Should Astera Labs Investors Worry About DeepSeek?

Astera Labs Inc (NASDAQ:ALAB) shares recovered in early trading on Tuesday, after having tanked in the previous session amid a broader downturn in AI stocks.

The tech majors are unlikely to shelve their capital expenditure plans following the launch of China’s open-source AI model DeepSeek, according to Northland Capital Markets.

The Astera Labs Analyst: Analyst Gus Richard upgraded the rating from Market Perform to Outperform, with a price target of $120.

The Astera Labs Thesis: Amazon.com Inc (NASDAQ:AMZN), Microsoft Corp (NASDAQ:MSFT), Meta Platforms Inc (NASDAQ:META), and Alphabet Inc (NASDAQ:GOOG)(NASDAQ:GOOGL) are likely to spend around $270 billion on capex in 2025, up 35% from $200 billion last year, Richard said in the upgrade note.

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"We don’t think DeepSeek has changed their capex plans," he added.

"Connectivity solutions are increasing as a percentage of the bill of materials in next-generation AI systems," the analyst wrote.

Astera Labs is offering wider connectivity solutions with new product lines and "ramping on multiple new AI platforms based on internally developed AI accelerators for various customers, along with the continued momentum of GPU-based AI platforms," he further stated.

ALAB Price Action: Shares of Astera Labs had risen by 4.61% to $86.91 at publication on Tuesday.

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