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Group 1 - The semiconductor sector in the US stock market experienced a collective increase on Friday, with notable gains among several companies [1] - Astera Labs (ALAB.US) saw a rise of over 6%, while United Microelectronics (UMC.US) increased by more than 5.8% [1] - Advanced Micro Devices (AMD.US) and Marvell Technology (MRVL.US) both rose by 1.9%, Broadcom (AVGO.US) increased by 0.9%, and Nvidia (NVDA.US) saw a gain of 0.48% [1]

PresentationQuinn BoltonNeedham & Company, LLC, Research Division Welcome back, everybody, to the second day of Needham's 28th Annual Growth Conference. My name is Quinn Bolton. I'm the semiconductor analyst for Needham. My pleasure to host this fireside chat with Astera Labs founded in 2017 and headquartered in San Jose, California. Astera Labs provides rack scale AI infrastructure through purpose-built connectivity solutions, the company's intelligent connectivity platform integrates CXL, Internet, NVLink ...

Summary of Astera Labs Conference Call Company Overview - **Company**: Astera Labs - **Founded**: 2017 - **Headquarters**: San Jose, California - **Industry**: Semiconductor, specifically focused on rack-scale AI infrastructure and connectivity solutions [1][3] Core Products and Technologies - **Product Portfolio**: - **Scorpio P and X Family of Fabric Switches**: - Scorpio P for PCI Express connectivity in scale-out applications - Scorpio X for GPU to GPU scale-up connectivity [4][5] - **Aries Retimers**: Used for both scale-out and scale-up applications [5] - **Taurus Products**: Signal conditioning for Ethernet, deployed as active electrical cables [5] - **Leo Products**: Address memory bottlenecks in AI systems, enabling DDR5 memory with CXL connectivity [5] - **Software**: Cosmos software suite integrates various components for diagnostics and customization [8] Competitive Advantages - **Architecture**: Software-first architecture allows flexibility and customization for end customers [7] - **Customer Trust**: Strong relationships with customers provide insights into their future needs, influencing Astera's product roadmap [9] - **Market Position**: Leading position in PCIe retimers and rapidly gaining market share in PCIe switches [10][11] Market Trends and Customer Insights - **AI Spending Environment**: Strong demand for AI systems, with customers reporting ROI on investments. No signs of slowdown expected in 2026 or 2027 [12][14] - **Engagements**: Over 10 engagements for PCIe scale-up switches, with increasing traction for Scorpio X family [28] Industry Developments - **AWS Announcements**: Transition to PCIe-based switch fabric and support for UA-Link, which is beneficial for Astera [15][17] - **CPO Solutions**: CPO (Chiplet-Optical) is seen as a net increase in Total Addressable Market (TAM), with plans to develop optical solutions [21][22] - **CXL Market**: Expected ramp-up in 2026, particularly for general-purpose compute applications [55] Future Outlook - **Product Development**: Anticipation of growth in 800-gig AECs and continued development of UA-Link switches [49][32] - **M&A Strategy**: Plans for strategic acquisitions to bolster capabilities and capture market opportunities [57][58] Key Challenges - **Competition**: Competing with companies like Marvell and Broadcom in the UA-Link and Ethernet spaces [32][10] - **Adoption of New Technologies**: Transition from PCIe to UA-Link and NVLink may take time, with expectations for gradual adoption [30][31] Conclusion Astera Labs is positioned strongly in the semiconductor industry, particularly in AI infrastructure, with a robust product portfolio and strategic customer relationships. The company anticipates continued growth driven by strong demand for AI solutions and plans to expand its offerings in optical and CXL technologies.

Core Viewpoint - Global semiconductor sales showed slight slowdown in November, but the memory chip market remains strong [1] Group 1: Semiconductor Sales Performance - November semiconductor sales increased by 7.1% month-over-month, lower than Morgan Stanley's forecast of 10.4%, but significantly above the 10-year historical average of 2.5% [1] - Year-over-year growth for the semiconductor industry reached 29.8%, up from 27.2% previously, with a monthly year-over-year increase of 29.5% [1] - Asia-Pacific region saw a remarkable sales increase of 71.9%, while China recorded a 28.9% growth; the Americas and Europe followed with year-over-year growth rates of 12.4% and 10.8%, respectively [1] Group 2: Product Category Performance - Discrete devices underperformed with a month-over-month sales decline of 4.1%, worse than Morgan Stanley's zero growth prediction and the historical average decline of 0.7% [1] - Analog chip segment also showed weakness, with a month-over-month sales drop of 4.4%, exceeding the forecasted decline of 3% and the historical average of 3.2% [2] - Microcontrollers experienced a significant month-over-month decline of 7.3%, falling short of the zero growth forecast and the historical average decline of 0.6% [2] - Memory chip market showed mixed results: NAND flash sales surged by 47.3%, exceeding the forecast of 40.8% and the 5-year historical average of 21.9% [3] - DRAM sales grew by 18.9%, below the forecast of 43.4% and the 5-year historical average of 26.3% [3] Group 3: Industry Outlook - Despite the slight month-over-month decline in semiconductor sales, analysts maintain an optimistic outlook for the industry, particularly for companies like NXP Semiconductors (NXPI.US) and Analog Devices (ADI.US) [3] - Analysts are increasingly positive about the semiconductor sector, favoring companies with structural competitive advantages and cyclical recovery opportunities [4] - In the AI sector, companies such as NVIDIA (NVDA.US), Broadcom (AVGO.US), and Micron Technology (MU.US) are expected to continue benefiting from strong demand [4][5] - The growth in AI demand is penetrating the analog chip sector, particularly in power management chips, with significant growth anticipated from the deployment of 800-volt architectures [5]

Key Takeaways ALAB is seeing rising UA Link interest, with hyperscalers and AI firms in active RFP and RFQ stages. UALink supports high-bandwidth, low-latency scale-up for AI clusters using Astera Labs' fabric design. ALAB expects UA Link to boost PCIe scale-up revenue, with a multibillion-dollar opportunity by 2029. Astera Labs (ALAB) is benefiting from strong growth in UALink, an open standard scale-up connectivity protocol designed to address the increasing demands of AI infrastructure. UALink combines t ...

Core Insights - The race for artificial intelligence supremacy among major tech companies has intensified since the launch of ChatGPT by OpenAI and Microsoft, with other companies like Alphabet also investing heavily to catch up [1] - The ultimate leaders in the AI large language model (LLM) space remain unpredictable, similar to the internet boom of the late 1990s [1] AI Investment Strategies - Investors can benefit from the AI revolution by focusing on "pick and shovel" stocks rather than trying to identify the ultimate leader in the LLM race, akin to merchants during the California Gold Rush [2] Company Summaries CoreWeave - CoreWeave specializes in cloud computing, providing high-end GPU computing power specifically for AI applications, distinguishing itself from traditional cloud services [3] - The company has secured a $2.6 billion debt financing facility and has $25 billion in capital commitments, indicating strong demand and financial backing [4] - Recent share price fluctuations were influenced by debt concerns and the expiration of the IPO lock-up period, but insider selling is expected to decrease moving forward [6][7] Nebius Group - Nebius Group is a leader in AI infrastructure, offering a cloud platform designed for intensive AI workloads and vertical integration of proprietary software and hardware [8] - The company has a significant partnership with Nvidia, ensuring priority access to GPUs, and has secured a $17.4 billion multi-year deal with Microsoft, which could grow to $19.4 billion [9][10] - Following the Microsoft deal, Nebius' market cap was surpassed by the contract value, suggesting strong future revenue growth potential [11] Astera Labs - Astera Labs manufactures high-performance semiconductors and software for AI applications, addressing data transmission bottlenecks in AI data centers [13] - The company has established strong partnerships with industry leaders like Nvidia, Intel, and AMD, positioning it well within the AI infrastructure space [14] - Analysts predict double-digit growth for Astera Labs through 2026, with the company consistently exceeding Wall Street expectations since its public debut [15]

Group 1: AI Race and Market Dynamics - The AI race among major tech companies, initiated by OpenAI's ChatGPT, has led to significant investments and competition in large language models (LLMs) [1] - The unpredictability of LLM leaders mirrors the internet boom of the late 1990s, where dominant players like Yahoo! and Netscape were eventually surpassed [1] Group 2: Investment Strategies - Investors can benefit from the AI revolution by focusing on "pick and shovel" stocks rather than trying to identify the ultimate LLM leader [2] - Historical context from the California Gold Rush illustrates that suppliers often profit more consistently than the primary players [2] Group 3: CoreWeave Overview - CoreWeave is a specialized cloud computing provider focused on delivering high-performance computing power through GPUs, catering specifically to AI needs [3] - The company has established relationships with major tech firms like IBM and Microsoft, and has a strong partnership with Nvidia for GPU access [3] Group 4: CoreWeave's Recent Performance - CoreWeave's stock experienced a significant drop from approximately $180 to around $90 due to debt concerns and the expiration of the IPO lock-up period [4][5] - The company secured a $2.6 billion debt financing facility, alleviating some concerns regarding its financial health [6] Group 5: Nebius Group Overview - Nebius Group is a leading AI infrastructure company providing cloud platforms and services tailored for intensive AI workloads [9][10] - The company has secured significant investments from major tech firms and has a competitive edge through vertical integration of its AI software and hardware [11] Group 6: Nebius' Strategic Partnerships - Nebius has a strong partnership with Nvidia, ensuring priority access to the latest GPUs, which is crucial for running advanced AI models [13] - A recent multi-year deal with Microsoft worth $17.4 billion highlights Nebius' growing significance in the AI infrastructure space [14][15] Group 7: Astera Labs Overview - Astera Labs manufactures high-performance semiconductors designed to enhance data transmission in AI data centers, addressing potential bottlenecks [20] - The company has established strong partnerships with industry leaders like Nvidia, Intel, and AMD, positioning itself well in the AI market [21] Group 8: Astera Labs' Growth Potential - Analysts predict double-digit growth for Astera Labs through 2026, driven by increasing demand for AI infrastructure [22] - The company has consistently exceeded Wall Street expectations, showcasing its strong performance and growth trajectory [25]

Group 1 - Astera Labs will participate in financial conferences during Q1 2026, including the 28th Annual Needham Growth Conference on January 14 and the Morgan Stanley Technology, Media & Telecom Conference on March 3 [1][3] - A webcast of the conference sessions will be available on Astera Labs' investor relations website [1] Group 2 - Astera Labs specializes in semiconductor-based connectivity solutions for rack-scale AI infrastructure, collaborating with hyperscalers and ecosystem partners [2] - The company's Intelligent Connectivity Platform integrates various semiconductor technologies, including CXL, Ethernet, NVLink, PCIe, and UALink™, along with the COSMOS software suite [2] - Astera Labs offers both custom connectivity solutions and a standards-based portfolio to meet diverse infrastructure requirements [2]

Company Overview - Astera Labs, Inc. (NASDAQ:ALAB) is recognized as one of the best unstoppable growth stocks to buy currently, having increased by over 7.9% since the end of 2025, reflecting renewed investor confidence in the semiconductor sector [1] - The company designs, manufactures, and sells semiconductor-based connectivity solutions specifically for cloud and AI infrastructure [6] Market Performance - The Philadelphia Semiconductor Index rose by 4% during the same period that Astera Labs saw its stock price increase [1] - Wall Street analysts maintain a positive outlook on Astera Labs, with a 12-month price target indicating more than 16.9% upside potential from the current stock level [4] Analyst Insights - Stacy Rasgon from Bernstein Research highlighted the sustainability of the chips trade in 2026, emphasizing the strong performance of high-quality AI stocks in 2025 and optimistic growth estimates for 2026 [2][3] - Analysts at H.C. Wainwright expect Astera Labs to continue its growth trajectory, driven by Scorpio X revenue throughout 2026, and anticipate the introduction of larger switches in the second half of 2026 to further enhance growth [5] Future Growth Potential - H.C. Wainwright projects that growth in 2027 will be driven by the NVLink Fusion product, which has the potential to significantly improve revenue per AI accelerator chip [5] - Despite the potential of Astera Labs as an investment, some analysts suggest that other AI stocks may offer greater upside potential with less downside risk [6]