Astera Labs Targets $10B AI Connectivity Opportunity as Scorpio X-Series Ramps

Key Points

• Astera Labs said demand remains strong across its connectivity portfolio and expects growth to accelerate through the second half of 2025 and into 2027, driven by multiple product lines.
• Scorpio X-Series is the company’s biggest near-term catalyst, with management saying it targets a more than $10 billion market opportunity and should be a meaningful revenue driver as production ramps.
• The company also highlighted continued momentum in Aries and Taurus, plus growing interest in Leo CXL and optical solutions, as Astera expands its role in AI infrastructure connectivity.

Astera Labs NASDAQ: ALAB is seeing robust demand across its connectivity portfolio and expects multiple product lines to contribute to growth through the back half of the year and into 2027, Nick Aberle, vice president of finance and investor relations, said at the 54th Annual TD Cowen TMT Conference.

Aberle said the company had reported “good results” about a month earlier and guided for an acceleration in growth in the second quarter, with optimism for continued growth inflection later in the year. He said demand remains strong from a secular standpoint as Astera seeks to build out what he described as a “connectivity backbone” for AI infrastructure.

He said the company has expanded beyond its core I/O connectivity products, Aries and Taurus, into more complex offerings including the Leo CXL Memory Controller and the Scorpio Smart Fabric Switch portfolio, which targets both scale-out and scale-up opportunities.

Scorpio X-Series Expected to Be a Key Growth Catalyst

Aberle said Scorpio X-Series is expected to be “a great catalyst” for revenue for the remainder of the year and into 2027 as the company broadens across additional customers. He said all of Astera’s product lines are growing sequentially into the second quarter, and the company expects every product line to keep growing into the third quarter, fourth quarter and next year.

According to Aberle, Scorpio X-Series addresses a market opportunity of more than $10 billion, which he said represents nearly half of the company’s total addressable market. He said the product carries “extremely rich” content and average selling prices, allowing it to move the needle more than some other parts of the portfolio.

Aberle said Scorpio X-Series has been in development for a long period of time, with pre-production volumes shipping in the second half of 2025 and early volume production beginning in the first quarter. He said the portfolio now includes both smaller-radix and larger-radix solutions, which are shipping in the second quarter.

While acknowledging that volume deployment in complex AI systems remains challenging, Aberle said the company is confident in its current position and expects Scorpio X-Series to be a “nice driver” in the back half.

Taurus and Aries Remain Important Pieces of the Portfolio

On Taurus, Astera’s active electrical cable product for Ethernet connectivity, Aberle said the company views optical connectivity as incremental and additive to copper, rather than a direct replacement. He said copper continues to have a long life cycle due to its power, reliability and cost characteristics, and should remain preferred wherever the needed reach can be achieved.

Aberle said the Ethernet-based AEC market is still in early stages as the industry transitions toward 800G and eventually 1.6T. He said Astera sees an opportunity for AEC to take share from passive copper, while also expanding Taurus to additional customers.

Aries, Astera’s PCI Express retimer portfolio, also remains a significant contributor. Aberle said Aries grew roughly 70% year over year in 2025, even as it fell as a percentage of total revenue because other products grew faster. He said Aries once represented more than 90% of revenue and is now roughly in the range discussed by the TD Cowen moderator, around two-thirds of revenue.

Aberle said Astera is in the early stages of transitioning to PCI Express Gen 6 and that Gen 6 represented a little more than one-third of total revenue in the first quarter. He said he was not aware of anyone else shipping PCI Express Gen 6 products in volume today. On a like-for-like basis, he said Astera expects about a 20% ASP increase generation over generation, along with higher attach rates as faster speeds require retimers in more locations.

Optical Roadmap and NVLink Fusion

Aberle said Astera has been building its optical capabilities for at least a couple of years, including assembling a team, developing resources and mapping out how to address the opportunity. He said the work is being done closely with customers and aligned with their roadmaps.

The company has discussed optical-based revenue in 2027, including from a standalone fiber coupler and from near-packaged optics applications, Aberle said. He described the XScale acquisition as meaningful because coupler technology is important to the scalability of an optical engine and was outside Astera’s typical internal capabilities.

Aberle said Astera is developing an electrical IC, photonic IC and related packaging, test and manufacturing flow internally. The company’s goal is to create an optical engine that can be built around Scorpio X to create a co-packaged optics solution for customers, while also being usable on the other side of the link around a customer’s AI accelerator.

He also discussed Astera’s role in NVIDIA’s NVLink Fusion concept, saying the company provides a bridge or translation layer between a customer accelerator and NVIDIA’s backend scale-up topology. Aberle said the work requires deep collaboration and is a custom solution rather than a multi-sourced product. He said the company has discussed one collaboration publicly, with others “percolating.”

Supply Chain and CXL Activity

On supply chain, Aberle said Astera has been building its backend operations with scale and volume in mind for a long time. He said the company has a good understanding of its allocation profile on both the front end and back end through 2027 and feels comfortable with its supply position, including room for upside.

However, he noted that other components in AI racks could still create bottlenecks outside Astera’s control and potentially delay program rollouts. Aberle said Astera typically builds buffer into expectations around timing and ramps to stay conservative.

Aberle also said interest in the Leo CXL Memory Controller has increased, particularly for AI inferencing applications, as memory prices rise and supply tightens. He said hyperscalers are evaluating ways to optimize memory performance and cost. Astera has discussed a new design win with a hyperscaler customer for a customized version of Leo to be used for CXL connectivity within an AI inferencing appliance, which Aberle called a potential first step toward meaningful revenue momentum in CXL.

Customer Conversations Focus on Longer-Term Connectivity Challenges

Asked how customer conversations differ from investor discussions, Aberle said customers are focused on a three- to five-year horizon, including future accelerator capabilities, rack architectures and scale-up requirements. He said those plans create significant challenges for the connectivity backbone of AI infrastructure.

Aberle said Astera’s discussions with customers are not only about revenue opportunities in 2026 or 2027, but about solving next-generation connectivity challenges in 2028, 2029 and 2030 across both optical and copper technologies.

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.