Astera Labs tumbles after AMD's new partnership with Oracle

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Astera Labs (NASDAQ:ALAB [https://seekingalpha.com/symbol/ALAB]) had plunged 14% by late morning market action on Tuesday following news of AMD's (NASDAQ:AMD [https://seekingalpha.com/symbol/AMD]) new partnership [https://seekingalpha.com/news/4503855-oracle-cloud-to-deploy-50000-amd-ai-chips] with Oracle (NYSE:ORCL [https://seekingalpha.com/symbol/ORCL]) to deploy 50,000 GPUs beginning in the second half of 2026.

Astera Labs designs and manufactures semiconductor-based connectivity solutions for cloud and artificial intelligence infrastructure.

In September, Astera Labs tumbled [https://seekingalpha.com/news/4498395-astera-labs-stock-tumbles-nearly-11] after Morgan Stanley said [https://seekingalpha.com/news/4496528-intel-nvidia-deal-may-have-implications-for-astera-labs-morgan-stanley-says#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews] that Intel's (INTC [https://seekingalpha.com/symbol/INTC]) deal with Nvidia (NVDA [https://seekingalpha.com/symbol/NVDA]) to co-develop PC and data center chips could have major implications for Astera.

"There is some concern that this extension of NVLink into the x86 domain could replace the traditional PCIe connection between the x86 CPU and NVIDIA GPU, which would impact ALAB given its meaningful PCIe content," Morgan Stanley noted at the time.

The new deal between AMD and Oracle has appeared to possibly reignite some of those same concerns.

However, on Monday, Astera Labs revealed its connectivity solutions for AI infrastructure built with PCIe, UALink, Ethernet, CXL, and OpenBMC standards.

"The future of AI infrastructure depends on an open ecosystem that enables customers to choose the best AI accelerator for their specific workloads," said AMD's director of AI Technology and Ecosystems. "Our collaboration with Astera Labs on UALink connectivity ensures our joint customers can deploy AMD Instinct GPUs at scale in open rack architectures that deliver performance, energy efficiency and flexibility."

Earlier this month, Bank of America initiated coverage of Astera Labs with a Neutral rating and $230 price target due to its position to benefit with its PCIe and UALink retimers and switches.

Multiple Seeking Alpha analysts have recently given the stock a Sell [https://seekingalpha.com/article/4823682-astera-labs-high-valuation-maintain-sell] rating due to its high valuation. Astera Labs' stock value has surged 160% over the past year.

MORE ON ASTERA LABS, AMD AND ORACLE

* AMD Breaking Nvidia's Monopoly By Joining OpenAI's Party [https://seekingalpha.com/article/4829329-amd-breaking-nvidias-monopoly-by-joining-openais-party]
* Can AMD Break Nvidia's Monopoly Just Like It Did Intel? [https://seekingalpha.com/article/4829372-can-amd-break-nvdas-monopoly-just-like-it-did-intel]
* AMD's Missing (Ultra Accelerator) Link [https://seekingalpha.com/article/4829129-amds-missing-ultra-accelerator-link]
* ClearBridge Large Cap Growth Strategy buys ORCL, DDOG, FICO, exits UNH, WDAY, ACN among Q3 moves [https://seekingalpha.com/news/4503655-clearbridge-large-cap-growth-strategy-buys-orcl-ddog-fico-exits-unh-wday-acn-among-q3-moves]
* Oracle Cloud to deploy 50,000 AMD AI chips [https://seekingalpha.com/news/4503855-oracle-cloud-to-deploy-50000-amd-ai-chips]