Astera Labs Inc Announces Scorpio PCIe Gen 6 Switch

Investing.com — Astera Labs Inc (NASDAQ:ALAB) announced on Tuesday the Scorpio PCIe Gen 6 Switch (NYSE:SWCH), a product that has been hinted at over the past few months.

The company’s shares surged over 12% in premarket trading Wednesday.

Although Astera is in a quiet period, they plan to provide more details during the November earnings call. The new switch is expected to significantly boost content per GPU, adding hundreds of dollars per unit, according to Morgan Stanley.

Morgan Stanley noted, "While the exact content details are unknown, this new product is incrementally positive to our financial forecast. For a company doing ~$500mn in revenues, this new product should be meaningful to CY25 revenue and earnings."

The Scorpio switch is currently in pre-production, with additional information expected in November. It is also the first Gen 6 product available on the market, previously dominated by Broadcom (NASDAQ:AVGO).

Analysts pointed out that Astera has historically excelled in technological advancements, helping gain market share. However, competition remains tough, particularly against Broadcom. Even though Astera is the first to announce the Gen 6 switch, Morgan Stanley anticipates competitors will follow soon.

The rise of AI technology facilitates frequent upgrades to the PCI Express standard, potentially opening new opportunities for Astera. Analysts stated, "It took 25 years to move from PCI gen 1 to gen 5, but we now appear to be on a much quicker cadence."

They also mentioned, "We believe this is a reason to buy the stock, and listed new products as a key catalyst in our recent upgrade."

Concerns around Blackwell content have pressured the stock, but this announcement should help alleviate those worries, especially regarding the GB200 PCI Gen 6 connections from CPU to NIC (NASDAQ:EGOV).