We recently published a list of 15 AI Stocks That Skyrocketed in Q4. In this article, we are going to take a look at where Astera Labs, Inc. (NASDAQ:ALAB) stands against other stocks that skyrocketed in Q4.
AI has been dominating the news, market, and basically almost everything we come across for the last two years, since the launch of ChatGPT. In 2024, AI made significant strides, especially in agentic systems and smaller, more efficient models. In addition to that, advancements in retrieval-augmented generation (a method that combines information retrieval with text generation) improved data accuracy and reduced AI errors, while smaller models became faster and more energy-efficient, making AI more accessible.
However, the year also saw a rise in AI-driven cybercrime, with deepfakes used in scams and election interference. As these risks grew, governments and regulators began to implement measures to control AI’s development and use. However, opinions on the balance between innovation and safety remain divided.
The Next Chapter for AI in 2025
While AI continues to evolve and shows immense long-term potential, it still faces challenges such as data limitations, model reliability, and the need for revenue-generating applications. With the maturity of this technology, it will be crucial to address these obstacles in order to meet investor expectations and unlock its full potential in the coming years.
Julie Biel, chief market strategist and portfolio manager at Kayne Anderson Rudnick, discussed the current state of AI investments in a CNBC interview and noted that while significant capital has been poured into developing the technology, much of it is still at the infrastructure stage. She pointed out that AI’s efficiency improvements are beneficial, but the lack of revenue-generating use cases is preventing broader enthusiasm. Biel also raised concerns about a potential AI bubble, as she mentioned issues such as hallucinations and data limitations that could become a hurdle in short-term progress. Despite the strong long-term outlook, she suggested that investors’ patience may wear thin if immediate returns do not materialize.
In another CNBC interview, Anastasia Amoroso, iCapital chief investment officer, highlighted the continued growth of AI as a major theme in 2024, especially its expansion into AI software and power. She noted that while the last two years focused on semiconductors, this year should focus on AI software monetization and the energy demands of AI infrastructure, like data centers. Amoroso believes that AI will remain a key investment opportunity into 2025 and that the sector’s broadening scope, including AI software and its supporting power needs, presents solid prospects for growth.
Our Methodology
For this article, we listed 15 best-performing stocks from Insider Monkey’s database of AI stocks with at least over 100% share price returns in the fourth quarter of 2024. The stocks are listed in ascending order of their share price performance. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s Q3 database of 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Astera Labs, Inc. (NASDAQ:ALAB)
Number of Hedge Fund Holders: 39
Stock Price Performance in Q4 2024: ~153%
Astera Labs, Inc. (NASDAQ:ALAB) designs and manufactures semiconductor-based connectivity solutions for cloud and AI infrastructure. The company is headquartered in California and its offerings include an intelligent connectivity platform with mixed-signal products, microcontrollers, sensors, and COSMOS software, which manages and optimizes resources at a cloud scale. The company provides smart fabric switches, DSP retimers, memory controllers, and Ethernet smart cable modules for AI and cloud connectivity. Astera Labs serves hyperscalers and system OEMs and focuses on AI and cloud solutions.
Astera Labs (NASDAQ:ALAB) has been quite an analyst favorite in Q4. It also unveiled its Scorpio Smart Fabric Switch portfolio, including the first PCIe 6 switch designed for AI workloads in cloud-scale accelerated computing. The portfolio features the Scorpio P-Series for GPU-to-CPU/NIC/SSD connectivity and the Scorpio X-Series for GPU clustering, offering optimized performance, reliability, and energy efficiency for AI platforms.
The company received multiple positive ratings and upward price target revisions from firms such as Barclays, Stifel, Roth MKM, Craig-Hallum, and Evercore ISI along with others at the start of November 2024. Morgan Stanley raised the company price target twice in the last two months of Q4. First in November from $74 to $94 and later in December to a price target of $142.
Overall, ALAB ranks 8th on our list of stocks that skyrocketed in Q4. 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.
