Astera Labs NASDAQ: ALAB reported strong first-quarter fiscal 2026 results and issued upbeat second-quarter guidance, pointing to accelerating AI infrastructure spending and broad-based demand across its connectivity portfolio. Management said hyperscalers, AI labs, and sovereign entities are signaling that the industry’s build-out remains “in its early stages,” with monetization and return on investment supporting continued investment.
First-quarter results exceed outlook as PCIe Gen 6 expands
Chief Executive Officer and co-founder Jitendra Mohan said the company delivered “strong results” in the quarter, with revenue and non-GAAP EPS above its outlook. Revenue was $308 million, up 14% sequentially and up 93% year-over-year, which Mohan said reflected broad-based growth across the signal conditioning and fabric switch portfolios and continued customer and product diversification.
Chief Financial Officer Desmond Lynch, making his first earnings call appearance in the role, reported first-quarter revenue of $308.4 million and highlighted the company’s increasing exposure to newer connectivity standards. He said PCIe Gen 6 revenue across AI fabric and signal conditioning represented more than one-third of total company revenue in the quarter. Mohan added the company has shipped “millions” of PCIe Gen 6 ports to date.
On profitability, Lynch said non-GAAP gross margin was 76.4%, up 70 basis points sequentially, primarily due to a lower mix of hardware sales in the signal conditioning portfolio. Non-GAAP operating expenses were $123.9 million, including $96.2 million in R&D, reflecting continued roadmap investment and costs associated with the XSCALE acquisition and the company’s Israel design center. Non-GAAP operating margin was 36.2%.
Astera posted non-GAAP diluted EPS of $0.61. Lynch reported interest income of $11.6 million, a non-GAAP tax rate of 11%, and 181.2 million non-GAAP diluted shares. The company ended the quarter with $1.18 billion in cash, cash equivalents, and marketable securities, flat sequentially, as $74.6 million in cash from operations was offset by cash paid for acquisitions.
Scorpio portfolio expansion and ramp underway
Management emphasized momentum in its Scorpio fabric switch family, spanning scale-up and scale-out use cases. Mohan said smaller-radix Scorpio X Series configurations moved from pre-production to an initial volume ramp during the quarter, and the company announced an expanded Scorpio product line.
According to Mohan, the Scorpio X Series now supports up to 320 lanes for high-radix scale-up networking, while the Scorpio P Series PCIe 6.0 portfolio now spans 32 to 320 lanes. He described the new Scorpio X 320-lane device as “purpose-built to maximize AI economics” through hardware-accelerated Hypercast and in-network compute engines that he said can “boost collective operations by up to 2x.” Mohan said COSMOS software enhancements enable deeper customer stack integration, providing diagnostics and telemetry and also improving AI platform performance.
Lynch said Scorpio began shipping in initial production volumes during the quarter and forecast increased Scorpio X Series shipments in Q2, including initial shipments of the new 320-lane product, with production volumes ramping in the second half of 2026. In response to an analyst question, Lynch said the company expects Scorpio to become its largest product line by year-end and that, as the year progresses, the company expects X-Series revenue to exceed P-Series revenue.
Optical roadmap and custom solutions point to 2027 ramps
Astera also outlined its optical and custom solutions strategies as longer-range growth drivers. President and COO and co-founder Sanjay Gajendra said the company has spent the past couple of years building foundational capabilities needed for optical enablement, including mixed-signal technology, electronic ICs, photonic ICs, optical packaging, and supply-chain relationships. He said near-package optics (NPO) is expected to be the first major optical ramp for the company, starting in 2027. Gajendra added that pluggable connector technologies for co-packaged optics (CPO), “mostly for scale out,” are also expected to ramp in 2027, while more “mainstream deployments for CPO” are expected in 2028.
On form factors, Mohan said the company will participate in XPO (a newer pluggable technology), but added that current company focus has been on NPO and CPO based on customer demand signals.
Custom solutions drew repeated mentions during the Q&A. Gajendra said Astera is engaging with multiple customers around NVIDIA Fusion scale-up architecture for “hybrid racks,” and noted the company is “very deep in engagement for an initial design win” in collaboration with NVIDIA and a hyperscaler. He said the company expects this to start contributing revenue in 2027 and grow from there.
Leo/CXL traction and inference-related opportunities
Management also discussed rising interest in CXL and inference-oriented architectures. Mohan said Astera is seeing increased traction for CXL not only in general-purpose compute but also in AI inferencing. He said the company is “on track” to deploy CXL-attached memory with Microsoft Azure for M-series instances, describing the program as in private beta and expected to reach general availability by the end of the year.
Mohan also highlighted KV cache offload as an inference-related growth area, including a new custom design win for KV cache offload shipments expected in 2027. In Q&A, he said the company had picked up its “second design win of a custom application for CXL” earlier in the quarter and is working with a new hyperscaler customer on at-scale performance testing, with expectations for revenue shipments in 2027.
When asked about how inference and agentic workloads affect the company’s opportunities, Mohan pointed to KV cache offload and the Scorpio X 320-lane product’s in-network compute and Hypercast features as ways to reduce networking overhead and improve performance for both training and inference workloads.
Second-quarter guidance calls for continued growth
For the second quarter, Lynch guided revenue to $355 million to $365 million, representing 15% to 18% sequential growth. He said the outlook reflects continued strength across AI fabric and signal conditioning, with Aries growth tied to PCIe 6.0 adoption and Taurus growth tied to higher volumes for AI scale-out connectivity. In AI fabric, Lynch cited the “early-stage ramp” of Scorpio X Series for large-scale XPU clustering along with continued P-Series growth and customized GPU platforms.
Lynch guided second-quarter non-GAAP gross margin to approximately 73%, including an estimated 200 basis point non-cash impact related to a recently executed warrant agreement with a customer. He forecast non-GAAP operating expenses of $128 million to $131 million, interest income of approximately $11 million, a non-GAAP tax rate of about 12%, and diluted shares of about 184 million. Non-GAAP EPS is expected to be $0.68 to $0.70.
On supply, Lynch said the company has supply in place through year-end based on its view of demand and is comfortable with inventory levels, while noting “pockets of supply challenges” remain across the industry. He said Astera has diversified its back-end supply chain and continues working with partners to secure supply going into 2027.
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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