Key Takeaways
- Astera Labs stock is down 19% today, at about $181, and 29% over three months, even though third-quarter revenue rose 154% and fourth-quarter guidance beat analysts’ estimates.
- J.P. Morgan kept its Overweight rating and $465 price target on Nov. 4, about 157% above today’s price.
- Analysts expect earnings to more than double this year, yet the stock trades at about 32x forward earnings, far below its one-year average of 72x.
- The $465 target only works if investors go back to paying that average multiple, which looks unlikely until Scorpio X switches bring in revenue from new customers.
Astera Labs (ALAB) stock is down 19% today, trading at about $181, as chip stocks slid again after a weak outlook from the biggest phone chipmaker and a royalty miss at a chip designer. Astera had no news of its own. The shares are now down 29% in three months and about 63% below their June 30 closing high.
J.P. Morgan is sticking with its call. On Nov. 4, the day after the report, analyst Harlan Sur kept his Overweight rating and $465 price target, about 157% above today’s price.
Big Beats Haven’t Been Enough for Astera
Astera fell harder than the market in October’s AI selloff. On Oct. 30, it lost 11% while the Nasdaq Composite fell 2.9%, again with no news of its own.
Then came the Nov. 3 report. Third-quarter revenue rose 154% from a year earlier to a record $584.9 million, and Scorpio fabric switches became Astera’s largest product family. Management guided fourth-quarter revenue to $730 million to $750 million, well above the roughly $656 million analysts expected.
The call took the shine off. When Morgan Stanley’s Joseph Moore asked whether Scorpio X could plateau, CFO Desmond Lynch said “the initial Scorpio X platforms have completed much of their initial deployment ramps.” He still expects Scorpio X to grow through 2027, but I suspect the market heard a yes.
A day later, Democrats swept the midterms, and chip stocks fell on fears of tighter rules on AI data centers. Astera closed Nov. 4 at $223.27, down 4.4%, before today’s drop.
J.P. Morgan Hasn’t Budged
Sur raised his target to $465 from $280 in August and kept it on Nov. 4, three months into the slide. Most firms went the other way after this report (RBC Capital cut to $400 from $500).
On the call, Sur asked about Orion, Astera’s new rack-scale design for enterprise AI, and said “Orion seems to be that sort of perfect solution.” President Sanjay Gajendra put Astera’s content in the first Orion version at about $100,000.
TIKR Tracks 25 Analysts on Astera Labs. How Many Say “Buy”?
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The Catch Is the Multiple
Wall Street’s consensus target was $388 on Nov. 2, more than double the $189 of a year earlier. J.P. Morgan’s sits 20% above it.
The earnings case holds up. Analysts expect normalized EPS to more than double this year, to $4.03 from $1.84, and to reach $8.19 by 2028. Management guided to $1.62 to $1.66 of fourth-quarter adjusted EPS, against the $1.42 analysts expected, which gives them reason to keep raising.
The stock went the other way. Astera traded at 40x forward earnings at the Nov. 2 close, its lowest of the past year, against an average of 72x and a June 30 peak of 143x. At today’s price, it’s about 32x the $5.67 a share analysts expect over the next 12 months.
What $465 Asks of Astera Stock
On that same $5.67, J.P. Morgan’s $465 works out to 82x. The fairer test looks a year ahead, when the forward year is mostly 2027. On the $6.50 analysts expect for 2027, $465 is about 72x, right at the one-year average.
So the target doesn’t need June’s euphoria back. It needs investors to go from about 32x to 72x, more than double what they pay today, inside 12 months.
Astera Needs a Second Scorpio X Wave
That’s a lot to ask of a stock this concentrated. Astera’s top three end customers made up about 86% of 2025 revenue, according to its annual report, and Scorpio X shipped to just two customers in the third quarter. Until new names show up in the revenue, I don’t see the market paying the average multiple again, so J.P. Morgan looks too optimistic on timing.
The test comes early next year. Management expects to ship pre-production Scorpio X volumes to new customers this quarter. If the fourth-quarter report shows those customers ramping, a move back toward 72x stops looking like a stretch.
So what is Astera Labs stock actually worth?
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