Astera Labs initiated with a Buy at Needham

Needham initiated coverage of Astera Labs with a Buy rating and $85 price target. Astera is a “unique investment” as the company’s entire product line targets connectivity challenges in cloud and artificial intelligence infrastructure, the analyst tells investors in a research note. The firm says the company’s product suite offers interoperability and observability, which will drive customer “stickiness” and share retention. Astera’s valuation is rich, but the company is among the fastest growers in the semiconductor industry with industry-leading margins, says Needham. It expects estimates to rise, specifically from higher AI server shipments and/or higher retimer attach rates.