Astera Labs (ALAB) received a bullish boost on Tuesday after RBC Capital analyst Srini Pajjuri raised his price target to $250 from $225, while reiterating a Buy rating. The five-star analyst cited stronger visibility into the company’s growth, particularly as Amazon (AMZN) prepares to ramp its Trainium3 AI chips.
Claim 30% Off TipRanks
Trade ALAB with leverageThe upgrade also lands on a strong trading day for ALAB, with shares up roughly 9%. Much of that momentum stems from the massive expansion of the Amazon-Anthropic partnership announced yesterday. Astera Labs is seen as a key beneficiary: its semiconductor connectivity hardware, including retimers and smart fabric switches, is essential for powering Amazon’s Trainium‑based AI clusters.
Under the deal, Anthropic has committed to spending over $100 billion on AWS infrastructure over the next decade, including up to 5 gigawatts of power dedicated to Trainium clusters. Investors see this as a multi‑year revenue engine for Astera Labs, since its components are required to interconnect these large‑scale AI systems.
Here’s Why The Analyst Is Bullish on ALAB Stock
Astera supplies key connectivity components to AWS, including PCIe retimers, smart cable modules, and Scorpio switches. The company is also expected to begin volume shipments of its next‑generation Scorpio‑X switches in the third quarter of 2026, a major catalyst tied directly to Trainium3.
The analyst forecasts that Scorpio switch revenue could triple, rising from $130 million in 2025 to $390 million in 2026, with room for further upside.
Also, Pajjuri said Astera is well-positioned for long‑term growth thanks to its deep relationship with AWS, growing design wins at other hyperscalers, and a strong product roadmap tied to next‑generation AI infrastructure.
Finally, the analyst’s new price target is based on 74x its 2027 EPS estimate and reflects expectations for 40-50% annual revenue growth and gross margins above 70%.
It is worth noting that Pajjuri ranks 161 out of more than 12,206 analysts tracked by TipRanks. He has an overall success rate of 100% on ALAB stock, with an average return per rating of 49.53% over a one-year timeframe.
Is ALAB a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on Astera Labs stock based on 13 Buys and four Holds assigned in the past three months. Further, the average ALAB price target of $206.88 per share implies 8.08% upside potential.
