10 Hot New Stocks to Buy Now

3. Astera Labs, Inc. (NASDAQ:ALAB)

6-Months Performance: 120.22%

Analyst Upside Potential: 38.14%

Number of Hedge Fund Holders: 51

Astera Labs, Inc. (NASDAQ:ALAB) specializes in creating connectivity solutions that are essential for cloud computing and artificial intelligence (AI) systems. Their key offerings include an Intelligent Connectivity Platform that includes both hardware (like chips and modules) and software (COSMOS) designed to enhance connectivity in AI and cloud environments.

On February 11, Quinn Bolton, an analyst at Needham, maintained a Buy rating on the stock with a price target of $140. The analyst sees growth potential and expects a strong performance from the company. During the fiscal fourth quarter of 2024, Astera Labs, Inc. (NASDAQ:ALAB) achieved a record quarterly revenue of $141 million, indicating a 25% increase from the previous quarter and a 179% increase year-over-year. Management attributed the growth to be primarily driven by the Aries PCIe Retimer and Taurus Ethernet Smart Cable Module product families. There was also strong demand for both AI scale-up and scale-out connectivity solutions. Looking ahead, Astera Labs, Inc. (NASDAQ:ALAB) expects 2025 to be a breakout year, with revenue driven by all four of its product families. It is one of the hot new stocks to buy now.

Alger Small Cap Growth Fund stated the following regarding Astera Labs, Inc. (NASDAQ:ALAB) in its Q4 2024 investor letter:

“Astera Labs, Inc. (NASDAQ:ALAB) is a semiconductor company specializing in connectivity solutions for data-centric systems, including cloud computing, artificial intelligence, and machine learning. Its products optimize data flow and performance in servers, GPUs, and AI accelerators, addressing bottlenecks in high-performance computing environments. The company’s Intelligent Connectivity Platform (ICP) integrates advanced semiconductor hardware with the proprietary COSMOS software suite, delivering customizable and cost-effective solutions. Astera’s Platform-Specific Standard Products (PSSP) enhance flexibility with features such as predictive analytics, monitoring, and troubleshooting. Backed by strong relationships with leading cloud and AI providers, we believe Astera is well positioned in rapidly growing markets, demonstrating high profitability and industry-leading gross margins. During the quarter, shares contributed to performance after reporting better-than-expected fiscal third-quarter results, with revenues and gross margins exceeding analyst estimates. Specifically, revenue growth spanned all four product segments, led by accelerated custom silicon sales and robust GPU demand. Management also raised fiscal fourth-quarter guidance, citing expanding product ramps and a broader customer base.”