10 Most Popular AI Stocks to Avoid Now

3. Astera Labs, Inc. (NASDAQ:ALAB)

Year to Date Loss as of May 13: -39.30%

S&P 500 Year to Date Performance as of May 13: 4.92%

Astera Labs, Inc. (NASDAQ:ALAB) is a technology company that designs, manufactures, and sells semiconductor-based connectivity solutions for cloud and AI infrastructure. It offers an intelligent connectivity platform comprising semiconductor-based, mixed-signal connectivity products that integrate a matrix of microcontrollers and sensors. The stock is down by about 39% year-to-date, underperforming the S&P 500, that’s up by about 4.92%.

The underperformance stems from growing concerns that a slowdown could hard hit the company in spending on cloud and AI infrastructure. In addition, the company has been under pressure ever since DeepSeek delivered a low-cost AI model, raising questions about spending billions of dollars on AI infrastructure. Nevertheless, Astera Labs, Inc. (NASDAQ:ALAB) delivered solid first-quarter 2025 results, with revenues up 13% year-over-year to $159.4 million.

The robust revenue growth came from Astera Labs seeing strong demand for PCle scale-up and Ethernet scale-out connectivity solutions in ASIC platforms. It also posted quarterly earnings of $0.33, better than the $0.28 a share expected. However, Astera Labs, Inc.’s (NASDAQ:ALAB) issuing second-quarter sales guidance of between $170 million and $175 million has not gone well with the markets. That’s partly because it represents a sequential growth of 8.5%, much lower than the 13% sequential growth in Q1. Also, management projecting a gross margin of 74% down from 74.9% in Q1 has rattled investors.