Deep Research

Astera Labs (ALAB)

4 min read

Snapshot

  • Ticker: ALAB (NASDAQ)
  • Bucket: AI Connectivity & Optics
  • Q1 2026 position: 3,365,787 shares, $368,890,255 — 7.37% of 13F, #2 holding overall and the fund’s largest equity long (only the QQQ put notional is bigger)
  • HQ: Santa Clara, California
  • One line: Fabless designer of connectivity silicon for AI servers — PCIe/CXL retimers, Ethernet cable modules, CXL memory controllers, and scale-up/scale-out fabric switches.

Business Overview

Astera Labs sells the plumbing between GPUs, CPUs, memory, and NICs inside AI racks. Four product families: Aries (PCIe/CXL smart DSP retimers, gearboxes, and smart cable modules — the original franchise, designed into essentially every major GPU server platform), Taurus (Ethernet smart cable modules), Leo (CXL memory controllers, up to 2 TB attach), and Scorpio (fabric switches — P-Series for PCIe scale-out, X-Series for scale-up networking). The company is a board member of the UALink Consortium and is positioning Scorpio X-Series as merchant silicon for open scale-up fabrics, the direct counterweight to NVIDIA’s proprietary NVLink.

Fiscal 2025 was the proof point that Astera is more than a retimer vendor. Revenue reached 396.3M in FY2024, with Q4 2025 revenue of 125M in its first full year, crossing 15% of total revenue, with X-Series moving from preproduction to initial volume shipments entering Q1 2026. Margins are software-like for a chip company: FY2025 GAAP gross margin 75.7%, non-GAAP operating margin 39.2%, non-GAAP net income 286–297M revenue, implying continued sequential growth as the Scorpio ramp becomes the primary FY2026 driver.

The customer base is concentrated among hyperscalers and AI platform builders (sold largely through ODMs), which makes revenue lumpy quarter to quarter but tightly coupled to accelerator unit growth — connectivity content per rack rises super-linearly as clusters scale.

Financial Trajectory

Fiscal yearRevenueYoYGAAP gross marginNon-GAAP op margin
FY2023~$116M~45%—negative
FY2024$396.3M+242%~76%~24%
FY2025$852.5M+115%75.7%39.2%
Q1 2026 (guide)$286–297M~+85%~74%—

Why Atreides Owns It

Astera is the signature Atreides name. Baker invested privately at the Series C in 2021, well before the March 2024 IPO, and is routinely described (including in the Invest Like the Best EP.473 “Watts and Wafers” bio, May 2026) as an early investor in Astera Labs alongside Cerebras. It is the cleanest public expression of his crossover flywheel — private conviction converted into the fund’s largest public equity long.

Thesis fit: in the “watts and wafers” framework, power and wafer supply cap how much compute gets built, so value migrates to whatever lets each watt and wafer do more work — and interconnect is the highest-torque layer. As scale-up domains grow from 8 GPUs to 72+ and beyond, retimer, cable-module, and switch content per accelerator rises faster than accelerator count. Scorpio/UALink adds an option on the open-fabric alternative to NVLink: if hyperscalers’ custom accelerators (Trainium, TPU, MTIA) keep scaling — Baker called Trainium “the most undervalued AI chip” at Sohn NY 2026 — they need exactly the merchant scale-up silicon Astera is shipping. At ~76% gross margin, Astera monetizes the buildout without the capital intensity of the optics names in the same bucket.

The fund’s trading, however, shows Baker treats even his highest-conviction name as a position to be sized, not married (see below).

Position History

QuarterTypeShares/NotionalValue% of 13F
Q4 2024Common1,836,650$243,264,2935.33%
Q1 2025Common4,652,264$277,600,5938.43%
Q2 2025Common954,783$86,331,4792.40%
Q3 2025Common62,050$12,149,3900.24%
Q4 2025Common1,611,194$268,038,2343.28%
Q1 2026Common3,365,787$368,890,2557.37%

This is the book’s defining whipsaw. Atreides built to 4.65M shares in Q1 2025, then liquidated almost entirely over the next two quarters (down to 62k shares — a 99% cut from peak) before rebuilding 26× to 1.6M and then doubling again to 3.4M in Q1 2026. The share count swings far exceed what price moves explain: this is aggressive round-tripping of a name Baker knows from the cap table, harvesting volatility while always returning to size. As of Q1 2026 it sits at its largest dollar value ever in the filing history.

Risks

  • Customer concentration: a handful of hyperscalers (via ODMs) drive most revenue; one platform transition slipping moves a quarter materially.
  • NVLink gravity: if NVIDIA’s rack-scale systems keep taking share from open architectures, the UALink/Scorpio X-Series TAM compresses.
  • Competition: Broadcom (PCIe switching, Atlas/retimers), Marvell, and in-house hyperscaler silicon all converge on the same sockets; ~76% gross margins invite entry.
  • Mix-driven margin dilution: hardware-heavy Scorpio and cable modules carry lower gross margin than Aries retimers as they scale.
  • Valuation/factor risk: the stock trades as a high-multiple AI pure-play; any AI capex digestion quarter hits it harder than the market — and Atreides’ own history shows the position can be cut 99% when that happens.

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