Astera Labs Conference: Scorpio Switching Seen as Next AI Growth Engine

Key Points

• Scorpio switching is emerging as Astera Labs’ next major growth engine, with management saying the family could become the company’s largest product line by year-end. Scorpio already made up about 15% of revenue last year, and volume production for the 320-lane Scorpio X is expected in the second half of the year.
• COSMOS software is being positioned as a key differentiator across Astera’s AI connectivity products. Executives said the telemetry platform helps customers monitor health and traffic, improving utilization in large-scale AI infrastructure.
• Astera sees continued opportunity in retimers, CXL controllers, UALink and optical connectivity, with multiple product ramps expected over the next several years. Management emphasized that content per accelerator has already risen above $1,000 and should keep growing as AI clusters become denser.

Astera Labs NASDAQ: ALAB executives outlined expectations for continued growth across the company’s connectivity portfolio during an Evercore ISI fireside chat, pointing to expanding opportunities in AI infrastructure switching, retimers, CXL controllers and optical connectivity.

Desmond Lynch, chief financial officer of Astera Labs, said his decision to join the company was driven by the size of the market opportunity, the company’s expanding product portfolio and its business model. He said his first months at the company reinforced those views, citing Astera’s engineering focus, customer relationships and execution around the recent Scorpio X release.

Scorpio Switching Seen Becoming Largest Product Line

Lynch said Astera’s Scorpio switching family, announced in 2024, includes Scorpio P for scale-out applications and Scorpio X for scale-up applications. He said Scorpio became the company’s fastest-growing product line last year and accounted for about 15% of total company revenue, with much of that growth driven by Scorpio P.

Looking ahead, Lynch said Astera’s 320-lane high-radix Scorpio X solution is expected to contribute to volume production in the second half of the year. He said the company expects two hyperscalers to contribute to Scorpio P revenue in the second half, while Scorpio X engagements could lead to design wins toward the end of the year, contributing in 2027 and beyond.

Lynch described the addressable markets as about $4 billion for scale-out applications and $10 billion for scale-up applications, calling scale-up a “greenfield” opportunity. He said he expects Scorpio to become Astera’s largest product line by year-end.

Nick Aberle, senior vice president of finance and head of investor relations at Astera Labs, said the company has shipped more than $100 million of P-Series business and is among the first to ship PCIe 6.0 solutions for both scale-out and scale-up. He said Astera’s approach differs from general-purpose switching solutions because Scorpio was designed specifically for AI-based applications.

COSMOS Software Positioned as Differentiator

Aberle emphasized Astera’s COSMOS telemetry software as a competitive differentiator across its product lines. He said COSMOS, originally used with signal conditioning products, is integrated into hyperscaler operating stacks and can now be leveraged across the AI fabric portfolio.

According to Aberle, COSMOS enables customers to monitor system health, traffic and other diagnostics, supporting higher productivity and utilization. He said even small percentage improvements can be meaningful given the large scale of AI infrastructure spending.

Aberle also said Astera’s broadened Scorpio portfolio, ranging from lower-lane-count products to the 320-lane solution, is intended to address varied AI topologies and customer requirements. He said no two cloud providers are the same and that Astera’s software-defined architecture allows it to tailor features and capabilities for different customers.

UALink and Optical Roadmap Highlighted

Discussing UALink, Aberle said the ecosystem has progressed since the consortium was formed nearly two years ago. He said the first specification was released in April of last year and a second version was released recently. He described the ecosystem as maturing across suppliers, technology, IP availability and testing equipment.

Aberle said Astera has more than 10 customers planning to use PCI Express for scale-up over the next year and a half, with most of them viewing UALink as a future extension. He said Astera plans to offer fabric and signal conditioning solutions supporting UALink, with products expected to become available to customers toward the later part of this year or early next year. He said some customers have pointed to late next year for initial UALink platform deployment, with revenue more likely in 2028.

On optical connectivity, Aberle said optics have been used in scale-out applications for some time, while scale-up optics remain early. He said copper will continue to be used where possible because of its performance, power, cost and reliability characteristics, but optical solutions become relevant as scale-up clusters expand across multiple racks and distances exceed copper’s practical range.

Aberle said the long-term goal is to “optically enable” Scorpio X through co-packaged optics, with Scorpio X at the center of a switching solution and optical engines around it. He said Astera also sees intermediate opportunities through the fiber coupler acquired via aiXscale Photonics and through near-package optics solutions.

Retimers, CXL and Taurus Remain Growth Areas

Lynch said Astera’s retimer business remains the backbone of the company and is expected to keep growing in 2026 and beyond. He cited increasing speeds, complexity and strong attach rates as drivers. He also said the transition from PCIe 5.0 to PCIe 6.0 is underway, with one-third of recent revenue attributed to Gen 6 solutions. Lynch said generation-to-generation transitions typically produce a 20% to 25% uplift in average selling price.

Aberle said incumbency, interoperability experience and COSMOS help Astera maintain its position in retimers. He said the company has shipped “millions and millions” of Aries devices and that few AI systems deployed globally lack Aries today.

On CXL controllers, Lynch said memory supply chain dynamics are driving renewed customer interest. He cited Astera’s Microsoft Azure deployment, expected to enter the revenue profile in the back half of this year and ramp into 2027. He also referenced an AI inferencing opportunity tied to a KV cache option and a hyperscaler design win expected to ramp in 2027.

For Taurus, Lynch said the product family represented about 15% of total company revenue last year, with growth driven by 200-gigabit and 400-gigabit solutions. He said 400-gigabit demand should remain strong this year and that the 800-gigabit transition in the second half should bring customer diversification beyond Astera’s lead customer.

Executives Emphasize Longer-Term Content Growth

Aberle said Astera’s content opportunity per accelerator has grown from hundreds of dollars around the time of its IPO to more than $1,000 today as the company added products including Taurus, Scorpio P and Scorpio X. He declined to provide a specific future number but said Astera expects content per accelerator to continue growing at a “very robust clip” over the next several generations.

Addressing investor concerns, Aberle said some market participants focus too heavily on near-term design wins, attach rates and quarterly timing. He said Astera is focused on a multi-year opportunity as connectivity becomes more critical in dense AI clusters.

Lynch said investors are also focused on the potential size of scale-up switching and the company’s optical roadmap. He said Astera has been investing in optical connectivity for several years and expects to participate in near-package optics and, eventually, co-packaged optics.

About Astera Labs NASDAQ: ALAB

Astera Labs is a fabless semiconductor company that develops connectivity solutions for data center and cloud infrastructure. The firm focuses on addressing signal integrity and link management challenges that arise as server architectures incorporate higher-bandwidth processors and accelerators. Its technology is aimed at improving reliability and performance for high-speed interconnects used in servers, storage systems and compute accelerators.

The company's product portfolio centers on silicon devices and accompanying firmware and software that enhance and manage high-speed links.

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