Astera Labs extends gains after stellar debut as investors lap up AI stocks

Astera Labs,

21/03/2024 16:43

By Arsheeya  Bajwa
       March 21 (Reuters) - Astera Labs  ALAB.O  surged more
than 16% on its second day of trading on Thursday, as euphoria
over artificial intelligence continued to power the stock,
putting the chipmaker on course to add about $1.5 billion in
market value.
    Companies that make high-powered chips used in AI have been
the biggest beneficiaries of a surge in demand as businesses
race to adopt the technology.
    Astera shares rose to $72.15, after closing at $62.03 on the
debut day — a 72% jump from its initial public offering price of
$36.
    "Investors' enthusiasm for the chip sector is intensifying,
as they start to grasp the transformative potential of the AI
revolution on earnings," said Brandon Michael, analyst at
investment management firm ABC Funds.
    The Philadelphia SE Semiconductor Index  .SOX  rose 3.1%,
adding to its gains of more than 18% so far this year. The
index, which includes Astera's competitors and top chipmakers
such as Broadcom  AVGO.O  and Marvell Technology  MRVL.O , had
risen more than 64% in 2023.
    Astera, which sells high-speed data transfer technology for
AI computing and other data center applications, is currently
not part of the index.    
    
 
   The company, along with some of its existing investors,
raised $712.8 million by selling 19.8 million shares at $36 each
in its upsized IPO.
    "The equity valuation multiple such as enterprise
value-to-sales is excessive for Astera Labs, and many times
higher than Nvidia, reflecting the limited supply of pure plays
on AI ... so the Astera Labs IPO taps into this demand," said
Peter Garnry, head of equity strategy at Saxo Bank.
    Memory chipmaker Micron Technology  MU.O  also surged 16% to
a record high, after its strong revenue forecast offered more
evidence on AI's potential to drive demand for semiconductor
firms.
    Shares of Broadcom rose close to 8%, while Marvell and
Nvidia  NVDA.O  were up between 1% and 4%.
    Nvidia also makes InfiniBand, which works like an ethernet
cable, linking clusters of chips across servers, and competes
with networking offerings of Broadcom and Marvell.

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Philadelphia SE Semiconductor Index's gains outpace the S&P 500
Composite Index    https://reut.rs/43wCkIT
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 (Reporting by Arsheeya Bajwa in Bengaluru; Editing by Shilpi
Majumdar)
 ((ArsheeyaSingh.Bajwa@thomsonreuters.com; +91 8510015800;))