Astera Labs (NASDAQ:ALAB) sees an opportunity to grow faster than underlying demand for AI infrastructure as it expands its product lineup and increases the value of its chips in each computing system, Senior Vice President of Finance Nick Aberle said at a BMO event.
Aberle said the company could capture approximately $50 of silicon content per XPU in an AI server about four years ago, compared with upwards of $1,000 today. He said Astera sees a path to doubling that dollar content with each subsequent generation of XPUs over roughly the next five years.
Astera develops silicon hardware and software for hyperscalers and AI platform providers. Its growth opportunity rests on new products, customers and designs as well as increasing content per XPU, Aberle said.
Scorpio X-Series Growth
Aberle described the Scorpio product line as a shift for Astera from signal-conditioning products toward switches and AI fabric solutions that connect components within systems. The P-Series connects CPUs, GPUs, storage, memory and networking over PCI Express, while the X-Series is designed to connect accelerators within a system.
The X-Series generated slightly above zero revenue in the first quarter of the year, Aberle said. He projected that the product would exit the year at an annualized revenue run rate well above $1 billion. A run rate extrapolates revenue at a particular pace; it is not the same as revenue already recorded for a full year.
Astera began ramping X-Series shipments to a lead hyperscaler earlier in the year and started shipping to a second, international hyperscaler in the third quarter, Aberle said. The company expects to ship to at least two or three more X-Series customers by year-end, bringing the total to approximately four or five. It also has a pipeline of potential customers in the teens that it hopes to convert and begin shipping to during 2027.
For the P-Series, Aberle said Astera has shipped to upwards of five customers over the past six quarters. Lead customer AWS has ramped the product in high volume on customized NVIDIA-based GB200 and GB300 racks, with Vera Rubin racks to follow, he said. A second hyperscaler began ramping in the third quarter, with revenue expected over the following several quarters.
Aries and Rack Management
Aberle estimated Astera’s share of the Aries retimer market at approximately 90% to 95%, saying the company held a similar share in PCI Express Gen 5 and would likely do so again in Gen 6. He said broad deployment has helped Astera build expertise in connecting different endpoints and has introduced customers to its COSMOS software.
COSMOS provides diagnostics, telemetry and predictive analytics to data-center fleet managers. Astera’s recently launched Orion product line incorporates its hardware into a full rack managed by COSMOS, extending the software from managing individual links to managing rack-level components and connectivity, Aberle said.
He expects Aries to continue growing with XPU shipments, higher attachment rates and rising average selling prices as the market moves to faster PCI Express generations. Astera typically sees an approximately 20% increase in average selling prices from one generation to the next, he said. Aries is declining as a share of revenue despite growing, partly because its selling price is much lower than Scorpio’s.
Memory and Ethernet Opportunities
Aberle said Astera’s Leo CXL controller business has been relatively small, but customer interest has increased amid memory shortages and rising prices. The company has design wins with two hyperscalers for general-purpose and AI applications and expects them to begin ramping from the middle to the second half of next year.
Among the applications, he cited an AI inference system that uses the controller to help offload KV cache, and systems that use older DDR4 memory with newer endpoints designed for DDR5. He also said Astera expects its Taurus signal-conditioning products to benefit as Ethernet platforms move from 400-gigabit to 800-gigabit port switching speeds and adopt more active electrical cables.
About Astera Labs (NASDAQ:ALAB)
Astera Labs, Inc. is a fabless semiconductor company that develops connectivity solutions for cloud and artificial intelligence infrastructure. Its products are designed to help move data among processors, accelerators, memory and other components in high-performance computing systems. The company’s portfolio includes Aries PCIe and CXL retimers, Taurus Ethernet smart cable modules, Scorpio fabric switches and Leo CXL memory connectivity controllers. Astera Labs also offers software tools to help customers configure and monitor its connectivity products.
