QS Research · Michael Burry's Scion Capital analyst template · 2006
Astera Labs, Inc. (ALAB)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -39% · downside -52% · upside +19%
The market is not missing the growth story; it is mispricing the cash flow backing it. Using the same TTM-to-Sep-30-2026 base as section 13, ALAB earns $397.1M EBIT and $344.7M FCF but trades at 20.99x EV/Sales, 82.3x EV/EBIT and a 1.0% FCF yield, above every comparable; the only scale peer, CRDO, earns more EBITDA on similar revenue at 12.79x sales. My base value applies CRDO's 12.79x to $1.56B revenue: $19.95B EV + $0.164B net cash = $20.1B equity / 174.78M shares = about $115, or -39%; downside at 37.5x EBITDA on $412.6M is about $89 (-52%), upside at 25x sales is about $224 (+19%). That meets the short rule, with medium conviction because demand and guidance are still accelerating and a re-rating could squeeze a 4.6%-short-interest stock.
Key numbers
- Share price: $188.10
- Market cap: $32.88B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $1.56B
- EV / EBITDA (TTM): 79.2x
- P/E (TTM): 71.3x
- Price / book: 16.44x
The 15 boxes
- ✓ 1. Long-form business notes
ALAB sells purpose-built connectivity silicon, boards and modules — Aries PCIe/CXL retimers and Smart Cable Modules, Taurus Ethernet Smart Cable Modules, Leo CXL memory controllers, Scorpio Smart Fabric Switches — with the COSMOS software suite embedded, sold direct to hyperscalers and their manufacturing partners plus distributors. Revenue went from $79.9M in FY2022 to $852.5M in FY2025 and operating income turned positive at $173.4M in FY2025 versus -$116.1M in FY2024, with FY2025 operating cash flow of $319.3M against $37.5M of capex. The model is fabless (TSMC fabricates all ICs; ASE and Amkor assemble/test) and extremely concentrated: the top three end customers were about 86% of FY2025 revenue versus about 80% in FY2024. Between the oldest and newest 10-K the four product families and the platform story are unchanged; what changed is scale, IP depth (18 to 26 issued U.S. patents) and R&D geography.
- ✓ 2. Competitive advantage
Astera sells a 'differentiated and holistic' connectivity platform, but its own 10-K lists seven principal competitors (Broadcom, Credo, Marvell, Microchip, Montage, Parade, Rambus) who overlap only part of the line-up, and the real moat is the design-win cycle: qualification is costly enough that a socket, once won, tends to carry into successor systems. Against that, the FY2025 numbers show a business that only just turned: operating income +$173.4M versus -$60.2M in FY2022, on revenue of $852.5M and gross profit of $645.3M, with $319.3M operating cash flow against $37.5M capex. The durability is not yet proven — one end customer was >70% of FY2025 revenue, most historical sales came from a single product family (Aries Smart DSP Retimers), and the 10-K itself says current-generation pricing declines over time.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-30) revenue was $584.9 million, up 154% YoY, and 9M 2026 revenue was $1,285.7 million, up 121%, driven by Scorpio, Aries, and Taurus shipments plus mix/ASPs. Gross margin fell to 72.3% in Q3 2026, down 390 bps, on inventory-related charges, manufacturing overhead, and Warrants, while GAAP operating income rose 223% to $179.1 million. GAAP net income was $182.9 million, up 101%, with Q3 2026 taxed as a $9.1 million provision versus a $24.3 million benefit in Q3 2025; cash and marketable securities were $1.4 billion at 2026-09-30 and 9M 2026 CFO was $341.5 million. The filing excerpt gives no buyback or formal guidance data, and S29 says risk factors are unchanged.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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