Here’s Artisan Small Cap Fund’s Update on Astera Labs (ALAB)

Artisan Partners, an investment management company, released its “Artisan Small Cap Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Global equities continue to rally in the third quarter, the period with double-digit YTD gains. Major US indices like Russell 1000®, Russell Midcap®, and Russell 2000® reached record highs in the period. In the quarter, the fund’s Investor Class fund ARTSX returned 8.69%, Advisor Class fund APDSX posted a return of 8.75%, and Institutional Class fund APHSX returned 8.73%, compared to a return of 12.19% for the Russell 2000 Growth Index. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2025.

In its third-quarter 2025 investor letter, Artisan Small Cap Fund highlighted stocks such as Astera Labs, Inc. (NASDAQ:ALAB). Astera Labs, Inc. (NASDAQ:ALAB) engages in the manufacturing of semiconductor-based connectivity solutions for cloud and AI infrastructure. The one-month return of Astera Labs, Inc. (NASDAQ:ALAB) was -10.23%, and its shares have appreciated by 48.55% over the past 52 weeks. On November 17, 2025, Astera Labs, Inc. (NASDAQ:ALAB) stock closed at $141.39 per share, with a market capitalization of $23.881 billion.

Artisan Small Cap Fund stated the following regarding Astera Labs, Inc. (NASDAQ:ALAB) in its third quarter 2025 investor letter:

“We ended our investment campaigns in Inspire Medical Systems, Astera Labs, Inc. (NASDAQ:ALAB) and Clearwater Analytics during the quarter. Astera Labs is a fabless provider of connectivity chips designed to address data, network and memory bandwidth bottlenecks in data centers. The company reported strong quarterly results and issued robust guidance, driven by rising demand for its AI-optimized products and sustained strength in data center spending. These results helped ease investor concerns about potential market share losses and order delays from a major customer. We remain confident in our investment thesis and believe Astera will continue to benefit from the expansion of data centers—driven by both cloud migration and increasing AI-related compute intensity. However, we exited our position during the quarter as its market capitalization exceeded the limits of our small-cap mandate. It’s rare for us to initiate a GardenSM position and sell a CropSM holding in less than six months, but that’s what happened in this case.”

Astera Labs, Inc. (NASDAQ:ALAB) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 56 hedge fund portfolios held Astera Labs, Inc. (NASDAQ:ALAB) at the end of the second quarter, up from 45 in the previous quarter. In Q3 2025, Astera Labs, Inc. (NASDAQ:ALAB) reported revenue of $230.6 million was up 20% from the prior quarter and up 104% versus Q3 2024. While we acknowledge the risk and potential of Astera Labs, Inc. (NASDAQ:ALAB) as an investment, our conviction lies in the belief that some 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 Astera Labs, Inc. (NASDAQ:ALAB) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Astera Labs, Inc. (NASDAQ:ALAB) and shared Alger Mid Cap Growth Fund’s views on the company. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None. This article is originally published at Insider Monkey.