Astera Labs (ALAB): This Stock Is Hurting From DeepSeek AI News That Could Turn Into Multibaggers

We recently compiled a list of the 10 Stocks Hurting From DeepSeek AI News That Could Turn Into Multibaggers. In this article, we are going to take a look at where Astera Labs (NASDAQ:ALAB) stands against the other stocks.

US semiconductor stocks are getting hammered after the Chinese launched an AI model that has many questioning United States dominance in the AI space. China is currently facing restrictions on importing state-of-the-art semiconductor equipment needed for AI training. The launch of DeepSeek AI despite these restrictions is an eye-opener for Western tech companies, and the investor sentiment is reflecting it.

As market participants scamper to gather more information on China’s progress, we decided to look at stocks that are not only taking a hit from this news but also provide an attractive buy-the-dip opportunity. Against the backdrop of Project Stargate, a US government initiative to pump private sector investments into AI infrastructure, these companies also offer a potential multi-bagger opportunity.

Usually, it is the low market cap companies that become multibaggers. However, the failure rate when betting on these companies is quite high. We therefore chose companies with a market cap between $10 and $25 billion. In this way, our list contains businesses that are already established and will thrive on the boost provided by Project Stargate while successfully managing any headwinds. We believe the downside to these stocks is minimal because of the already sound fundamentals of these companies.

An aerial shot of a computer server station, highlighting the company’s focus on cloud-based technology.

Astera Labs (NASDAQ:ALAB)

Astera Labs is a semiconductor company that manufactures and supplies purpose-built connectivity solutions for AI and cloud infrastructure. The company is set to be a beneficiary of the increased spending by hyperscalers as a result of Project Stargate.

ALAB not only collaborates with Nvidia but also has key partnerships with Micron, Intel, and AMD. Its latest product, the Scorpio Smart Fabric Switch, specifically targets cloud AI infrastructure and could be a key part of all future data center installations. In fact, ALAB’s products, especially the P-series switches, are an integral part of Nvidia’s Blackwell line of GPUs.

The only thing that investors need to keep an eye on is the company’s reliance on a handful of companies for a major portion of its revenue. Only 3 companies account for 72% of the company’s revenue, which is a high-concentration risk. The stock is down 15% during trading today.

Overall ALAB ranks 7th on our list of the stocks that are hurting from DeepSeek AI news that could turn into multibaggers. While we acknowledge the potential of ALAB as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as 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 was originally published at Insider Monkey.