"A net asset in AI: Evercore ISI doubled down on Astera Labs' targeting after the report

Evercore ISI doubled its target price on shares of semiconductor company Astera Labs following its report. After showing strong results in the second quarter, the company gave revenue and earnings guidance for the third quarter that beat Wall Street's expectations. Astera shares jumped 35% to an all-time high in trading on August 6.

Evercore ISI analyst Mark Lipasis raised his target price on chipmaker Astera Labs from $104 to $215: that's 23% above the closing level of August 6. At the same time, the analyst maintained an Outperform rating on the stock. Lipasis called the semiconductor company "a net asset in the AI space amid accelerating capital expenditure growth."

Astera Labs develops high-speed semiconductor communication systems for cloud and data center solutions that power artificial intelligence. The target increase followed the company's successful second-quarter reporting. Its revenue increased 150% year-over-year, to $191.9 million. Astera beat forecasts: analysts polled by FactSet had expected $172.5 million, wrote Investor's Business Daily. Adjusted earnings rose 238% to $0.44 per share, while Wall Street expected $0.32. For the third quarter, the company forecast adjusted earnings of $0.38-0.39 per share and revenue of $203-210 million, also above analysts' expectations.

On Wednesday, Astera shares rose 35.5% to $183.6 at the moment, which became their highest value for the whole time of their circulation on the stock exchange, and ended the trades with 28.7% growth. According to FactSet data, the chipmaker's securities had their best day since November 5, 2024. Since the beginning of January 2025, Astera shares have strengthened by more than 31%, and over the last year - by 380%.

Lipasis is positive on Astera's growth prospects in the artificial intelligence infrastructure space.

"We recommend buying Astera after a quarter with a powerful outperformance [of expectations] and an equally powerful outlook upgrade, as we believe the company has reached the peak of its AI product wave on three fronts at once," the analyst wrote in a note quoted by CNBC. - Against the backdrop of accelerating capex growth in the cloud segment (we book 72% in 2025 vs. 56% in 2024), we believe Astera is poised to exceed expectations through a multi-pronged product cycle over the next year or two."

Lipasis pointed to growing demand for the Scorpio P Series line of specialized network switches for AI servers that integrate with the MGX platform based on Nvidia's Blackwell AI chip. In addition, the analyst highlighted the upcoming X-Series line of switches, which he said will increase revenue per AI chip. He added that customer interest in the X-Series is already significant, with at least 10 projects with unique customers in development. The company competes with Nvidia, Cisco, Marvell and Broadcom switches in this segment.

JPMorgan analyst Harlan Suhr on Wednesday also raised his target price on Astera Labs shares - from $100 to $180 - and praised the company's market position. "We believe Astera Labs' strong and expanding portfolio of new products will continue to set the bar high for competitors," he wrote in a note that is cited by MarketWatch. 

Suhr said he expects the company to maintain its market leadership in PCIe timers, chips that recover and retransmit signals to improve the reliability of data transfers. The analyst also pointed to "a lot of new products coming into production" that he believes will deliver "solid quarterly growth" through the end of this year as well as into 2026.

Jefferies analyst Blaine Curtis called Astera Labs an attractive bet on the "surging and unpredictable AI market," emphasizing that Astera has the "largest potential to exceed forecasts" of any company tracked by the investment bank. FactSet consensus estimates for Astera's 2026 adjusted earnings could be less than $2 per share, but Curtis believes the company could go above $3.

"Expectations for the report were high - and yet they were exceeded. We expect Astera to continue to exceed forecasts and raise guidance," Curtis wrote.

He added that the "main show" is the expected launch of Scorpio X next year, but already Scorpio P switches contributed more than 10% of revenue in the last quarter, which was a pleasant surprise for investors.

According to MarketWatch, of the 17 analysts tracking the chipmaker's securities, most recommend them for purchase, with only two taking a neutral stance. However, the Wall Street consensus price target is 20% below the current share price: analysts expect the securities to fall to $139.

This article was AI-translated and verified by a human editor