Is Morgan Stanley’s Backing Reframing Astera Labs (ALAB) as a Core AI Data Center Connectivity Play?

• Morgan Stanley recently named Nvidia, Broadcom and Astera Labs among its top semiconductor picks for 2026, highlighting AI-driven demand for data center connectivity chips and Astera’s role as a standout small-cap in this space.
• The bank’s focus on Astera Labs’ exposure to hyperscale AI infrastructure and open-standards connectivity puts fresh attention on its position in next-generation data center buildouts.
• We’ll now explore how Morgan Stanley’s endorsement of Astera Labs as a leading small-cap AI data center beneficiary shapes its investment narrative.

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Astera Labs Investment Narrative Recap

To own Astera Labs, you need to believe that hyperscale AI data centers will keep leaning on third party connectivity and memory expansion chips instead of folding everything into in house silicon. Morgan Stanley’s endorsement raises Astera’s profile but does not fundamentally change the key near term catalyst, which is continued AI infrastructure spending by hyperscalers, or the biggest risk, which is a potential slowdown or architectural shift that shrinks its addressable market.

The most relevant recent development is Astera’s plan to deliver UA Link based scale up connectivity solutions in 2026, which ties directly into Morgan Stanley’s focus on open standards for next generation AI infrastructure. If UA Link adoption progresses as expected alongside Scorpio and Leo ramps, it reinforces the idea that Astera can participate across both scale up and scale out architectures, supporting the longer term revenue drivers behind the small cap AI data center thesis.

Yet even with this positive setup, investors still need to be aware of how dependent Astera remains on a concentrated base of hyperscale customers...

Read the full narrative on Astera Labs (it's free!)

Astera Labs' narrative projects $1.5 billion revenue and $393.5 million earnings by 2028. This requires 34.1% yearly revenue growth and about a $293 million earnings increase from $100.2 million today.

Uncover how Astera Labs' forecasts yield a $199.37 fair value, a 42% upside to its current price.

Exploring Other Perspectives

Twenty eight members of the Simply Wall St Community currently value Astera Labs anywhere from US$17.11 to US$262.56 per share, with estimates spread across the full range. As you weigh those views, it is worth considering how much the thesis now hinges on sustained AI infrastructure capex and Astera’s ability to keep winning design slots in hyperscale data centers.

Explore 28 other fair value estimates on Astera Labs - why the stock might be worth less than half the current price!

Build Your Own Astera Labs Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Astera Labs research is our analysis highlighting 2 key rewards and 2 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.

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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.

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