another risk factor. Much of the expected growth in fiscal 2027 is dependent on a successful ramp in the optical business. Any delay in deployment or broader industry transitions could affect this ramp.Macroeconomic uncertainties and exposure to the AI investment cycle amid increasing market competition from the likes of Broadcom AVGO, Marvell Technology MRVL and Astera Labs ALAB may also impact CRDO’s growth trajectory. CRDO is trading at a forward 12-month price/earnings ratio of 30.09X, higher than the Electronic-Semiconductors sector’s multiple of 13.31X. Image Source: Zacks Investment Research The market is pricing in the explosive revenue momentum, strong profitability and expanding hyperscaler relationships. However, this leaves very little room for error. Any execution missteps or demand-supply chain troubles could lead to heavy volatility in the stock.In comparison, Broadcom trades at a forward 12-month P/E multiple of 20.64X, while Astera Labs and Marvell are trading at a multiple of 50.99X and 36.69X, respectively.Over the past year, CRDO has gained 65.6%. In comparison, the Electronic-Semiconductors industry, the broader Computer and Technology sector and the S&P 500 are up 46.1%, 27.2% and 19.7%, respectively. Image Source: Zacks Investment Research Investor enthusiasm around AI buildout has benefited other semiconductor stocks as well. Marvell Technology, Broadcom and Astera Labs have gained 237.7%, 22.3% and 58.5%, respectively. Credo's fiscal first-quarter performance reinforces the strength of its fundamental growth story. The company is aligned with one of the most powerful and durable trends in technology, the rise of AI-driven infrastructure. The expanding portfolio is particularly encouraging. Optical DSPs, silicon-photonics PICs, ZeroFlap Optics, retimers, ALCs and OmniConnect could steadily broaden Credo's addressable market and reduce its dependence on a single product category over time.However, customer concentration, increasing expenses and the need to execute a substantial second-half optical ramp leave little room for disappointment.The long-term growth opportunity remains compelling, but the near-term risk-reward warrants some caution. Existing investors may stay put, but new investors would be better off waiting for a favorable entry point. At present, CRDO carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Credo Technology Group Holding Ltd. (CRDO) : Free Stock Analysis Report Marvell Technology, Inc. (MRVL) : Free Stock Analysis Report Broadcom Inc. (AVGO) : Free Stock Analysis Report Astera Labs, Inc. (ALAB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Earlier this year, Astera Labs, Inc. (ALAB) was highlighted for significantly outperforming its Computer and Technology peers, supported by improved earnings estimate trends and a top Zacks Rank of #1 (Strong Buy). This shift in analyst expectations and sentiment suggests the market is increasingly focused on Astera Labs’ earnings power as a core part of its AI connectivity story. Now we’ll examine how this stronger analyst sentiment around Astera Labs’ earnings outlook could reshape the company’s existing investment narrative. The best AI stocks today may lie beyond giants like Nvidia and Microsoft. Find the next big opportunity with these 18 smaller AI-focused companies with strong growth potential through early-stage innovation in machine learning, automation, and data intelligence that could fund your retirement. To own Astera Labs, you need to believe in long-term AI data center buildout and the company’s role in high value interconnects. The recent recognition for outperforming peers and improved earnings estimates reinforces the near term catalyst around execution on Scorpio switches and AI deployments. It does not fundamentally change the biggest risk, which remains Astera’s dependence on hyperscaler AI capex and a concentrated customer base in a fast moving connectivity market. The recent Q2 2026 earnings report, with US$392.4 million in sales and US$153.09 million in net income, is the most relevant backdrop to this sentiment shift. Strong reported results and raised guidance for Q3 2026 place even more weight on Scorpio P and upcoming Scorpio X ramping smoothly, while intensifying questions about valuation, competitive pressure from larger chipmakers, and how resilient demand will be if AI spending patterns evolve. Yet investors should also be aware of how quickly customer concentration and technology shifts could matter if AI data center spending slows... Read the full narrative on Astera Labs (it's free!) Astera Labs' narrative projects $3.8 billion revenue and $1.1 billion earnings by 2029. Uncover how Astera Labs' forecasts yield a $391.77 fair value, a 35% upside to its current price. While consensus already flagged hyperscaler dependence as a key risk, the most optimistic analysts were assuming revenue could reach about US$6.1 billion by 2029 and earnings about US$1.7 billion, which is far more bullish than the baseline and could look different once this latest analyst upgrade and outperformance are fully reflected. Explore 11 other fair value estimates on Astera Labs - why the stock might be worth as much as 73% more than the current price! Don't just follow the ticker - dig into the data and build a conviction that's truly your own. A great starting point for your Astera Labs research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision. Our free Astera Labs research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Astera Labs' overall financial health at a glance. Our top stock finds are flying under the radar-for now. Get in early: Invest in the nuclear renaissance through our list of 92 elite nuclear energy infrastructure plays powering the global AI revolution. The future of work is here. Discover the 38 top robotics and automation stocks leading the charge in AI-driven automation and industrial transformation. AI is about to change healthcare. These 39 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ALAB. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Credo Technology Group Holding Ltd CRDO is scheduled to report first-quarter fiscal 2027 results on Sept. 1. The Zacks Consensus Estimate for the bottom line for the to-be-reported quarter stands at $1.16, indicating a 123.1% year-over-year surge. The estimate has remained unchanged in the past 30 days. Image Source: Zacks Investment Research The Zacks Consensus Estimate for total revenues is pinned at $470.7 million, implying an 111% increase. For the fiscal first quarter, CRDO expects revenues to be between $465 million and $475 million. Credo’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 27.4%. Let us see how CRDO is expected to fare in terms of revenues and earnings this time. Our proven model does not conclusively predict an earnings beat for CRDO this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. CRDO has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here. Credo Technology Group Holding Ltd. price-consensus-chart | Credo Technology Group Holding Ltd. Quote Credo’s fiscal first-quarter performance is likely to have been driven by strong demand for its active electrical cables (“AEC”) and optical products, along with deeper engagement with hyperscalers. The company continues to see broader AEC adoption as AI clusters increase in size and customers place greater emphasis on network reliability, power efficiency and signal integrity. Four hyperscalers each contributed more than 10% of total revenues in the last reported quarter, reflecting strong adoption of Credo’s high-reliability AEC solutions. Management believes AEC adoption remains in the early stages of penetration, with increasing adoption across hyperscalers and Neo cloud customers supporting continued growth. Credo continues to see momentum in 100-gig and 200-gig per-lane retimers, along with improving traction for PCIe Gen 6 products. It is also witnessing increased interest in Blue Heron 200-gig per-lane retimer targeted at scale-out and emerging scale-up networks and supports multiple high-speed protocols. The optical portfolio represents an increasingly important growth vector, although management expects its most significant revenue acceleration to occur during the second half of fiscal 2027 rather than in the fiscal first quarter. The company expects mid-single-digit sequential growth in the first half of fiscal 2027, followed by a stronger second-half acceleration buoyed by its optical portfolio. Management projects more than $600 million in optical revenues, with ZeroFlap optics, silicon photonics PICs and optical DSPs each contributing more than $100 million. This is expected to support more than 80% year-over-year revenue growth for the full year. Image Source: Zacks Investment Research The acquisition of DustPhotonics strengthens Credo’s high-speed optical connectivity portfolio with silicon photonics PIC technology. The deal adds advanced technology, including 800G and 1.6T solutions, and brings a roadmap to 3.2T solutions and beyond. CRDO’s improving profitability is another thing investors need to watch for.  In the last reported quarter, non-GAAP gross margin was 68.3% compared with 67.4% a year ago. Non-GAAP operating margin was 49.6% compared with 36.8% reported in the prior-year period. Non-GAAP net income hit $226.7 million, representing a 51.9% net margin. For the fiscal first quarter, CRDO expects non-GAAP gross margin of 67% to 69%. However, tougher competition and an uncertain macro backdrop due to a fluid tariff situation continue to pose challenges. On the last earnings call, Credo noted ongoing tightness in the supply chain. While the company has taken steps to secure capacity, disruptions could still affect its ability to meet demand.Also, heavy reliance on a few customers creates concentration risks, leaving the company exposed to sharp revenue hits if any major client pulls back. Management expects three to four customers to remain above the 10% threshold in coming quarters. Further, non-GAAP operating expenses are expected to be between $86 million and $90 million in the fiscal first quarter. This could pressure margins if revenue growth falters. Also, intensifying competition in the semiconductor space from the likes of bigshots like Broadcom Inc. AVGO and Marvell Technology, Inc. MRVL, as well as newer entrants like Astera Labs ALAB, remains a concern. CRDO’s shares have gained 110.4% in the past six months, outperforming the Electronics Semiconductor industry (up 21%), Zacks Computer And Technology (up 18%) and the S&P 500 (up 11.3%). Image Source: Zacks Investment Research AVGO, ALAB and MRVL have gained 16.6%, 152.3% and 198.6%, respectively, over the same time frame. Based on the price-to-earnings ratio, the company’s shares currently trade at 35.16X forward earnings, higher than the industry average of 13.47X. Image Source: Zacks Investment Research In comparison, Broadcom trades at a forward 12-month P/E of 20.86X, while Astera Labs and Marvell Technology trade at P/E multiples of 55.71X and 45.85X, respectively. CRDO’s expanding AEC adoption and growing optical opportunity support a favorable long-term growth outlook. However, premium valuation, customer concentration and supply-chain tightness warrant some caution ahead of upcoming results. Given the balanced risk-reward profile, existing investors may retain CRDO, but new investors are better off waiting for an attractive entry point. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Credo Technology Group Holding Ltd. (CRDO) : Free Stock Analysis Report Marvell Technology, Inc. (MRVL) : Free Stock Analysis Report Broadcom Inc. (AVGO) : Free Stock Analysis Report Astera Labs, Inc. (ALAB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Outside of Nvidia NVDA), Marvell Technology MRVL) will provide the semiconductor market’s most closely watched earnings report this week when it posts Q2 results after the closing bell on Thursday, August 27. Marvell has become a prime beneficiary of the AI infrastructure boom through custom AI silicon, optical interconnects, and Ethernet switching, with hyperscale relationships involving Amazon AMZN), Microsoft MSFT), and Alphabet’s GOOGL) Google. Adding to the anticipation is that Marvell’s stock has skyrocketed +180% this year, vastly outperforming Nvidia and the broader market. Even after the surge, however, MRVL is trading more than 25% below its 52-week and all-time high of $329 a share. Image Source: Zacks Investment Research The Zacks Consensus Estimate calls for Marvell to post Q2 revenue of $2.71 billion, representing 35% growth from $2.01 billion in the prior year quarter. Adjusted EPS is expected at $0.93, up nearly 39% from a year ago. Notably, these estimates are almost directly in line with Marvell’s guidance for Q2 revenue of $2.7 billion, plus or minus 5%, and adjusted EPS of $0.93, plus or minus $0.05. More important than a modest Q2 beat may be Marvell’s outlook for continued AI-driven data-center growth. Data-center revenue reached $1.83 billion in Q1, rising 27% YoY and representing 76% of total sales, giving investors a high bar to measure against Marvell’s Q3 guidance and longer-term growth expectations. Marvell's AI opportunity has broadened considerably beyond its work with Amazon's custom Trainium chips and Microsoft's Maia accelerators. Its newly expanded agreement with Alphabet covers custom silicon tied to Google's custom AI chip ecosystem of Tensor Processing Units (TPUs), including AI inference accelerators, storage controllers, network-interface controllers, and memory-related chips. That puts Marvell in an increasingly important position as hyperscalers seek custom alternatives to Nvidia GPUs, although competition remains intense from Broadcom AVGO), Advanced Micro Devices AMD),and Astera Labs ALAB). Broadcom in particular remains a formidable competitor in custom AI silicon and has been a major Google TPU partner. The biggest argument against chasing Marvell stock before Q2 earnings is valuation. Following a massive year-to-date rally, MRVL trades at 17X forward sales and 74X forward earnings. Image Source: Zacks Investment Research However, the premium is backed by an exceptional growth outlook. Marvell expects total revenue to rise roughly 40% in its current fiscal 2027, followed by 45% growth in FY28 to around $16.5 billion. Notably, analyst expectations have moved even higher, with the Zacks Consensus now calling for FY28 sales of $16.63 billion. More importantly, Zacks Consensus projections call for Marvell’s EPS to increase 42% in FY27, with a nearly 53% spike projected in FY28 to $6.18 per share. Image Source: Zacks Investment Research Marvell's valuation leaves little room for a disappointing Q2 report or softer guidance, especially after its tremendous YTD rally. Still, Marvell's expanding relationships with Amazon, Microsoft, and Google, combined with rapid growth across custom AI chips and data-center connectivity, make MRVL one of the more compelling ways to participate in hyperscaler AI spending beyond Nvidia. Supporting that bullish outlook, Marvell stock currently sports a Zacks Rank #2 (Buy). Growth-oriented investors may still find MRVL attractive ahead of Q2 earnings, although the premium valuation makes the stock better suited for those comfortable with potentially significant post-earnings volatility. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Marvell Technology, Inc. (MRVL) : Free Stock Analysis Report Amazon.com, Inc. (AMZN) : Free Stock Analysis Report Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report Microsoft Corporation (MSFT) : Free Stock Analysis Report NVIDIA Corporation (NVDA) : Free Stock Analysis Report Broadcom Inc. (AVGO) : Free Stock Analysis Report Alphabet Inc. (GOOGL) : Free Stock Analysis Report Astera Labs, Inc. (ALAB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Marvell Technology, Inc. MRVL is scheduled to report second-quarter fiscal 2027 results after market close on Aug. 27, 2026. Marvell Technology anticipates revenues to be $2.7 billion (+/-5%) for the second quarter of fiscal 2027. The Zacks Consensus Estimate for MRVL’s fiscal second-quarter revenues is pegged at $2.71 billion, indicating year-over-year growth of 35.2%. For the fiscal second quarter, the company expects non-GAAP earnings of 93 (+/- 5) cents per share. The Zacks Consensus Estimate for MRVL’s earnings is pegged at 93 cents per share, indicating a 39% increase year over year. The consensus mark for earnings has remained unchanged over the past 60 days. Image Source: Zacks Investment Research In the trailing four quarters, Marvell Technology’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, while matching twice, with an average surprise of 0.65%. Marvell Technology, Inc. price-eps-surprise | Marvell Technology, Inc. Quote Our proven model does not conclusively predict an earnings beat for Marvell Technology this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. Though Marvell Technology currently carries a Zacks Rank #2, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here. Marvell Technology’s data center business is likely to have remained the primary growth driver in the second quarter of fiscal 2027, supported by continued investments in AI infrastructure and rising demand for the semiconductor solutions required to connect and scale increasingly complex AI systems. The company’s broad exposure to custom silicon, optical interconnects, switching and XPU-attach solutions is likely to have kept it well-positioned as hyperscalers expand AI computing capacity. Marvell Technology’s custom silicon business is expected to have remained a key contributor in the to-be-reported quarter. Hyperscalers are increasingly developing specialized AI accelerators and supporting infrastructure to improve performance, efficiency and control over their AI workloads. This trend is likely to have supported demand for MRVL’s customized XPU and XPU-attach solutions, while the company’s expanding pipeline of multigenerational programs should provide greater visibility into future growth. Interconnect demand is also expected to have remained strong in the second quarter of fiscal 2027 as AI clusters become larger and require greater bandwidth, lower latency and more efficient data movement. Marvell Technology is likely to have benefited from continued adoption of high-speed optical technologies as AI infrastructure evolves from traditional scale-out architectures toward scale-up and scale-across configurations. Demand for faster optical connectivity, switching and data center interconnect solutions should therefore remain an important source of growth in the to-be-reported quarter. The company’s optical portfolio is likely to have gained further traction as hyperscalers increase the scale and complexity of their AI deployments. The transition toward higher-speed connectivity is creating greater silicon content around optical transceivers, drivers, receivers and related technologies. Marvell Technology’s exposure across these areas could allow it to participate in multiple stages of the AI networking infrastructure buildout rather than relying on a single product category. MRVL’s switching business is anticipated to have benefited from increasing networking requirements within AI data centers. As AI workloads become more distributed across larger clusters, efficient Ethernet switching and high-bandwidth networking become increasingly important. The adoption of higher-capacity switching platforms and emerging scale-up networking architectures is likely to have supported demand in the second quarter of fiscal 2027. Year to date, MRVL shares have gained 179%, outperforming the Zacks Electronics – Semiconductors industry’s growth of 27.5%. Image Source: Zacks Investment Research Now, let’s look at the value Marvell Technology offers investors at the current levels. MRVL stock trades at a premium price with a forward 12-month price-to-sales (P/S) multiple of 14.40X compared with the industry’s 5.06X. Image Source: Zacks Investment Research Marvell Technology has laid out an ambitious growth trajectory, with revenues expected to increase approximately 40% year over year in fiscal 2027 and another 45% in fiscal 2028 to roughly $16.5 billion. MRVL expects its data center business to remain the primary growth driver, with revenues projected to rise approximately 50% in fiscal 2027 and accelerate to about 55% growth in fiscal 2028. Rather than relying on a single product cycle, Marvell Technology is participating across five AI infrastructure growth engines: scale-out optics, scale-across data center interconnect, scale-up optics, Ethernet switching and custom silicon. Scale-out optics remains a key near-term driver as expanding AI clusters increase demand for high-speed connectivity. However, the company faces competitive headwinds. Marvell Technology faces stiff competition in the networking and custom silicon space from Broadcom AVGO, Astera Labs ALAB and Advanced Micro Devices AMD. Broadcom is a leader in the domain of custom silicon solutions for data centers. Broadcom’s advanced 3.5D XDSiP packaging platform is critical to ensure the performance and efficiency of custom AI XPUs. Advanced Micro Devices is another established player in the custom silicon solutions and AI accelerator market. Advanced Micro Devices offers semi-custom SoCs and Instinct Accelerators to power data centers. Astera Labs’ Leo CXL smart memory controllers are built for memory expansion up to two terabytes and improve interoperability to accelerate AI performance and cloud computing. The competition from Broadcom, Astera Labs and Advanced Micro Devices has led MRVL to scale up its product delivery faster. While MRVL is scaling into higher-value AI opportunities, the margin profile can vary with the pace of custom ramp-ups, competitive pricing and the mix of optics, switching and silicon content. Nevertheless, MRVL is prioritizing rapid growth across custom silicon, optical interconnects and switching. Marvell Technology continues to benefit from the expanding AI infrastructure market, driven by strong momentum in interconnect, switching, custom silicon and optical networking. MRVL’s businesses are expected to benefit from increasing networking requirements within AI data centers and the AI capex supercycle. We therefore recommend accumulating MRVL at this time. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Marvell Technology, Inc. (MRVL) : Free Stock Analysis Report Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report Broadcom Inc. (AVGO) : Free Stock Analysis Report Astera Labs, Inc. (ALAB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 4:30 p.m. ET Chief Executive Officer and Co-founder - Jitendra Mohan President, Chief Operating Officer, and Co-founder - Sanjay Gajendra Chief Financial Officer - Desmond Lynch Investor Relations - Leslie Green Operator: Good afternoon. My name is Holly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Astera Labs Q2 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After management remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I will now turn the call over to Leslie Green, investor relations for Astera Labs. Leslie, you may begin. Leslie Green: Thank you, Holly, and good afternoon, everyone, and welcome to the Astera Labs second quarter 2026 earnings conference call. Joining us on the call today is Jitendra Mohan, Chief Executive Officer and Co-founder; Sanjay Gajendra, President and Chief Operating Officer and Co-founder; and Desmond Lynch, Chief Financial Officer. Before we get started, I would like to remind everyone that certain comments made in this call today may include forward-looking statements regarding, among other things, expected future financial results, strategies and plans, future operations, and the markets in which we operate. These forward-looking statements reflect management's current beliefs, expectations, and assumptions about future events, which are inherently subject to risks and uncertainties that are discussed in detail in today's earnings release and the periodic reports and filings we file from time to time with the SEC, including the risks set forth in our most recent annual report on Form 10-K. It is not possible for the company's management to predict all risks and uncertainties that could have an impact on these forward-looking statements or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statement. In light of these risks and uncertainties and assumptions, the results, events, or circumstances reflected in the forward-looking statements discussed during this call may not occur, and actual results could differ materially from those anticipated or implied. All of our statements are based on information available to management as of today, and the company undertakes no obligation to update such statements after the call, except as required by law. Also, during this call, we will refer to certain non-GAAP financial measures, which we consider to be important measures of the company's performance. For example, the overview of our Q2 financial results and Q3 financial guidance refer to various non-GAAP financial measures. These non-GAAP financial measures are provided in addition to, and not as a substitute for, financial results prepared in accordance with US GAAP. A discussion of why we use non-GAAP financial measures and reconciliations between our GAAP and non-GAAP financial measures and outlook are available in the earnings release we issued today, which can be accessed through the investor relations portion of our website. With that, I would like to turn the call over to Jitendra Mohan, CEO of Astera Labs. Jitendra? Jitendra Mohan: Thank you, Leslie. Good afternoon, everyone. thanks for joining our second quarter conference call for fiscal year 2026. Today, I'll provide an update on AI infrastructure market trends, our Q2 results, and recent announcements. I'll turn the call over to Sanjay to discuss Astera Labs' long-term growth profile. Des will cover our Q2 financial results and Q3 guidance. Since our last earnings call, investment in AI infrastructure has continued to accelerate. Multiple industry forecasts now point to hyperscaler AI and cloud infrastructure spending in 2027 reaching into the trillion-dollar range, with sovereign AI initiatives, inference workloads, and enterprise adoption expanding globally. These secular trends are increasing the need for intelligent connectivity and expanding our long-term growth opportunity. Astera Labs delivered outstanding results in Q2, with record revenue of $392.4 million, up 27% sequentially and up 104% year-over-year. This strong performance was driven by broad-based strength across our entire product portfolio, reflecting the diversification of our business as we continue to win new designs across multiple customers and product categories. PCIe 6 momentum further accelerated in Q2, representing more than 50% of our total revenue, driven by both Scorpio AI fabric switches and Aries retimers. This milestone demonstrates the maturity and scale of our Gen 6 portfolio and clear market leadership. On the AI fabric front, Scorpio delivered significant growth in Q2. High-radix Scorpio X-Series has entered volume production and will continue to scale materially in the second half of this year. We expect Scorpio to become our largest product family in Q3, which is one quarter ahead of our prior expectations, marking an important strategic milestone. We are now shipping multiple configurations of Scorpio X-Series into scale-up applications to our initial customers, we remain on track to ship Scorpio X-Series to additional customers by year-end. Scorpio P-Series also continued to expand across multiple customers, with new shipments to hyperscalers and AI infrastructure providers. These programs are currently in pre-production and are expected to ramp more meaningfully in 2027. We are also closely engaged with our customers to support their future system architectures with purpose-built AI fabrics, including next-generation PCI Express and UALink protocols. Upcoming AI systems will employ more complex switching topologies to enable larger XPU cluster sizes and higher bandwidth. These designs are expected to drive a material increase in our silicon dollar content per XPU. Our Scorpio fabric switch family is well-positioned for a multi-year growth cycle driven by the following factors. First, higher dollar content per XPU due to greater attach rate and increased capabilities. Second, expanding customer base with exceptional traction and design in pipeline. Third, a greenfield TAM growing rapidly with broadening use cases across training and inferencing. Our signal conditioning business, Aries, delivered record quarterly revenue in Q2, driven by strong adoption of retimers and gearboxes across scale-up and scale-out topologies in AI and general-purpose compute platforms. Aries growth is being fueled by increased AI system deployments, expanding AI accelerator cluster sizes, greater unit attach rates, and higher ASPs associated with the transition to PCIe 6. Taurus also provided strong revenue growth in Q2, with increased units shipped across a variety of AI and general-purpose platforms. During the quarter, we also shipped pre-production volume of our 100G per lane Taurus smart cable modules for 800G AECs for scale-out applications. We expect Taurus to continue its growth trajectory in the second half of the year as 800G deployments expand, driving improved attach rates and higher ASPs compared to 400G solutions. We also expanded our Taurus portfolio with a new family of 3.2T smart retimers and smart redrivers supporting 200G per lane for next-generation Ethernet and UALink connectivity. These are the industry's first solutions to enable smart swap, giving platform designers the flexibility to choose between low-power smart redrivers and long-reach smart retimers without requiring a board redesign. This architectural flexibility is critical as AI systems evolve rapidly and designers need to address increasing signal integrity challenges at higher data rates while optimizing system power consumption. We expect our new high-speed 200G per lane retimers and redrivers to double our Taurus portfolio market opportunity to over $4 billion by 2030. In CXL, we are seeing renewed momentum as industry is recognizing its potential to unlock performance and utilization benefits in agentic AI applications. For a growing set of memory-intensive inference and agentic AI workloads, memory capacity and utilization are increasingly becoming system constraints, and CXL-attached memory can offer attractive cost performance relative to local HBM. As our hyperscaler customers look to address current memory supply and pricing dynamics, we are also seeing additional opportunities for CXL in mainstream general-purpose server platforms. During Q2, we closed a new design win with our standard Leo memory controller at a U.S. hyperscaler. Looking into 2027, we expect to ship both standard and custom Leo CXL memory controllers in volume across general-purpose compute and AI inferencing applications to two U.S. hyperscalers. Activity and engagement within the CXL ecosystem continues to be robust, and we expect to convert additional designs in the coming quarters. In closing, I'm proud of the results we have delivered, and what excites me most is the trajectory ahead for Astera Labs. Scorpio X-Series is in volume production, and we expect our Scorpio family to become our largest product category by revenue in Q3, a significant milestone in our evolution as a company. At the same time, new and existing designs across Aries, Taurus, and Leo are contributing to our broad-based growth. Intelligent connectivity is now fundamental to AI infrastructure, and we are winning with the customers and platforms that define the market. With proven execution, deep customer partnerships, and growing design win visibility, we are confident in our ability to continue outgrowing the market. With that, let me turn the call over to our President and CEO, Sanjay Gajendra, to provide more details on our product momentum and strategic initiatives. Sanjay Gajendra: Thanks, Jitendra, and good afternoon. I'll walk through our product execution and the expanding market dynamics that are positioning Astera Labs to capture a significantly larger share of AI infrastructure spend over the coming years. Our laser focus on execution and innovation has delivered a purpose-built, intelligent connectivity platform to our hyperscaler customers and is solving sophisticated technology challenges against aggressive timelines. This results-oriented mindset has helped us strengthen the trust that our customers and partners place in us. As a result, we continue to unlock many new opportunities in next-generation designs across multiple customers to rapidly expand our top-line growth. Let me deep dive into some of the key product categories, starting with AI fabrics. Our broad portfolio of Scorpio switching solutions is perfectly suited to address the increasing complexity and bandwidth requirements in AI architectures. With leading hyperscalers planning large-scale training and inference deployments with ever-growing accelerator cluster sizes, our Scorpio X-series high-radix fabric switch family provides intelligent AI fabric with industry-leading features to maximize token economics. These capabilities are driving exceptional demand for our Scorpio X smart fabric switches to address the $20 billion merchant scale-up switching TAM. Scorpio X-series differentiation comes from its intelligence layer. Hardware-accelerated Hyper-cast and in-network compute capabilities deliver up to 2x improvement in collective performance for large-scale training and inference workloads. These capabilities are implemented through our COSMOS software platform, which now extends beyond basic fleet management functionality to enable dynamic traffic shaping and advanced real-time performance management. We're not stopping here. Drawing on our multi-generational partnerships with customers and the lessons learned from deployments at scale, we are building an ambitious roadmap for our scale-up smart fabric switches. Our Scorpio roadmap is closely aligned with our customers' next-generation XPU architectures, enabling more complex topologies, larger cluster sizes, and higher bandwidth. Looking ahead, we expect the content opportunity for Scorpio X series solutions alone to grow well beyond $1,000 per XPU in future generations of AI platforms. Scorpio P-Series momentum also remains very strong, with both early-stage and production deployments expanding across multiple AI platforms. We are shipping Scorpio P-Series to several customers to enable high-speed connectivity across AI networking applications. Over the long term, we aim to proliferate Scorpio P-Series across a broader set of applications spanning modular AI servers, disaggregated KV cache appliances, storage platforms, and enterprise-level servers. On signal conditioning, Aries delivered record quarterly performance in Q2 and is well-positioned for sustained growth over the long term. PCIe 6.0 retimers and gearboxes have become critical infrastructure for AI servers, where signal integrity directly determines whether systems achieve rated performance. Aries established itself as the gold standard across major XPU and CPU platforms for PCIe 5.0, and this position has continued for PCIe 6.0. We continue to invest in our customers' technology roadmaps, and we expect to have PCIe 7.0 solutions ready to meet their timelines. Taurus is also expected to deliver strong long-term growth, propelled by 800G deployments for AI scale-out networks in the near term and 1.6T and 3.2T-based systems over the long term. We are pleased to report that Taurus has entered pre-production ramp for 100 gig per lane in Q2, which will support platforms utilizing 800G links. Our Taurus portfolio expansion supporting 200G per lane for 1.6T and beyond positions our roadmap through the next Ethernet generation and the forthcoming ramp of UALink, driving continued content gains and above-industry growth for the Taurus product family. Moving to UALink. The consortium's 2.0 specification validates our architectural approach. UALink 2.0 codifies in-network compute, advanced RAS features, and 200 gig SerDes as next-generation scale-up fabric requirements. These directly align with our investment areas. We remain engaged with lead customers and ecosystem partners to enable UALink deployments supported by our upcoming fabric and signal conditioning solutions. We are on track to deliver UALink-enabled Scorpio X Series scale-up switches in 2027. Optical connectivity represents a substantial expansion vector with the potential to unlock tens of billions of dollars of additional market opportunity beyond our current copper connectivity TAM. Over the past two years, we have assembled capabilities spanning analog and mixed signal design, DSP, electronic and photonic IC integration, and optical packaging through organic investment and the aiXscale acquisition. This enables us to deliver complete optical engines in addition to optical components. Our optical strategy unfolds in three phases. First, high-density fiber-attached solutions leveraging our aiXscale core technology enable up to 50-meter fiber connectivity with ultra-low latency. Our initial opportunity with a tier 1 AI platform provider is expected to enter volume production in 2027. Second, near packaged optics, or NPO, chipsets enabling multi-rack scale-up clusters via optical links are also targeted for 2027 production. Third, fully integrated Scorpio X-Series fabric switches with CPO optical engine modules represent our longer-term roadmap for 2028 and beyond, supporting larger fabric domains with terabits per second optical I/O per switch. Beyond standard products, we continue to make solid progress with our custom solutions. The increasingly diverse XPU landscape and workloads are driving demand for custom connectivity solutions. We are executing across multiple vectors with custom solutions for hybrid rack architecture, including NVLink fusion-based designs and, separately, custom Leo memory controllers in specialized interface applications. We expect initial shipments for these custom design wins to commence in 2027. We are also engaged with multiple customers on additional high-value custom connectivity opportunities to deliver end-to-end purpose-built silicon solutions. Together, these design wins and active opportunities validate our capability to deliver differentiated custom silicon and represents a multi-billion dollar incremental opportunity over time. Overall, our platform philosophy, which we call AI Your Way, reflects our strategy. Rather than prescribing a single architecture approach, we provide the broadest portfolio of connectivity solutions that let customers deploy AI infrastructure optimized for their specific workloads, whether that's standards-based or custom or copper or optical interconnects and scale-up or scale-out connectivity across a plethora of standards. This architectural flexibility is becoming a competitive advantage as the market diversifies. To summarize, Astera Labs has hit another important inflection point with Scorpio high-radix AI fabrics reaching volume production. This marks our evolution to a complete AI fabric infrastructure provider, extending beyond signal conditioning and memory connectivity solutions. Our expansion into optical interconnects and custom solutions further broadens our addressable market in 2027 and beyond. With that, let me turn over the call to Des to walk through our Q2 financial results and Q3 guidance in more detail. Desmond Lynch: Thank you, Sanjay, and good afternoon, everyone. Today, I will review our Q2 financial results and then discuss our Q3 guidance, both presented on a non-GAAP basis. We delivered outstanding second quarter results with record revenue of $392.4 million, up 27% sequentially and up 104% year-over-year. Growth was broad-based across our AI fabric and signal conditioning portfolios, led by PCIe 6.0 products and the initial production ramp of Scorpio X-Series. Our Scorpio product family delivered a strong Q2. Scorpio P-Series momentum continued during the quarter, driven by the scaling of existing customer deployments and the early ramp of new programs into production. Scorpio X-Series also grew strongly as we began shipping initial production volumes across a variety of radix configurations. Aries revenue reached a new quarterly record driven by strong PCIe 6.0 retimer adoption across both scale-up and scale-out applications. Overall, revenues from PCIe 6.0 across our AI fabric and signal conditioning portfolios represented more than 50% of total company revenue in Q2, up from one-third in Q1. Taurus's revenue also grew strongly in Q2, driven by increased unit shipments across both AI and general-purpose compute platforms. Non-GAAP gross margins for the second quarter were 73.7%, above our guidance of 73%. Non-GAAP operating expenses for the second quarter were $135.8 million, up 10% sequentially, reflecting continued investment in our roadmap. Non-GAAP operating margins for the second quarter were 39.1%, up 290 basis points from Q1, driven primarily by strong revenue growth and the resulting operating leverage. For the second quarter, interest in other income was $12.1 million. Our non-GAAP tax rate was 12%, and non-GAAP net income was $145.8 million, resulting in non-GAAP diluted earnings per share of $0.80, an increase of more than 30% from Q1. We enter the quarter with cash, cash equivalents to marketable securities, totaling $1.25 billion, of $68.5 million from Q1 driven by cash of $87.7 million. Turning to our outlook for the third quarter. We expect revenue to be in the range of $540 million-$560 million. At the midpoint, this represents 40% sequential growth driven by the transition of Scorpio X-Series to volume production, continued strength in Aries PCIe 6.0 retimers, and pre-production shipments of Taurus solutions supporting 100 gigabits per lane for 800-gigabit Ethernet. As Jitendra mentioned, we expect Scorpio to become our largest product line by revenue in the third quarter, marking an important milestone in our journey from smart signal conditioning products to mission-critical AI fabric solutions. This milestone reflects the progress we have made over the past several quarters as Scorpio X-Series transitions to volume production. We expect third quarter non-GAAP gross margin to be approximately 72%. We expect third-quarter non-GAAP operating expenses to be between $156 million and $160 million. Our non-GAAP operating margin is expected to be approximately 43%, up 400 basis points sequentially, which reflects significant operating leverage as our revenue expands. Interest in other income is expected to be approximately $12 million, and we expect our non-GAAP tax rate to be approximately 12%. We expect our Q3 diluted share count to be approximately 185 million shares outstanding. Overall, we expect non-GAAP fully diluted earnings per share to be between $1.16 and $1.21. In closing, Q2 was an excellent quarter with strong execution, driving record revenue and expanding operating leverage. Our strong Q3 guidance reflects continued momentum and confidence in sustained growth across both our AI fabric and signal conditioning portfolios. We will continue to invest strategically to capture the substantial opportunity ahead while maintaining strong profitability and driving long-term value to our stockholders. This concludes our prepared remarks. I will now turn the call back to our operator to begin Q&A. Operator? Operator: We will now begin the question-and-answer session. Please limit yourself to one question. At this time, I would like to remind everyone, in order to ask a question, press star then one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Harlan Sur with J.P. Morgan. Harlan, your line is now open. Please go ahead. Harlan Sur: Good afternoon. Thanks for taking my question and great execution by the team. It's great to see the volume production ramp of your Scorpio X scale-up fabric switching solutions here in the third quarter. I think in the press release you said that Scorpio X ramp would be led by your newer 320-lane products. I think that's with one hyperscaler customer, right? Do you have another hyperscale cloud customer that is targeted to ramp your lower-rate X, Scorpio X product family, as well? Is that more of a Q4 high-volume ramp? With the strong ramp in Q3, is Scorpio X revenues going to exceed Scorpio P revenues this quarter, or is that still looking to be more like the Q4 timeframe? Thank you. Sanjay Gajendra: Thanks, Harlan. A couple of points. First, the Scorpio X-Series has been gaining tremendous amount of interest in the market. We have started shipping the parts for pre-production for multiple customers starting this quarter. We do expect Q3 at least for our lead opportunity and lead customer to ramp to high-volume production in Q3 and essentially taking over, or surpassing the revenue from Scorpio P-Series. Which should give you an idea of the value that we bring in scale-up use cases. We do expect to ship to revenue for additional customers on Scorpio X by end of the year. In general, what I would say is that there's been an exceptional traction that we're seeing both for Scorpio X and P. X tends to be more tied to scale-up and various different configurations. P goes to a multitude of opportunities. Overall it's been great to see how the customer base is seeing the value that we deliver with our Scorpio family. Like we noted in the call, Q3 onwards, we expect Scorpio as a family to be the largest product line within the company. Harlan Sur: Thank you, Sanjay. Operator: Your next question comes from the line of Blayne Curtis with Jefferies. Blayne, your line is now open. Please go ahead. Blayne Curtis: Hey, guys. Thanks for taking my question and great results. I know there's going to be a lot on Scorpio, I want to ask on the Aries product; you said record revenue. I think when you gave initial outlook, it was directionally growth. I think people had pretty low expectations. Just kind of curious if you could talk about the drivers within Aries, and then as you look to kind of the next generations of AI servers, what kind of design traction are you seeing and retimer attach in those systems? Sanjay Gajendra: Yeah. Two parts to that. One is, again, Aries 5, which is our gen 5 portfolio that's been around; I want to say definitely continues to expand, especially as we're seeing inference-based applications start showing up. That's driving a new wave of growth, is how I would put it. Aries 6, which is for gen 6, supporting the higher data rate, the 64 gigabits per second. Obviously that comes in with higher attach rate and going into several new platforms. Also, there are other use cases around the cabled application and so on. Overall, like we've always said, the retimer is a socket that somewhat keeps on giving in the sense that you need it for a variety of use cases. If anything, the surprise is how long Gen 5 has continued, and given that there is a new set of use cases opening up for inference, all of those are contributing to help us achieve a new record on the Aries portfolio. Jitendra Mohan: By the way, we expect this trend to continue as new Gen 6 platforms and GPUs are being developed. This is not a trend that will stop. Then, of course, then we move on to Gen 7. You can expect some of this cycle to continue for a long time. Blayne Curtis: Thank you. Operator: Your next question comes from the line of Joseph Moore with Morgan Stanley. Joe, your line is now open. Please go ahead. Joe Moore: Great. Thank you. You mentioned UALink in your roadmap there. Can you talk a little bit about that roadmap and, do you see, I guess, a transition from PCI to UALink and how broad do you expect the customer adoption to be there? Jitendra Mohan: Hey, Joe. Thank you for the question. Yeah, we continue to see a lot of interest in UALink for scale-up networking. As you mentioned during the prepared remarks, the ecosystem is evolving. We have new IP vendors coming online, new tools coming online. Some of the other vendors have also introduced their own products or announced their own products. That kind of all points to a nice, vibrant ecosystem. From a customer standpoint, we continue to stay engaged with our customers. There is continuing interest in UALink. A lot of it is actually driven by not only the additional throughput that UALink brings but also because of the low latency that UALink will deliver compared to some of these other protocols. We find a lot of traction for that in inferencing applications. The throughput and the latency and the open ecosystem is definitely continuing to drive the traction from our customers. We are completely plugged in terms of the development cycle for UALink. We plan to intercept the XPUs that are on track to be released in 2027 with our own UALink solutions. As we have discussed, we want to come in here with a full portfolio of devices, which would be anchored around our switch platform. Then also providing signal conditioning solutions both for copper and optical. In fact, we recently introduced our Taurus family, which supports UALink at 200 gig per lane line rates. It's all looking very good. We continue to stay completely engaged, as things move from the PCI Express generation to UALink, we do expect the dollar content per XPU to increase; that's going to be a favorable trend for us. Joe Moore: Great. Thank you. Operator: Your next question comes from the line of Tore Svanberg with Stifel. Your line is now open. Please go ahead. Tore Svanberg: Yes. Thank you; congratulations on the strong results. You talked about new software for the Scorpio X deployment. I think you even talked about really improving efficiency, tokenomics, and so on and so forth. Can you maybe elaborate a little bit on that? I'm especially curious if that new software is also landing you more new customers, because I assume that's something that's going to be very beneficial as they launch their switch fabrics. Jitendra Mohan: Yeah. As Sanjay mentioned, Tore, there is exceptional traction from our new customers for the new software devices that we introduced. Part of it comes just because of the fact that we have higher radix and higher lane count; therefore, we can connect more XPUs to the switch. A lot of it is also stemming from the advanced capabilities that we built in, I think this is what you refer to when you talk about software, which is the in-network compute as well as HyperCast. Both of these are very important technologies that really set us apart and enable very low latency inferencing as well as very high efficiency for in-network compute. Almost 2x improvement in the collective operations that are required for training. All of these are hardware-based features, but they are enabled through software, and this software resides in our COSMOS platform. While previously COSMOS was mainly responsible for optimization, telemetry, diagnostics, now we are becoming part of the orchestration layer. The XPUs are talking directly to our COSMOS platform to run the workloads. This drives a lot more stickiness into our solution. Many customers that have adopted our platform in this generation will continue to use this for the next generation. It's the easiest thing for them to do. We continue to support these types of advanced capabilities in our current devices, and we'll carry them forward for the next generation devices as well. Tore Svanberg: That's very clear. Thank you. Operator: Your next question comes from the line of Natalia Winkler with UBS. Natalia, your line is open. Please go ahead. Natalia Winkler: Hi. Thank you very much for taking my question. I wanted to follow up on the CXL opportunity. You guys mentioned the CXL controller and kind of two new hyperscalers that you will be ramping in 2027. Curious how that CXL opportunity plays out for the switching content as well, and how do you see that market kind of progressing from here? Sanjay Gajendra: Yeah, I think it was about time, isn't it? I think it's finally great to see some traction back on CXL. As you know, we've been investing in the technology for quite a while now, and it's great in some ways because we understand exactly what is needed both from a hardware and software standpoint. Now, we see actually three main use cases. One is largely driven around the memory market dynamics. People wanting to find alternates to the availability or the high cost of memory today. They're trying to do that through CXL and try to leverage the fact that you can stick different kinds of memory behind a CXL bus. The second one, which is very exciting for us, is the GPU attach or accelerator attach, where combined with our KV cache acceleration type of function, we're able to do unique things that fundamentally are improving the latency and performance for inference applications The third one is something that we've been talking for a while, which is general compute or HPC application, where for use cases like SAP, where you need a high memory or memory-intensive workload, the CXL provides a way of adding more memory to the CPU. Those are the three main applications or dynamics that we see. For us, what we are tracking is, of course, multiple design win and opportunities at this point, with most of them in qualification or early stage this year and getting into high-volume production in 2027. We do see this trend to continue, by the way, and we are investing heavily in coming out with technologies and capabilities to solve the memory wall problem and the memory availability problem in some ways, given where the market is on that front. Overall, we are positive and we are continuing to invest. Natalia Winkler: Thank you. Operator: Your next question comes from the line of Sean O'Loughlin with TD Cowen. Sean, your line is now open. Please go ahead. Sean O'Loughlin: Hey, guys. Congrats on another great set of results, and thanks for letting me hop on. I wanted to ask maybe a bigger picture question on the product portfolio, especially as we start to think about optics really starting to be something that sees at-scale deployment within most investors' time horizons. I guess the question is, as I think about a UALink, NPO, or CPO switch, you have an optics-based Ethernet PHY. Is there a fundamental reason why Taurus over time couldn't also transition that physical media-dependent layer to one that's based on fiber rather than copper? Does that, in effect, extend the assumed lifetime revenue of what maybe most of us are thinking of as an inherently copper-based solution today? Apologies if I'm leading the witness here a bit, but I just wanted to get your thoughts on that. Sanjay Gajendra: No, that's a great question. Let me comment on that. First of all, we do fully expect copper and optical to coexist. As you know, most of the scale-up connectivity today is done in copper, and our customers are asking us to continue to push that forward, and we will continue to do that. As these data rates go up and the signal integrity challenges increase, there is definitely room for additional products and additional product categories, just like we announced our Taurus 200G, both retimers as drivers in support of these applications. We do expect that for this generation and the next generation, the scale-up within a rack will continue to be copper. As these cluster sizes grow and the data rates increase, optical will definitely play an increasingly important role as you start connecting these racks to each other and cluster size expands from maybe one or two racks to four, five, or even a larger number of racks. We are very well positioned to play our part in this developing market segment. We are very closely engaged with our customers. We understand when they want to deploy these increased cluster sizes, and we expect that the first deployment will happen with NPO solution. As we go from copper, in addition to copper, to NPO solution, our dollar content per XPU or per link actually goes up. We definitely welcome this change. Overall, if you look at the optical market, it's several tens of billions of dollars in TAM that gets unlocked. Once NPO gets deployed and data rates continues to increase, we will start to see CPO getting deployed. We look at it as 2027 being the year where NPO gets deployed; 2028 and beyond is when CPO gets deployed. From a product development standpoint, we are very comfortable. We started investing in this a couple of years back. We have a team of engineers working on the EIC solution, which is the electrical component. We have a team of engineers that is working on the silicon photonics. Of course, late last year, we acquired aiXscale Photonics, which gives us the ability to develop a connector. Put all of these things together, we have now the ability, or we will have the ability, to have full optical engines, which will eventually lead to not only optical links and Taurus-like components, as you pointed out, but actually a fully optically enabled Scorpio switch. We are really looking forward to that, supplying both an optically enabled Scorpio switch as well as the individual components that make up the full optical link. That's a tremendous opportunity for us in addition to what we have at copper. Sean O'Loughlin: Thanks for that. Congrats again. Sanjay Gajendra: Thank you. Operator: Your next question comes from the line of Papa Sylla with Citigroup. Papa, your line is now open. Please go ahead. Papa Sylla: Thank you for taking my question. Congrats on the impressive results. I wanted to double-click on the content for accelerator. I think when you initially kind of IPO'd, it was more around the $50-$100 for accelerator, and over the past quarters or so, it went to $1,000+. Sanjay, you mentioned today Scorpio X alone could be well over $1,000 per accelerator. I'm wondering if that $1,000+ for Scorpio X is it a pre-UALink metric. Perhaps if you can provide color on the path to that $1,000+ per accelerator for Scorpio X. Finally, maybe tying everything together, if you can speak more generally on your content per accelerator currently, and where do you see that growing over the next 2-3 years? Sanjay Gajendra: Yeah, a good question. I think this is a fundamental question that you asked, and it's a very important focus for us, which is how do we keep ensuring that our long-term business continues to grow, and we are able to sustain the kind of growth that we're able to deliver? It really, like you highlighted, comes down to how can we keep increasing the dollar content that we can get per XPU attached. Like you correctly noted, we started with small numbers when IPO time. Now we see our business contributing multiple thousands of dollars per XPU with the X scale or scale-up switch itself offering over $1,000 per XPU. This is already starting to happen, of course, with the high-radix switch that we are shipping right now. At the same time, this is just the beginning of it, because when you start adding several other features that are important in terms of optical, for example, or adding more signal conditioning because of the higher speed and the higher attach rate, we do believe that this number will continue to scale up. That is what we are focusing our investment right now, which is how do we ensure, A, we keep increasing the dollar content we get per XPU targeting multiple thousands of dollars, and B, how do we continue to keep diversifying our business, adding more hyperscalers around the anchor socket that we have, which is a scale-up switch, and continue to grow significantly above where the market is. Papa Sylla: Got it. Very helpful. Thank you. Operator: Your next question comes from the line of Tom O'Malley with Barclays. Tom, your line is now open. Please go ahead. Trip Smith: Hi, team. This is Trip Smith on for Tom O'Malley. Appreciate the question and very nice results. I was just curious about how we should think about Scorpio's gross margins now that it's becoming a bigger part of the business and what are the puts and takes there for gross margins looking out. I believe you still have the Amazon warrant impact, so I just wanted to double-check on that and how we should be modeling that over the next few quarters. Thank you. Desmond Lynch: Hey, thanks for the question. It's Des here. As we mentioned in the prepared remarks, we do expect our Q3 gross margins to be approximately 72%. Really, as our portfolio continues to sort of diversify, we continue to see a wider range of gross margins, with the main impacts being silicon versus module revenue mix and the different use cases associated with our switching portfolio. On Scorpio across both P and X Series, we do have a wide range of margins, really driven by use case and lane count utilization. I would say, on average, Scorpio across all use cases has an average margin profile broadly in range with our corporate gross margins. In any given quarter, this mix can change. What I would say on the switching side is that we are going after large opportunities, and as the top line continues to scale, we'll see the gross margin dollars flow through and contribute to the bottom line. We clearly saw that in our Q2 results and also our Q3 guidance from here. Really, given the broadening of the portfolio, I would expect our gross margins continue to trend towards a long-term target of 70% from here. Operator: Your next question comes from the line of Ananda Baruah with Loop Capital Markets. Ananda, your line is now open. Please go ahead. Ananda Baruah: Thanks, operator, for the question. Good morning, I mean, good afternoon, guys. Thanks for taking the question. What's a useful way to think about the contribution that the China hyperscale can make across the portfolio as you continue to introduce the new products and move up from generation to generation? Thanks. Sanjay Gajendra: Ananda, it's a good observation. In China, as you can imagine, open protocols are quite popular, which includes PCI Express, Ethernet, and increasingly, NVLink. We definitely see that as a good market, not nearly as big as what we have here, but certainly there is a lot of interest, and we are engaging with the customers there with our PCI solutions as well as our Taurus-based Ethernet solution. In aggregate, that can be a very promising opportunity, especially as PCI Express is the nervous system of servers and probably the best way to connect many add-in card-format GPUs together to deliver good inferencing capabilities. Ananda Baruah: I appreciate. Is it a way that can be noticeable in the PNL over time? Sanjay Gajendra: I think it'll be in an absolute scale; yes, our revenues from China will continue to increase. However, we do expect the rest of the world to increase even faster. As a percentage of total revenue, they will continue to be in the single digits. Ananda Baruah: Got it. Operator: Your next question comes from Suji Desilva with Roth Capital Partners. Suji, your line is now open. Please go ahead. Suji Desilva: Hi, Jitendra. Hi, Jitendra, Sanjay, and Des. Congrats on the results here. I'm curious; you talked about the software supporting telemetry and now orchestration gaining more kind of functionality there. Is there a kind of a soft line where you might cross over to helping the XPU itself with some of the functionality as a coprocessor, or would you draw sort of a straight line there as connectivity versus that eventual trend in memory, compute, and things like that? Sanjay Gajendra: Very good point. Actually, that is what I was trying to say when I answered the question earlier: that with the advancement of the in-network compute and Hypercast features in our latest Scorpio 320-lane device, we are indeed crossing over that line where the XPU is directly talking to the switch to orchestrate the workloads, to reduce the latency, and increase the throughput for both inferencing as well as training workloads. That's a very important development for our COSMOS platform, where not only are we doing the traditional optimization, customization, diagnostic, and telemetry, but we are really helping to improve the workload and directly improve the utilization of the GPUs that are connected to our switch. It's a very important development, and as I mentioned, it makes our software solution more powerful and a lot more sticky as customers designing our current generation of switches and then look to upgrade them in the future. Suji Desilva: Okay, thanks. Operator: Your next question comes from the line of Simon Leopold with Raymond James. Simon, your line is now open. Please go ahead. Jeff Koche: Yeah, thanks. Jeff Koche in for Simon. Maybe you could just talk qualitatively about your end market concentration. How has it trended the quarter? How do you expect it to trend over the next, I guess, through 2027, especially with the new launches? Desmond Lynch: Yeah, it's a really good question. What I was really pleased to see in our first half is that, really, it's been a broad-based strength across our product portfolio. Really looking at our drivers, I would say Aries delivered the record quarterly revenue in Q2 and remained our largest product line, really supported by the ongoing transition to PCIe 6.0 across both scale-out and scale-up connectivity. I do expect Aries to continue to grow in Q3 and beyond. As we mentioned in the prepared remarks, Scorpio continues to show strong momentum in Q2, really driven by X and P Series. As we mentioned, we do expect to see Scorpio becoming our largest product line in terms of revenue as a result of the production ramp of the high-radix solutions in Q3. Taurus also continues to show nice growth, really supported by AI and general-purpose platforms. I do expect to see further growth in the third quarter, driven by the strong base of the 400 gig demand, as well as the early contributions of 800 gigs as well. I think as Sanjay mentioned, we continue to see strong progress on the Leo CXL products, and we continue to see some revenue here in the back half of the year, which will ramp more materially into 2027. As we look into 2027, we'll continue to see further opportunities on the optical and custom side. We're really pleased with the overall performance of the portfolio and the continued diversification. Jeff Koche: Great. Operator: Our next question comes from Karl Ackerman with BNP Paribas. Karl, your line is now open. Please go ahead. Karl Ackerman: Yes, thank you. Jitendra, Scorpio X is ramping significantly in the second half of this year, largely driven by the product transition at your main customer. Could you discuss the breadth of customer wins, including a growing mix of neo clouds, and whether your Scorpio X opportunity extends across both liquid-cooled and air-cooled servers? Thank you. Sanjay Gajendra: Yeah, I'll take this question. It's Sanjay here. Like we've said, the demand for Scorpio X and Scorpio P has truly been exceptional. We have over 10 customers engaged on the Scorpio X itself. Many of these opportunities are either getting into pre-production or getting deeper into the qualification cycle. To that standpoint, we are already shipping Scorpio X to multiple customers right now as they get ready for their own internal qualification cycle. We do expect that we'll have additional customers ramping to production towards the end of this year, early next year, based on the progress that they can make. This trend is something that, of course, given the features and capabilities that we have, especially with the 320-lane, we're able to unlock several things when it comes to inference-type applications. There are several unique things that we are able to achieve, and all of these are contributing to diversifying our customer base on Scorpio X. Like I noted on Scorpio P, it's truly broad-based because the P series go into standard PCI switching applications. From storage to networking and some of the scale-out use cases, we have several design wins and design-ins that are ramping to production. In general, I want to say Scorpio family is taking off in a very positive way for us, and we intend to add more customers and more revenue growth in the second half through 2027. Jitendra Mohan: If I may just add to that, the chip itself supports both liquid cooling and air cooling. In fact, we do have customers that are designing it for both of them. Your point about the neo clouds is also very valid, because people, when they start to deploy these solutions for especially inferencing applications, sometimes they can do that without building a full rack-level solution. We do see this increasing use case of enterprise customers and neo-clouds looking at solutions that are based on Scorpio as a scale-up and using add-in card form factor GPUs to deliver good inferencing TCO. Karl Ackerman: Thank you. Sanjay Gajendra: Also maybe to add one more point that is somewhat lost is even with the lead hyperscaler we have, there are multiple platforms where we are designed in. It's not like there is just one, right? I think that's a nuance that needs to be considered as you look at our business. Operator: There are no further questions at this time. I will now turn the call back over to Leslie Green for closing remarks. Leslie Green: Thank you, everyone, for your participation and questions. Please refer to our investor relations website for information regarding upcoming financial conferences and events. Thanks so much. Operator: This concludes today's conference call. You may now disconnect. Before you buy stock in Astera Labs, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Astera Labs wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $411,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 11, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends Astera Labs. The Motley Fool has a disclosure policy. Astera Labs (ALAB) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

VRT and ALAB both beat earnings riding Amazon and Microsoft's $100B quarterly AI capex, yet Astera dropped 12% post-earnings while Vertiv surged 25%. Vertiv suits stability-focused investors with a six-quarter beat streak and tripled free cash flow, while Astera at a 249 P/E rewards patient buyers waiting for a pullback. Don't wait: the analyst who called NVIDIA in 2010 just revealed his top 10 AI stocks. See the full list FREE now. Vertiv (NYSE:VRT) and Astera Labs (NASDAQ:ALAB) both reported into the same tailwind: Amazon and Microsoft pouring roughly $100B to $105B combined per quarter into AI capex. Vertiv sells the racks their power and cooling depend on. Astera sells the connectivity silicon stitching GPUs together. Both beat. Only one saw its stock drop the next day. Vertiv posted Q2 revenue of $3.27B, up 24.1% YoY, with Americas sales jumping 29.2% and adjusted operating margin expanding 410 basis points to 22.6%. Free cash flow more than tripled to $925.3M. CEO Giordano Albertazzi credited "the compounding effect of years of deliberate investment in technology, capacity, and customer partnerships" as hyperscaler deployments grow more infrastructure intensive. Astera came in hotter but smaller. Revenue hit $392.4M, up 104.5% YoY, with non-GAAP EPS of $0.80 beating by 15.61%. The Aries retimer hit a record, and CEO Jitendra Mohan said the Scorpio fabric switch will become the largest product family in Q3, one quarter ahead of plan. Q3 guidance was the shock: revenue of $540M to $560M, a huge sequential leap. Don't wait: the analyst who called NVIDIA in 2010 just revealed his top 10 AI stocks. See the full list FREE now. The strategies diverge sharply. Vertiv is the physical bet, capturing an estimated $1.2B to $1.5B per quarter of hyperscaler spend, and raised full-year guidance to $13.80B to $14.20B in net sales with 30% to 32% organic growth. EMEA is the soft spot, with organic sales down 2.4%. Insiders across the C-suite acquired shares on June 25, 2026, though those look compensation-linked. Astera is the silicon bet, capturing perhaps $220M to $280M per quarter, tiny in absolute terms but growing far faster. Its risk profile matches: concentrated customers, no long-term commitments, and a fully-priced valuation. News flow confirms the connectivity layer is where money is moving. Vertiv rallied 24.61% in the week after earnings. Astera fell 11.96% the day after its beat, a classic "priced in" response. Watch whether Scorpio crosses Aries in Q3 revenue, and whether Vertiv's Americas margin holds while EMEA stabilizes. Tariffs and supply timing are the swing factors. If I had to pick one, I would lean Vertiv. Cash generation is real, guidance keeps rising, and the six-quarter beat streak tells me management is not stretching. Astera fits a different investor: someone comfortable owning a 9-for-9 beat hypergrowth name with a P/E near 249 and accepting volatile reactions. Astera's setup rewards patience for a wider pullback, while Vertiv's Q3 warrants a close watch on the stock, where organic growth guidance sits at 34% to 36%. Don't wait: the analyst who called NVIDIA in 2010 just revealed his top 10 AI stocks. See the full list FREE now. Contact [email protected] for any questions or corrections.

Astera Labs ALAB shares have lost 12% since it reported second-quarter 2026 results on Aug. 4, 2026.  The company’s second-quarter earnings suffered from higher operating expenses due to continued investment in its product roadmap. Challenging macroeconomic uncertainties and stiff competition remain headwinds.Click here to check the details of ALAB’s second-quarter 2026 results.However, Astera Labs shares have gained 91.4% in the year-to-date period, outperforming the broader Zacks Computer & Technology sector’s increase of 18.6% and the Zacks Internet - Software industry’s decline of 4.3% over the same time frame. The outperformance can be attributed to the strong demand for their AI connectivity products, especially the Scorpio and Aries portfolios. Image Source: Zacks Investment Research ALAB is rapidly expanding its 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. In the second quarter of 2026, PCIe 6 products, including the Scorpio AI Fabric Switches and Aries Retimers, accounted for more than 50% of total revenues, highlighting the market leadership of ALAB’s Gen 6 portfolio.The Scorpio product family delivered significant growth in the second quarter of 2026, 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.In the second quarter of 2026, Taurus 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 its Taurus signal conditioning portfolio with 3.2T Smart Retimers and Smart Redrivers for 224G Ethernet and UALink connectivity, strengthening AI infrastructure capabilities. The new OCP-compatible design enables Smart Swap flexibility, while Unified COSMOS software adds advanced telemetry, diagnostics and intelligent link management across high-speed interconnects. 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 third quarter of 2026.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 ramp, continued Aries PCIe 6 retimer strength and preproduction Taurus shipments for 800-gigabit Ethernet applications. The Zacks Consensus Estimate for third-quarter revenues is pegged at $405.29 million, representing year-over-year growth of 75.78%.Management projects non-GAAP earnings between $1.16 and $1.21 per share in the third quarter of 2026. The Zacks Consensus Estimate for third-quarter 2026 earnings is pegged at 77 cents per share, which has been unchanged over the past 30 days. The figure implies a year-over-year increase of 57.14%. Astera Labs, Inc. price-consensus-chart | Astera Labs, Inc. Quote Despite an expanding portfolio and strong partner base, ALAB is facing stiff competition from other industry players like Marvell Technology MRVL, Cisco Systems CSCO and Credo Technology CRDO. These companies are all expanding their footprints in the AI infrastructure space.Marvell Technology’s expanding portfolio has been noteworthy. In June 2026, Marvell Technology 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.Cisco Systems has been integrating AI into its product portfolios across networking, security, collaboration and observability. Strong demand for Cisco Systems’ products in developing AI infrastructure has been a game-changer for the company. In the third quarter of fiscal 2026, AI infrastructure orders taken from hyperscalers totaled $1.9 billion in the reported quarter compared with $600 million in the year-ago quarter. Cisco Systems raised its fiscal 2026 hyperscaler AI infrastructure order outlook from $5 billion to $9 billion, and increased expected AI infrastructure revenues from $3 billion to $4 billion. 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. Astera Labs’ stock is trading at a premium, as suggested by the Value Score of F.In terms of the forward 12-month Price/Sales, ALAB is trading at 28.94X, higher than the Computer & Technology sector’s 6.65X. Image Source: Zacks Investment Research Astera Labs is well positioned to benefit from strong AI infrastructure spending, supported by the rapid adoption of its Scorpio, Aries, and Taurus product families. However, its stretched valuation, rising operating expenses and intensifying competition remain concerns. Astera Labs currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Astera Labs, Inc. (ALAB) : Free Stock Analysis Report Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report Marvell Technology, Inc. (MRVL) : Free Stock Analysis Report Credo Technology Group Holding Ltd. (CRDO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. Astera Labs stock has delivered a strong 86.3% return over the past year, yet both its Discounted Cash Flow (DCF) intrinsic value estimate and market based multiples currently point to the shares trading at a premium rather than on sale. Astera Labs is up 86.3% over the past year, which puts extra focus on whether recent gains already reflect investors’ expectations. Recent excitement around AI infrastructure products and expansion of operations may support high growth expectations. However, any disappointment in how quickly that growth converts into cash flow could weigh on the valuation. The stock scores 0 out of 6 on Simply Wall St’s broader valuation checks, which suggests Astera Labs does not screen as a clear bargain on most measures at present 0/6 valuation score. The issue now is whether Astera Labs’ current share price leaves enough potential upside relative to its intrinsic value estimate and rich market multiples to justify the risk investors are taking. Astera Labs delivered 86.3% returns over the last year. See how this stacks up to the rest of the Semiconductor industry. The Discounted Cash Flow (DCF) model estimates what Astera Labs could be worth based on the cash it is expected to generate for shareholders. The latest twelve month free cash flow sits at about $276 million, and the model assumes that cash flows grow over time rather than shrink, using a 2 Stage Free Cash Flow to Equity framework. On these assumptions, Astera Labs has an estimated intrinsic value of about $266.60 per share in dollar terms. Compared with the current share price, this implies the stock is about 19.4% overvalued. The recent report of record Q2 2026 revenue and the stock surge that followed help explain why the market price sits ahead of what the current DCF cash flow profile supports. On this DCF view, Astera Labs stock currently screens as overvalued relative to its modeled cash flows. Our Discounted Cash Flow (DCF) analysis suggests Astera Labs may be overvalued by 19.4%. Discover 51 high quality undervalued stocks or create your own screener to find better value opportunities. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Astera Labs. The P/E ratio is a useful way to gauge what you are paying for each dollar of Astera Labs earnings. For Astera Labs, this multiple helps show how the market is pricing its AI exposure and recent profitability. Astera Labs currently trades on a P/E of about 149.5x, which is well above the semiconductor industry average of about 52.9x. It also sits far above the peer group average of around 59.6x. A tailored fair P/E ratio that adjusts for factors like growth outlook, margins, size and risk comes out nearer 61.6x. That is much lower than where the stock trades now, which indicates that investors are already paying a steep premium versus what this framework would imply. On this P/E basis, Astera Labs stock appears overvalued compared with both its industry and a more tailored fair multiple estimate. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives pick up where this Astera Labs valuation puzzle leaves off, by spelling out which expectations for growth, margins and earnings would need to hold for the stock to be worth significantly more or less than today’s price. Each Narrative sets out a fair value as a thesis about Astera Labs' business that can be tracked over time, rather than as a one off snapshot. Community views on Astera Labs sit far apart, with one camp seeing untapped upside and another warning expectations already look stretched. Bull case: 33% undervalued Read the full Bull Case to see why Astera Labs could be undervalued Bear case: 30% overvalued Read the full Bear Case to see why Astera Labs could be overvalued Do you think there's more to the story for Astera Labs? Head over to our Community to see what others are saying! Astera Labs looks overvalued on both the Discounted Cash Flow (DCF) intrinsic value estimate and the current P/E multiple, so the stock does not screen as a clear bargain right now. The broader valuation checks are weak, which supports the idea that expectations already bake in a lot of good news. What matters from here is whether Astera Labs can convert its AI infrastructure opportunity into sustained cash flow and earnings growth that justify the current premium, or whether the market eventually settles on a lower multiple if that progress comes through more slowly than bulls hope. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ALAB. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]