"Astera Labs ( Nasdaq: ALAB) closed at $129.32 on February 13, 2026, down 23.86% over the past week. Wall Street's average price target sits at $204.47, implying 58% upside from current levels. That gap widened dramatically after the company reported Q4 earnings on February 10, triggering an 11.85% pre-market decline followed by continued selling through mid-February."
"The semiconductor company designs connectivity solutions for AI and cloud infrastructure, focusing on signal conditioning, smart cable modules, and AI fabric switches. Its technology sits at critical junctions in data centers, enabling communication between GPUs, CPUs, and memory systems. Hyperscalers like Amazon, Microsoft, and Google rely on Astera's products to build out massive AI training clusters. Revenue grew 115% year over year in 2025, reaching $852.5 million."
"Astera reported Q4 revenue of $270.58 million, beating the consensus estimate of $250 million. Non-GAAP EPS came in at $0.58, also ahead of the $0.51 estimate. Sequential revenue growth of 17% and year-over-year growth of 91.8% demonstrated continued momentum in AI infrastructure spending. The market focused on what came with those beats: margin compression and rising operating expenses. Non-GAAP gross margin declined due to a higher mix of hardware sales, and management flagged increased operating expenses as a near-term headwind. Q1 2026 guidance called for operating expenses between $112 million and $118 million, a significant jump from Q4's $96 million. CFO Mike Tate explained the increase: "We've been having a lot of advanced dialogue with our customers, and they're presenting us with significant revenue opportunities that we really feel now is the time to really invest in.""
Astera Labs shares dropped significantly in mid-February after Q4 results, erasing most 2026 gains. Revenue grew 115% in 2025 to $852.5 million, and Q4 revenue of $270.58 million and non-GAAP EPS of $0.58 beat estimates. Sequential revenue rose 17% with year-over-year growth near 92%, driven by demand from hyperscalers building AI training clusters. Profitability weakened as a higher hardware mix compressed non-GAAP gross margin and management signaled elevated operating expenses. Q1 guidance calls for $112–118 million in operating expenses, creating short-term investor concern despite analysts projecting substantial upside.
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