The AI infrastructure unicorn Astera Labs, known as the "Little Nvidia," surged over 72% on its first day of IPO.
On March 20th local time, the company made its initial public offering on NASDAQ in the United States, with stock code ALAB and a price of $36 per share, which is higher than the price range of $32-34 previously submitted to the US SEC. The IPO size easily surpassed all recently listed US technology companies, and the final closing price on the day of listing was $62.03, with a market value of $9.3 billion.
Astera Labs was founded in 2017, mainly developing AI hardware to improve the performance of data centers. From a product line perspective, the company is not a complete competitor of Nvidia, but rather a part of Nvidia's industrial chain, directly supplying Nvidia with goods——
Its core product is data and memory connectivity semiconductors, which aim to improve the efficiency and speed of connections between different software and hardware within the data center, enabling the data center to more effectively support AI computing and other high-performance computing needs, optimize data transmission and processing speed, and thus accelerate the operation and response time of AI applications.
The core products of Astera Labs
At present, chip manufacturers such as Nvidia, Intel and AMD, and large Internet enterprises such as Amazon and Microsoft have become their customers.
So, why is it called Little Nvidia?
The Origin of "Little NVIDIA"
This is more due to the explosive growth trajectory similar to Nvidia under the AI wave.
According to the prospectus submitted by Astera Labs, the company's revenue increased rapidly from less than $35 million to $79.9 million and $115.8 million in the fiscal year 2021-2023. In 2023, revenue increased by 45% year-on-year, and the latest fiscal year's loss decreased from $58.3 million to $26.3 million. This year, revenue is expected to reach $250 million to $300 million.
Analysts point out that although Astera Labs is relatively small in scale, its data center connectivity semiconductor demand, like Nvidia's GPUs, will experience explosive growth.
Astera Labs has a gross profit margin of nearly 70%, which is also comparable to Nvidia, and its valuation curve reflects market recognition of its potential. After obtaining Series A financing in 2017, the company's valuation only exceeded 100 million US dollars during Series B financing in 2020. However, during Series C and D financing in 2021 and 2022, the company's valuation skyrocketed to 950 million US dollars and 3.15 billion US dollars.
The rapid iteration of AI hardware requires attention to internal transmission efficiency. US stock analysts point out that every Nvidia H100 chip requires Astera Labs products because high-performance chips have extremely high requirements for data transmission speed and efficiency. In order to fully leverage the capabilities of such high-performance GPUs, data centers need to use Astera Labs connectivity technology to ensure that data can be quickly and reliably transmitted within the system.
It is understood that Astera Labs mentioned "AI" 271 times in its IPO application to the SEC, indicating that the company is working hard to convince investors that they will embrace this AI boom and greatly benefit from it.
Amazon's "betting on treasure"
It is worth noting that Astera Labs is backed by Amazon, and well-known companies and investment institutions such as Intel, Sutherhill Ventures, and funds under Fidelity are also its shareholders.
Among them, Amazon is not only a major customer of Astera Labs, but also reached a stock warrant agreement with Astera in 2022 to purchase up to 1.5 million Astera Labs shares at a price of $20.34 per share. The agreement will be revised next year, allowing Amazon to purchase an additional 830000 shares. According to a securities filing, as of the end of last year, Amazon controlled 232608 shares.
In addition, according to the agreement, in order for Amazon to redeem the remaining shares and fully benefit from the rise of the stock, Amazon must purchase Astera Labs products worth up to $650 million within 7 years from 2022.
