Loop Capital thinks this chip manufacturer could more than double on an AI ‘super cycle’

Astera Labs is among the best-positioned companies to benefit from increasing artificial intelligence builds, according to Loop Capital. The investment firm initiated the semiconductor manufacturer with a buy rating and $250 price target, implying upside of 120% from Wednesday’s close. The semiconductor stock has slipped 32% this year but is still trading 66% higher over the past 12 months. ALAB 1Y mountain ALAB 1Y chart Loop analyst Ananda Baruah called Astera " the company most representing a diversified AI silicon ‘pure play’" outside of Nvidia. The analyst sees the stock as a beneficiary of an AI “super cycle.” Baruah said that Amazon Web Services’ usage targets for its Tranium 3 and 4 chips may be materially stronger than the market is appreciating. Amazon remains Astera Lab’s largest customer and is the driver of its lucrative Scorpio platform, he wrote. Artificial intelligence builds also remain larger than what is currently appreciated, the analyst added. “ALAB has opportunity across essentially all Gen AI silicon flavors (GPU, Tranium, TPU and the other XPUs) with solutions that address the most critical ‘pain points’ inside the AI Server & Cluster experience. As servers and clusters become larger and more sophisticated (i.e. increasingly complex), ALAB becomes more both critical and valuable,” Baruah wrote. “We view ALAB as a Best of Breed ‘AI-Server Complexity’ company at the very front end of numerous material tailwinds. While there is strong competition and ongoing innovation all manifesting simultaneously at an increasing rate, we believe ALAB is among the group of companies charting out leadership positions at the intersection of key AI infrastructure trends,” he said. Baruah also wrote that there may be a pathway to additional revenue upside levels from here, notably due to stronger Nvidia graphics processing units and overall AI accelerator shipments.