We recently published a list of the 11 Best Young Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Astera Labs, Inc. (NASDAQ:ALAB) stands against other best young stocks.
NASDAQ CEO and chair Adena Friedman appeared on CNBC’s ‘Squawk Box’ on April 24 to discuss what to make of the market volatility, as well as the IPO landscape. Friedman reported that NASDAQ achieved 12.5% overall revenue growth in the quarter, with every division posting double-digit increases. Specifically, the index business grew by 26%, which was supported by $27 billion of inflows during the quarter. Half of these inflows were directed into NASDAQ 100 index products, while the other half went into various other indexes offered by NASDAQ. Friedman also acknowledged that the economy entered the year with resilience but faced increasing uncertainty and volatility as the quarter progressed. However, she explained that such environments often drive clients to turn to NASDAQ as the market operator of choice to manage their trading volumes and capital flows. She noted that even amid market value fluctuations, NASDAQ saw inflows into its index products and strong demand for its fintech services.
The discussion also indicated that while short-term market volatility can boost trading activity and liquidity, longer-term IPO prospects depend on broader economic conditions. Friedman said that IPO activity and investor behavior could change more significantly if the economy were to enter an extended recession. But for now, NASDAQ benefits from a strong start to the year and remains a preferred venue for investors to express their views. The conversation then turned to global capital flows, particularly as Chinese sovereign wealth funds may reduce investments in US venture capital and private equity firms. Friedman stated that the capital flows where returns are the strongest. She emphasized that asset owners and managers have ‘fiduciary’ responsibilities to their ultimate beneficiaries and will prioritize returns over the long term. Acknowledging the influence of geopolitical and political factors on investment decisions, Friedman stressed that NASDAQ’s role is to provide the infrastructure that allows capital to flow efficiently regardless of shifts.
Our Methodology
We first used the Finviz stock screener to compile a list of young stocks that went public in the last 3 years. We then selected the 11 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A technician soldering a semiconductor chip, emphasizing the power of the company’s products.
Astera Labs, Inc. (NASDAQ:ALAB)
Number of Hedge Fund Holders: 51
Astera Labs, Inc. (NASDAQ:ALAB) designs, manufactures, and sells semiconductor-based connectivity solutions for cloud and AI infrastructure. It offers an intelligent connectivity platform that comprises semiconductor-based and mixed-signal connectivity products. The company serves hyperscalers and system original equipment manufacturers.
Morgan Stanley analyst Joseph Moore upgraded Astera to Overweight from Equal Weight with an unchanged price target of $99 on May 12. Astera is capitalizing on the demand for scale-up connectivity solutions within the expanding AI and cloud infrastructure market. This is evident by the increasing size of accelerator clusters, the necessity for higher-speed interconnects, and the growing complexity of overall system architectures.
In Q1 2025, Astera Labs, Inc. (NASDAQ:ALAB) made $159.4 million in revenue, which was up 144% year-over-year. The company has announced the upcoming introduction of the Scorpio X-Series solutions, which optimize the utilization of AI accelerators. Astera anticipates that the adoption of the Scorpio X-Series will increase its silicon content per accelerator, potentially reaching ‘hundreds of dollars’. Pre-production shipments of the Scorpio X-Series are slated to commence in late Q2 2025.
Overall, ALAB ranks 9th on our list of the best young stocks to buy according to hedge funds. While we acknowledge the growth potential of ALAB, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. 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 this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
