Astera Labs’ recent earnings report looks like a game changer.
Astera Labs (ALAB 37.70%) stock posted explosive gains in Tuesday’s trading. The company’s share price closed out the session up 37.7% and had been up as much as 39.8% earlier in the day’s trading.
After the market closed yesterday, Astera Labs published its third-quarter results. The company posted sales and earnings for the period that came in significantly better than Wall Street had expected, and it also gave encouraging forward guidance.
Astera Labs’ Q3 performance crushes expectations
Astera Labs posted non-GAAP (adjusted) earnings per share of $0.23 on sales of $113.1 million in the third quarter. The performance came in significantly ahead of the average Wall Street estimate, which had called for adjusted per-share earnings of $0.17 on sales of roughly $97.4 million.
Sales were up 206% year over year in Q3 and 47% on a sequential quarterly basis. Meanwhile, the business recorded an adjusted gross margin of 77.8% and an adjusted operating income margin of 32.4%. The strong results in the quarter suggest that the company’s solutions for artificial intelligence (AI) processors are continuing to gain ground.
Astera’s forward guidance points to big wins
Astera labs paired its Q3 sales and earnings beat with forward guidance that crushed Wall Street’s expectations. For the fourth quarter, Astera Labs is guiding for sales to come in between $126 million and $130 million. If the business were to hit the midpoint of that guidance range, it would mean delivering a massive annual sales increase and sequential quarterly sales growth of roughly 13%.
Meanwhile, the company expects to report an adjusted gross margin of roughly 75%. Adjusted earnings per share are projected to come in between $0.25 and $0.26. The results suggest that the company may have secured the design wins connected to Nvidia‘s next-gen Blackwell processors that investors were hoping for. Alternatively, it’s possible that the company is seeing stronger-than-expected demand from hyperscale cloud companies such as Amazon, Microsoft, and Alphabet.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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