Key Takeaways
- Astera Labs fell 12% as a weak phone-chip outlook and a chip designer’s royalty miss hit chip stocks, including Dell Technologies and Applied Materials.
- Both problems came from phones and memory costs, not data centers.
- Astera guided fourth-quarter revenue to $730 million to $750 million, well above the $656 million analysts expected.
- Astera’s forward P/E is at a one-year low, so most of its valuation reset looks done.
Astera Labs (ALAB) fell 12% today, with no news of its own.
The biggest phone chipmaker issued a weak outlook after Wednesday’s close, blaming memory costs for soft phone sales, and a chip designer missed on royalties. Dell Technologies (DELL) and Applied Materials (AMAT) went down with them.
But Astera has none of those problems. It just guided fourth-quarter revenue to $730 million to $750 million, against the $656 million analysts expected.
Another beat, another drop
Third-quarter revenue rose 154% to $584.9 million. That makes the fourth straight quarter above the top of Astera’s own guidance. Analysts already expected steep growth going in:
Annualize the fourth-quarter midpoint, and Astera is already running close to the $3.01 billion analysts expected for all of 2027. Those estimates look too low.
Some of the doubt comes from management. CFO Desmond Lynch said on the third-quarter call that “the initial Scorpio X platforms have completed much of their initial deployment ramps,” though he still sees Scorpio X growing through 2027.
TIKR tracks 25 analysts on Astera Labs. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Astera Labs, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Astera Labs’ Analyst Ratings
Wrong selloff for Astera
Arm Holdings (ARM), down 10%, shows why. Its royalties grew just 8% to $670 million in the quarter to Sept. 30, held back by memory prices in smartphones. Yet its data center royalties doubled. That’s the AI buildout Astera sells into, and by Arm’s numbers it’s intact.
Dell, down 8%, does buy the memory that keeps getting pricier. But it booked a record $60.9 billion of AI server orders in its fiscal second quarter and ended it with a $95 billion AI server backlog. Its next report has to show its prices keeping up with memory costs.
Applied Materials is off 6%. Qualcomm’s release described costs rising across wafer fabrication and memory, and supply that tight tends to push chipmakers to build capacity with Applied’s tools.
The reset looks done
Astera’s forward P/E has come down a long way:
It closed Wednesday at about 41x, a one-year low, against a 72x average and a 143x peak in June. At today’s price, it’s lower still.
The risk is concentration: Astera’s top three end customers made up about 86% of 2025 revenue.
Still, a stock at its cheapest in a year, guiding ahead of next year’s estimates, is falling on someone else’s phone problem. I’d call most of the reset done.
The Scorpio X doubt lasts until new customers show up, though. Management expects pre-production shipments to them this quarter.
So what is Astera Labs stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Astera Labs could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
