We recently compiled a list of the 10 Hot New Stocks to Buy Now. In this article, we are going to take a look at where Astera Labs, Inc. (NASDAQ:ALAB) stands against the other hot new stocks.
According to a report published by EY on January 15, the IPO activity in the United States remained strong in 2024 and is expected to continue at an accelerated pace in 2025. The market made a significant recovery last year. This recovery was both in terms of the number of IPOs and the proceeds raised when compared to 2023. While the number of IPOs increased 38% year-over-year, the proceeds rose 48% during the same time. The report further highlighted that around 20 deals raised more than $500 million, whereas, seven deals stood out by topping $1 billion. During the fourth quarter of 2024 alone, the proceeds almost doubled year-over-year, driven by a single deal that raised $1.7 billion, around 30% of the overall proceeds from Q4 2023.
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During the last year, 176 IPO deals led the total proceeds for the year to $33 billion. The healthcare technology and media and telecommunication sectors were the key leaders for the US IPO activity as these sectors accounted for around 61% and 49% of the overall proceeds. Moreover, companies with advancements in artificial intelligence technology were found to be significant attention gainers among investors. Looking ahead, the report predicts continued growth for the IPO market, with substantial success for companies with proven AI-driven results. In addition, cross-border IPOs also came under the spotlight as they accounted for around 64% of the deals conducted in Q4 2024, with two non-US companies making it to the top 10 largest deals of 2024.
Our Methodology
To curate the list of 10 hot new stocks to buy now we conducted our initial research using the Finviz stock screener. We searched for companies that went public in the last 2 years and then sorted the list by their past 6 months performance. Next, we cross-checked the past 6 months’ performance from Google and the analyst upside potential for each stock sourced from CNN. Lastly, we ranked the stocks based on the number of hedge fund holders as per Insider Monkey’s Q4 2024 database. Please note that the data was collected on February 18, 2025.
Why do we care about what hedge funds do? 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).
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Astera Labs, Inc. (NASDAQ:ALAB)
6-Months Performance: 120.22%
Analyst Upside Potential: 38.14%
Number of Hedge Fund Holders: 51
Astera Labs, Inc. (NASDAQ:ALAB) specializes in creating connectivity solutions that are essential for cloud computing and artificial intelligence (AI) systems. Their key offerings include an Intelligent Connectivity Platform that includes both hardware (like chips and modules) and software (COSMOS) designed to enhance connectivity in AI and cloud environments.
On February 11, Quinn Bolton, an analyst at Needham, maintained a Buy rating on the stock with a price target of $140. The analyst sees growth potential and expects a strong performance from the company. During the fiscal fourth quarter of 2024, Astera Labs, Inc. (NASDAQ:ALAB) achieved a record quarterly revenue of $141 million, indicating a 25% increase from the previous quarter and a 179% increase year-over-year. Management attributed the growth to be primarily driven by the Aries PCIe Retimer and Taurus Ethernet Smart Cable Module product families. There was also strong demand for both AI scale-up and scale-out connectivity solutions. Looking ahead, Astera Labs, Inc. (NASDAQ:ALAB) expects 2025 to be a breakout year, with revenue driven by all four of its product families. It is one of the hot new stocks to buy now.
Alger Small Cap Growth Fund stated the following regarding Astera Labs, Inc. (NASDAQ:ALAB) in its Q4 2024 investor letter:
“Astera Labs, Inc. (NASDAQ:ALAB) is a semiconductor company specializing in connectivity solutions for data-centric systems, including cloud computing, artificial intelligence, and machine learning. Its products optimize data flow and performance in servers, GPUs, and AI accelerators, addressing bottlenecks in high-performance computing environments. The company’s Intelligent Connectivity Platform (ICP) integrates advanced semiconductor hardware with the proprietary COSMOS software suite, delivering customizable and cost-effective solutions. Astera’s Platform-Specific Standard Products (PSSP) enhance flexibility with features such as predictive analytics, monitoring, and troubleshooting. Backed by strong relationships with leading cloud and AI providers, we believe Astera is well positioned in rapidly growing markets, demonstrating high profitability and industry-leading gross margins. During the quarter, shares contributed to performance after reporting better-than-expected fiscal third-quarter results, with revenues and gross margins exceeding analyst estimates. Specifically, revenue growth spanned all four product segments, led by accelerated custom silicon sales and robust GPU demand. Management also raised fiscal fourth-quarter guidance, citing expanding product ramps and a broader customer base.”
Overall ALAB ranks 3rd on our list of the hot new stocks to buy now. While we acknowledge the potential of ALAB as an investment, our conviction lies in the belief that 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.