Astera Labs IPO: Everything you need to know about Astera Labs

*This article last updated on 22 March 2024

What do we know about the Astera Labs IPO?

Astera Labs debuted on the NASDAQ on Wednesday, March 20 under the ticker symbol "ALAB." On the day of the IPO, the stock closed at $62.03, up 72% from its offering price of $36.

That’s not the only way Astera exceeded expectations. The tech company originally planned to sell 17.8 million shares but raised that figure to 19.8 million after gauging the level of investor interest the week of its IPO. It also raised its expected price range from $27 to $30 to $31 to $34 – which it still surpassed the day of.

Overall, the firm raised $712.8 million from its IPO and is currently valued at $10.64 billion as of 22 March 2024.

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What is Astera Labs?

Astera Labs is a fabless semiconductor company headquartered in Silicon Valley. That means Astera Labs designs and sells semiconductor technology, but the production is contracted out to other specialised manufacturers. These semiconductors are used to build out cloud and AI infrastructure—specifically, the ‘memory wall’ machine learning constantly butts up against as its capabilities flourish.

Semiconductor manufacturing has seen huge growth alongside the development of hyper-scale data centres. Hundreds of billions of dollars have been invested in the global market this year alone, and national governments of Europe, China and the United States have each invested tens of billions in subsidies for their domestic industries.

How much is Astera Labs worth?

Astera Labs has surpassed $10 billion in value following its recent IPO. That is a near-200% increase from the last private valuation, which set the company at $3.15 billion in November 2022.

Pre-IPO Astera Labs aimed for a $5.5 billion valuation once on the market. That figure has nearly doubled thanks to the upward volatility of its stock price in the days following.

Investors of Astera Labs include Microsoft, Amazon, NVIDIA, Fidelity Management and Research, Atreides Management, Intel Capital and Sutter Hill Ventures.

Is Astera Labs profitable?

No, Astera Labs is not profitable. The company has experienced strong business and revenue growth over the last two years, but it is still working to tamp down net losses associating with rapid growth.

Astera Labs reported a revenue of $115.8 million last year, up 45% from 2022. Over the same period its profit loss has shrunk from $58.3 million to $26.3 million.

However, the semiconductor developer did post a positive net income of $14.3 million for Q4 of 2023. It’s unclear right now whether that’s a positive trend that will continue in 2024 or an anomaly due to customer concentration.

What is Astera Labs’s business model?

Astera Labs’s business model focuses specifically on increasing semiconductor connectivity in an effort to keep up with the rapid pace of hyperscale data centres. This limitation is prevalent in data centres serving AI and machine learning technologies, as well as cloud processing, where memory bandwidth and capacity can bottleneck.

The firm has used its recent funding to open two new international research and development centres in Canada, grow its workforce and expand its product lines. The company recently debuted its newest microprocessor model, the Leo CXL Memory Connectivity Platform, in September 2023.

Astera Labs’s fabless development means it only designs semiconductors before sending those plans to Taiwan Semiconductor Manufacturing Co., an investor and industry behemoth. Astera Labs’s founders claim this production method drastically reduces development time and allows the company to continue developing new microchip models faster.

Who are Astera Labs’s competitors?

Astera Labs has attempted to differentiate itself from competitors by focusing on increasing connectivity in semiconductors. However, there are still competitors for the California start-up. Other fabless semiconductor developers include Qualcomm, Broadcom, NVIDIA, AMD and MediaTek. Together those companies held 88% of the market share at the end of 2022.

Another fabless semiconductor producer, ARM, recently debuted in September 2023 raising $4.87 billion. Its customers include several Astera Labs investors including Intel, Apple, NVIDIA, and TSMC.

Astera Labs management team

The management team of Astera Labs includes its three co-founders from 2017 and several other key executives.

• Jitendra Mohan: CEO & co-founder
• Sanjay Gajendra: COO & co-founder
• Casey Morrison: CPO & co-founder
• Mike Tate: CFO
• Philip Mazzara: general counsel & secretary