Astera Labs (NASDAQ:ALAB) reported record second-quarter revenue and projected a sharp sequential increase for the third quarter, citing accelerating demand for its AI infrastructure connectivity products and the volume-production ramp of its Scorpio X-Series fabric switches.
Revenue for the second quarter of fiscal 2026 totaled $392.4 million, up 27% from the prior quarter and 104% from a year earlier. Chief Executive Officer and co-founder Jitendra Mohan said growth was broad-based across the company’s product portfolio, with PCIe 6.0 products accounting for more than half of total revenue, up from about one-third in the first quarter.
Scorpio Expected to Become Largest Product Family
Astera Labs said its Scorpio AI-fabric switch portfolio was a major contributor to the quarter and is expected to become its largest product family by revenue in the third quarter, earlier than management had previously anticipated.
The company’s high-radix Scorpio X-Series has entered volume production and is being deployed in scale-up AI applications. Mohan said the company is shipping multiple Scorpio X-Series configurations to initial customers and remains on track to begin shipments to additional customers by the end of 2026.
During the question-and-answer session, President and Chief Operating Officer and co-founder Sanjay Gajendra said the lead Scorpio X customer is expected to ramp to high-volume production in the third quarter. He added that Scorpio X revenue is expected to surpass Scorpio P-Series revenue during the period.
Gajendra said Astera Labs has engaged with more than 10 customers on Scorpio X, with several opportunities moving through pre-production or qualification stages. Management expects more customers to enter production toward the end of 2026 and in early 2027.
The company said Scorpio X incorporates hardware-accelerated Hypercast and in-network computing functions, enabled through its COSMOS software platform. According to Gajendra, those features can improve collective-operation performance for training workloads and support low-latency inferencing applications. He said COSMOS is increasingly being used not only for telemetry and diagnostics but also for workload orchestration between XPUs and switches.
Astera Labs expects the content opportunity for Scorpio X solutions alone to grow to more than $1,000 per XPU in future AI-platform generations. Management said rising bandwidth requirements, more complex topologies, larger clusters and greater use of optical connectivity could further increase content per XPU over time.
Signal Conditioning, CXL and Networking Products Expand
The company’s Aries signal-conditioning business also reached record quarterly revenue, driven by PCIe 6.0 retimer adoption in scale-up and scale-out systems. Mohan said Aries is benefiting from AI system deployments, larger accelerator clusters, higher product attach rates and the higher average selling prices associated with the transition from PCIe 5.0 to PCIe 6.0.
In response to an analyst question, management said PCIe 5.0 products continue to see demand, including from emerging inference applications, while PCIe 6.0 products are entering additional platforms. Astera Labs said it expects to have PCIe 7.0 solutions ready to align with customer technology roadmaps.
Taurus products also posted strong growth in the second quarter, supported by shipments into AI and general-purpose computing platforms. The company began pre-production shipments of 100-gigabit-per-lane Taurus smart cable modules for 800G active electrical cables. It expects Taurus growth to continue in the second half as 800G deployments increase.
Astera Labs also introduced 3.2T smart retimers and smart redrivers supporting 200 gigabits per lane for next-generation Ethernet and UALink connectivity. Management said the new products can expand Taurus’ market opportunity to more than $4 billion by 2030.
On the CXL front, Mohan said the company sees renewed interest in memory expansion and utilization for memory-intensive inference, agentic AI and general-purpose server workloads. Astera Labs secured a new design win for its standard Leo memory controller at a U.S. hyperscaler during the quarter. It expects volume shipments of standard and custom Leo CXL memory controllers to two U.S. hyperscalers in 2027.
Optical Connectivity Roadmap Targets 2027 and Beyond
Management also outlined an optical-connectivity strategy that it said could open tens of billions of dollars in incremental market opportunity beyond copper interconnects. The company has built optical capabilities through internal investment and its acquisition of aiXscale Photonics.
Astera Labs expects its first high-density fiber-attached solution for a Tier 1 AI platform provider to enter volume production in 2027. Near-packaged optics chipsets for multi-rack scale-up clusters are also targeted for 2027 production, while fully integrated Scorpio X-Series switches with co-packaged optical engine modules are planned for 2028 and beyond.
Gajendra said copper connectivity is expected to remain important for scale-up connections within racks, while optics should become more prevalent as clusters span more racks and operate at higher data rates.
Profitability and Third-Quarter Outlook
On a non-GAAP basis, Astera Labs reported a 73.7% gross margin in the second quarter, above its 73% guidance. Operating expenses were $135.8 million, up 10% sequentially, while operating margin increased 290 basis points from the first quarter to 39.1%.
Non-GAAP net income was $145.8 million, and non-GAAP diluted earnings per share were $0.80, representing an increase of more than 30% from the prior quarter. Interest and other income totaled $12.1 million, and the company’s non-GAAP tax rate was 12%.
For the third quarter, Chief Financial Officer Desmond Lynch forecast revenue of $540 million to $560 million. At the midpoint, the outlook implies 40% sequential growth, driven by Scorpio X-Series volume production, continued demand for Aries PCIe 6.0 retimers and pre-production Taurus shipments supporting 100-gigabit-per-lane 800G Ethernet applications.
- Expected third-quarter non-GAAP gross margin: approximately 72%
- Expected non-GAAP operating expenses: $156 million to $160 million
- Expected non-GAAP operating margin: approximately 43%
- Expected non-GAAP diluted EPS: $1.16 to $1.21
- Expected diluted share count: approximately 185 million shares
Lynch said the company expects gross margins over time to trend toward its long-term target of 70% as its portfolio broadens across silicon and module products and different switching use cases.
About Astera Labs (NASDAQ:ALAB)
Astera Labs is a fabless semiconductor company that develops connectivity solutions for data center and cloud infrastructure. The firm focuses on addressing signal integrity and link management challenges that arise as server architectures incorporate higher-bandwidth processors and accelerators. Its technology is aimed at improving reliability and performance for high-speed interconnects used in servers, storage systems and compute accelerators.
The company’s product portfolio centers on silicon devices and accompanying firmware and software that enhance and manage high-speed links.
