Astera Labs (ALAB) plunged 19% on Tuesday after Advanced Micro Devices (AMD) announced a major deal with Oracle (ORCL) to deploy 50,000 GPUs starting in the second half of 2026. The news rattled investors who fear the partnership could hurt demand for Astera’s connectivity chips used in cloud and AI systems.
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Astera Labs makes semiconductor-based links that connect CPUs, GPUs, and memory inside data centers. Its products use PCIe, CXL, and Ethernet technology to move data faster, a key for AI workloads that need high-speed connections.
Competition Concerns Resurface after AMD’s Big Win
The sharp sell-off echoed concerns raised in September, when Morgan Stanley warned that Intel’s (INTC) partnership with Nvidia (NVDA) could put pressure on Astera’s business. The bank noted that Nvidia’s NVLink technology might one day replace traditional PCIe connections between CPUs and GPUs — a key segment for Astera Labs.
Now, the new AMD-Oracle deal has revived similar fears. Investors worry that as chipmakers and cloud providers strengthen their partnerships, they might rely less on independent hardware suppliers like Astera Labs for connectivity components.
Astera Labs Highlights Open-Standards Vision
Addressing these concerns, Astera Labs this week showcased its latest AI connectivity lineup at the OCP Global Summit, built around open standards such as PCIe, UALink, Ethernet, and CXL. These standards allow chips from different companies to work together more easily, promoting flexibility.
Earlier this month, Bank of America analyst Vivek Arya began coverage on Astera Labs with a Neutral rating and a $230 price target. Arya noted that while competition in AI infrastructure is intensifying, Astera is still well positioned to benefit from demand for PCIe and UALink connectivity chips.
Is Astera Labs a Good Stock to Buy?
Currently, Wall Street has a Strong Buy consensus rating on Astera Labs stock based on 14 Buys and four Holds. The average ALAB stock price target of $187.13 indicates 15.83% upside potential from current levels.
