Why Astera Labs Stock Is Rising Today

Astera Labs (ALAB 10.85%) make big gains on Thursday. The connectivity semiconductor company’s stock price rose 10.8% as of 2:45 p.m. ET, according to data from S&P Global Market Intelligence.

While there is no business-specific news to push Astera shares higher today, the company’s valuation is getting a boost from Nvidiahis (NVDA -6.06%) recent quarterly report. The graphics processing unit (GPU) leader reported better-than-expected Q2 results and early guidance yesterday, and the results helped fuel many other AI stocks today. But the actual results weren’t enough to boost earnings for Nvidia, and the AI ​​leader’s share price was down 4.5% in the daily session at the time of writing.

Nvidia’s T2 report signals strong demand for AI

AI-driven demand helped Nvidia’s data center segment revenue grow 154 percent year-over-year to $26.3 billion in the company’s fiscal second quarter, which ended July 28. The performance helped boost total revenue to approximately $30 billion, up 122% year-over-year. With margins proving quite resilient, non-GAAP (generally accepted accounting principles) adjusted earnings per share rose 152% year-over-year.

Looking at the current quarter, Nvidia indicated that sales will reach about $32.5 billion. By comparison, the average analyst estimate was for sales of $31.7 billion before the report.

With strong Q2 results and forward guidance, investors are seeing strong demand in the AI ​​space and are bidding for Astera Labs and other AI stocks in response. Astera’s share price will also likely get a boost from comments Nvidia shared about its upcoming Blackwell chips.

Is Nvidia’s Blackwell set to be a bullish catalyst for Astera Labs stock?

In yesterday’s investor conference call, Nvidia said it expects production of its next-generation Blackwell processors to begin in the fourth quarter of this year. While the market appears to be disappointed that the new chip platform will arrive a little later than originally expected, investors appear to be optimistic about what the production ramp will mean for the Astera.

Some analysts and investors are betting that technologies from Astera will be included in Nvidia’s upcoming GB200 processors. In Astera Labs’ latest quarterly conference call, CEO Jitendra Mohan said “the increase in average dollar content in next-generation GPU-based AI platforms gives us confidence in our ability to outperform industry growth rates.” If the company has secured contract wins to support future Blackwell processors at high selling prices, it likely has a major positive performance catalyst on the horizon.