Why Astera Labs (ALAB) Is Among Tuesday’s Worst Performers?

We recently published a list of 10 Stocks Nosedive, Defying Broader Optimism. In this article, we are going to take a look at where Astera Labs, Inc. (NASDAQ:ALAB) stands against other stocks nosedive, defying broader optimism.

Ten companies—predominantly Bitcoin miners—kicked off this week’s trading on a sour note, bucking an overall market optimism, following the lack of fresh developments to spark buying appetite.

On Tuesday, the Dow Jones rose by 1.24 percent, the S&P 500 rose 0.88 percent, while the Nasdaq Composite increased 0.64 percent.

In this article we will look at Tuesday’s worst performers and explore the reasons behind their drop.

To come up with Tuesday’s top losers, we considered only the stocks with at least $2 billion in market capitalization and $5 million in daily trading volume.

Astera Labs, Inc. (NASDAQ:ALAB)

Astera Labs, Inc. (NASDAQ:ALAB) saw its share prices drop by 6.67 percent on Tuesday to close at $124.41 apiece as investor sentiment was dampened after earning a rating downgrade from investment bank Morgan Stanley.

According to Morgan Stanley, it downgraded its outlook for Astera Labs (NASDAQ:ALAB) to “equalweight” from “overweight” previously, while also setting a price target of $142 for its share price.

The company noted that Astera Labs’ (NASDAQ:ALAB) current valuation appears to already reflect market optimism surrounding its new PCIe switch products, which are designed to support AI infrastructure. The investment bank added that while they remain optimistic about the company’s growth potential driven by the AI boom, they see no immediate catalyst to justify a re-rating at this time.

Overall, ALAB ranks 10th on our list of stocks nosedive, defying broader optimism. While we acknowledge the potential of ALAB as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ALAB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.