Astera Labs shares leap more than 50% on stellar Nasdaq debut amid AI frenzy (updated)

Astera Labs,

20/03/2024 16:44

(Adds more details and background throughout)
    By Arasu Kannagi Basil and Echo Wang
       March 20 (Reuters) - Shares of Astera Labs  ALAB.O 
jumped as much as 55% on their Nasdaq debut on Wednesday, giving
the chip firm a market capitalization of $8.52 billion, as it
tapped into the investor enthusiasm for artificial intelligence.
    The stock traded as high as $55.89, after opening at $52.56
each, versus its initial public offering price (IPO) of $36
apiece.
    Chip companies are seen as the main beneficiaries of the AI
boom as businesses race to adopt the technology, bolstering the
demand for advanced semiconductors used in data centers.
    The frenzy around AI has led to a 12.9% jump in the
Philadelphia Semiconductor  .SOX  index so far this year.
    "We are just in the early innings of AI," said Astera CEO
Jitendra Mohan. "We like to think at least that the bottleneck
for AI is now shifted from compute to connectivity".
    Astera is the first big technology firm to list this year
amid a stuttering rebound in the U.S. IPO market.
    "Hot areas like AI can make for some very volatile IPOs. So
in order for Astera to maintain a premium valuation post-IPO, it
will need to hit its growth targets and improve profitability,"
said Matthew Kennedy, senior strategist at Renaissance Capital.
    Social media platform Reddit's long-awaited market debut is
slated for Thursday, while cybersecurity software startup Rubrik
is planning to list as early as April, Reuters reported last
month.
    Astera, along with some of its existing investors, raised
$712.8 million by selling 19.8 million shares priced at $36
each, above the marketed range in its upsized U.S. IPO.
    The company, the name of which is inspired by astronomy and
means "star-like", provides vital data center components to
so-called hyperscalers or large cloud service providers. It
competes with chip companies such as Broadcom  AVGO.O , Marvell
Technology  MRVL.O  and Parade Technologies  4966.TWO .

 (Reporting by Arasu Kannagi Basil in Bengaluru and Echo Wang in
New York; Editing by Shilpi Majumdar)
 ((ArasuKannagi.Basil@thomsonreuters.com))