By Angela Palumbo
Astera Labs stock was soaring in Wednesday trading after the semiconductor company announced a new portfolio of fabric switches that will be used in artificial intelligence applications. Wall Street is optimistic about the news and where the stock could be headed.
Astera announced a new portfolio of fabric switches Tuesday evening. The devices help manage data flow in computing systems and are designed specifically for artificial intelligence applications and cloud infrastructure, the company said.
Nvidia's senior vice president of GPU engineering, Brian Kelleher, wrote in Astera's news release that the company's fabric switch portfolio "can support NVIDIA accelerated AI infrastructure deployments across a wide variety of AI and HPC workloads."
Shares of Astera are up 17% at $62.12 in Wednesday morning trading, on pace for their largest percentage increase since April 26 and highest close since June 20, according to Dow Jones Market Data.
Following the announcement, Morgan Stanley analyst Joseph Moore increased his price target to $74 from $55, implying a 40% increase to the stock's closing price of $52.96 on Tuesday. He also maintained an Overweight rating on the stock.
"While the exact content details are unknown, this new product is incrementally positive to our financial forecast, and for a company doing $500mn in revenues this new product should be meaningful to CY25 revenue and earnings," Moore wrote in a research note published Wednesday.
Mizuho desk analyst Jordan Klein wrote on Wednesday that the announcement is "a potential game changer for the growth outlook and thesis on the stock." He does not have a price target or rating on shares.
Astera went public in March at $36 a share. The stock has since dropped 29% from its all-time closing high of $85.70 on April 29. One concern that has weighed on shares is the shipping time for Nvidia's Blackwell chips, which are expected to include Astera technology.
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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October 09, 2024 11:10 ET (15:10 GMT)
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