Astera Labs (ALAB) Stock Rallies 10% After RBC Raises Target to $250

TLDR

• RBC Capital raised its price target on Astera Labs (ALAB) to $250 from $225, keeping an Outperform rating
• The upgrade is tied to expected Trainium3-related Scorpio-X switch revenue starting Q3 2026
• RBC projects Scorpio switch revenue to grow from $130M in 2025 to $390M in 2026
• UBS also initiated coverage on ALAB, but at Neutral with a $180 price target, citing competition in switching
• ALAB reported Q4 2025 EPS of $0.58, beating estimates of $0.51, with revenue up 92% year-over-year to $270.6M

Astera Labs had a busy Monday, picking up two analyst initiations in one day — and they weren’t exactly singing the same tune.

Astera Labs, Inc. Common Stock, ALAB

RBC Capital lifted its price target on Astera Labs to $250 from $225, keeping its Outperform rating intact. The stock was trading around $175.80 at the time, up roughly 10% on the day.

The bullish case from RBC centers on Scorpio-X, Astera’s next-generation switch product. The firm expects revenue from Trainium3-related Scorpio-X deployments to kick in during Q3 2026, adding incremental opportunity per XPU.

RBC projects total Scorpio switch revenue to jump from $130 million in 2025 to $390 million in 2026 — a tripling in one year.

The new $250 target is pegged at 74 times RBC’s calendar year 2027 EPS estimate of $3.37. The prior target used a 67x multiple. RBC pointed to multiple new product ramps, a large addressable market, projected revenue growth of 40–50%, and gross margins above 70% to justify the higher multiple.

Astera’s actual gross margin currently sits at 75.69%, with revenue growth of 115% over the last twelve months.

UBS Takes a Cooler View

UBS also initiated on ALAB Monday, but landed at Neutral with a $180 target — just a hair above where the stock was already trading.

Analyst Natalia Winkler acknowledged the company has built a credible position in AI networking over five years, with strong execution in retimers and expanding relationships beyond its anchor customer, AWS. Astera launched its retimer products in 2019 and has since broadened adoption across additional hyperscalers.

UBS projects 2027 revenues 4% above consensus, driven by retimers and the PCIe/UA Link switching portfolio. But for 2028, UBS sits 3% below consensus, flagging a more competitive switching market as a headwind.

The valuation is the sticking point for UBS. Astera trades at a high-40s 2027 P/E, well above AI networking peers. The firm said it sees better risk-reward elsewhere in the networking space.

Q4 Results Back Up the Bull Case

Underpinning both views is a strong recent earnings print. Astera reported Q4 2025 EPS of $0.58, beating the $0.51 consensus by nearly 14%.

Revenue for the quarter came in at $270.6 million, up 92% year-over-year.

Twelve analysts have revised earnings estimates upward for the upcoming period, according to InvestingPro data.

The stock has returned 223% over the past year. Despite that run, ALAB’s PEG ratio of 0.47 suggests the valuation may not be as stretched as the headline P/E of 143 implies — at least on a growth-adjusted basis.

RBC’s $250 target implies roughly 42% upside from current levels. UBS’s $180 target leaves almost no room from here.

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