Northland downgraded Astera Labs (ALAB) to Market Perform from Outperform, setting a new price target of $120. The firm cited valuation concerns following a substantial 300% advance in the company's shares since its initial public offering.
The analyst acknowledged that Astera Labs is well-positioned for a strong calendar year 2025, with expectations for increased estimates. However, the downgrade reflects a belief that communications service provider spending on AI silicon may experience a slowdown due to the 'law of large numbers.'
This adjustment in rating suggests a more cautious stance on the stock's near-term upside potential, despite the company's underlying positive business trajectory and market positioning in AI connectivity infrastructure.
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