We recently published a list of Analysts Are Talking About These 10 AI Stocks. In this article, we are going to take a look at where Astera Labs, Inc. (NASDAQ:ALAB) stands against other stocks analysts are talking about.
Marco Argenti, Chief Information Officer at Goldman Sachs, recently said that in 2025, the world will witness the full potential of AI that has been in development. He used the analogy of a child raised in a library, now ready to step out into the world.
“What if they, we make them interact with sensory data, with vision data, with, uh, you know, like basically opening that door of the library and making this child walk into the real world? I think this creation of word models, like they’re called generally in the industry, where you combine multimodal information, that is not only text but is also videos, but is also sensory data. It might be temperature, it might be anything you can perceive around you, could actually unlock the next level of capabilities,” Argenti said, according to CNBC.
Despite high hopes, a potential plateau in performance improvements in AI systems, high energy consumption of AI data centers and transparency remain key issues tech companies will continue to grapple with in 2025.
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For this article, we picked 10 AI stocks currently trending based on latest news and analyst ratings. With each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Astera Labs, Inc. (NASDAQ:ALAB)
Number of Hedge Fund Investors: 39
Morgan Stanley recently increased its price target on Astera Labs Inc (NASDAQ:ALAB) to $142 from $94.
“[The] industry view remains attractive, as AI strength now dominates the index weightings, and other areas are bottoming out slowly,” analysts wrote in a client note. “We expect to finish the year with a very strong Blackwell ramp, share gains vs. [application specific integrated circuits], and several aspects that should endure beyond CY25 even if the [artificial general intelligence] ‘arms race’ decelerates,” they added. “Other AI plays all offer promise, including [application specific integrated circuits], but we would still keep nearer term expectations in check.”
Baron Discovery Fund stated the following regarding Astera Labs, Inc. (NASDAQ:ALAB) in its Q2 2024 investor letter:
“AI models are rapidly moving from objects of curiosity to levels of functionality that just a couple of years ago were believed to exist only in the realm of science fiction. We obviously do not invest in large-cap companies that produce AI hardware, which is where significant market attention is focused right now. Yet we continue to look for exciting small-cap ideas in AI hardware. For example, we owned a small-cap AI-oriented semiconductor company in the second quarter called Astera Labs, Inc. (NASDAQ:ALAB). Astera Labs manufactures analog semiconductors that facilitate improved communications within a motherboard (for example between graphics processing units like what NVIDIA makes and central processing units which are made by companies like Intel), and between servers. We bought shares when the company went public, but due to the incredible hype surrounding hardware-based AI companies, the stock quickly doubled and exceeded what we believed was a reasonable long-term valuation (particularly given new competitive offerings on the horizon). Therefore, we sold our investment but continue to monitor its valuation closely for a potential re-entry point.”
Overall, ALAB ranks 10th on our list of stocks analysts are talking about. While we acknowledge the potential of ALAB, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ALAB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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