Astera Labs or Broadcom: Which Stock Leads in AI Infrastructure Now?
So, which connectivity chip stock is the better buy right now? Let's find out.
Why Astera Labs is a Compelling Buy Right Now
First-to-Market Advantage in PCIe 6 and Strategic Product Ramp in 2025: Astera Labs has established a first-mover edge in PCIe 6.0 connectivity, with Aries 6 retimers and smart gearboxes already shipping and Scorpio switches likely in volume production as projected earlier. Leo CXL controllers are also in pre-production sampling with hyperscalers. These products are qualified for next-generation GPU-based AI racks and management expects volume ramps in the second half of 2025, signaling a key inflection point in silicon content per rack.
Rack-Scale Strategy and UALink Create Long-Term Growth Tailwinds: Astera Labs is expanding its TAM through a rack-scale connectivity strategy that combines high-value hardware with differentiated software. Its Scorpio X- and P-series switches and COSMOS suite enable deeper system integration, telemetry, and fleet-level optimization, driving higher ASPs and software-based lock-in. UALink 1.0, an open, high-speed interconnect, marks a structural shift. Astera plans to sample UALink-compatible products in 2026, targeting a multibillion-dollar opportunity by 2029 that aligns with its portfolio and leadership in AI infrastructure.
Strong Operating Leverage Despite R&D Investment Surge: With Astera aggressively ramping up investment, the first-quarter adjusted R&D spending rose 14.2% year over year. The company delivered an adjusted operating margin of 33.7%, demonstrating tight cost control and clear operating leverage on higher product volumes. Furthermore, gross margin was 74.9%, reflecting stable ASPs and favorable mix, even amid preproduction shipments. With $925 million in cash and positive operating cash flow, Astera is also capitalized to pursue sustained innovation without near-term dilution risk.
Broadcom's Key Progress in the Semiconductor Space
AI Networking Momentum With Ethernet-Based Portfolio: AI networking revenues grew more than 170% year over year and now account for 40% of Broadcom's AI-related revenues. The company's Ethernet-first approach, leveraging Tomahawk switches, Jericho routers and NICs, has made it the preferred vendor for scale-out and scale-up AI clusters among hyperscalers. The newly launched Tomahawk 6, boasting 102.4 Tbps switching capacity, allows hyperscalers to flatten AI networks into just two tiers, reducing latency, power and cost.
XPU Custom Silicon Gaining Critical Mass: Broadcom is scaling up its custom AI accelerators (XPUs) for at least three major hyperscaler customers, each expected to deploy around 1 million clusters by 2027. With rising demand for inference, some deployments may begin as early as late 2026. This growing XPU business strengthens customer relationships and adds a high-margin revenue stream.
High-Margin Software Growth and Strong Capital Returns: Broadcom's infrastructure software revenues grew 25% year over year in the second quarter of fiscal 2025, fueled by strong adoption of its voltage-controlled filter (VCF) platform post-VMware acquisition, now used by 87% of its top 10,000 customers. This high-margin, recurring software business complements its chip segment and supports private cloud and AI workloads. Broadcom also delivered $10 billion in EBITDA (67% margin), $6.4 billion in free cash flow and returned $7 billion to shareholders, highlighting its capital-efficient model and strong value creation.
ALAB, AVGO Outperform Sector and Benchmark in Three Months
Over the past three months, Astera Labs and Broadcom shares have rallied 61.2%% and 60.1% respectively, significantly outpacing the broader sector 's 18.6% gain and the S&P 500's 9.5% rise.
Average Target Price for ALAB and AVGO Suggest Upsides
Based on short-term price targets offered by 14 analysts, ALAB's average price target represents an increase of 10.4% from the last closing price of $89.63.
Based on short-term price targets offered by 30 analysts, AVGO's average price target represents an improvement of 10.8% from the last closing price of $264.65.
Buy ALAB Now
While both Astera Labs and Broadcom are well-positioned to ride the AI infrastructure wave, ALAB presents a more focused trajectory. With a first-mover lead in PCIe 6.0 and CXL connectivity, likely volume ramp-ups in the second quarter of 2025, and early bets on UALink, Astera is set for an inflection in revenues and margin expansion.
In contrast, Broadcom's non-AI chip segments remain a headwind, with its fiscal second-quarter non-AI semiconductor revenues down 5% year over year and expected to stay flat. Given ALAB's Zacks Rank #2 (Buy) versus AVGO's Zacks Rank #3 (Hold), Astera Lab currently stands out as a relatively stronger player for investors seeking targeted exposure to next-gen AI connectivity. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren't winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.
See Our Top Stock to Double (Plus 4 Runners Up) >>
Broadcom Inc. (AVGO): Free Stock Analysis Report
Astera Labs, Inc. (ALAB): Free Stock Analysis Report
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' We believe that securing these properties will not only solidify our leading position in the most important new gold district in the U.S., but will also improve our ability to develop the region under an integrated plan – with more flexibility, greater access, better infrastructure sharing, and cohesive engagement with all stakeholders '. The Transaction The Transaction is expected to close in the fourth quarter of 2025, subject to the satisfaction of customary closing conditions, including the approval of the holders of a majority of outstanding shares of Augusta Gold common stock, as well as the approval by a majority of the votes cast by holders of outstanding shares of Augusta Gold common stock excluding certain related parties, at a stockholder meeting expected to be held in the fourth quarter of 2025. 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All directors and certain executive officers of Augusta Gold, as well as Augusta Investments Inc., holding shares of Augusta Gold common stock representing in the aggregate approximately 31.5% of Augusta Gold's issued and outstanding shares of common stock, have entered into voting support agreements with AngloGold Ashanti, pursuant to which they have agreed, among other things, to vote their shares of Augusta Gold common stock in favour of adopting the Merger Agreement and the Transaction. About AngloGold Ashanti AngloGold Ashanti, with its head office in Denver, Colorado, is an independent, global gold mining company with a diverse, high-quality portfolio of operations, projects and exploration activities across ten countries on four continents. Advisers and Counsel AngloGold Ashanti has engaged RBC Capital Markets as its financial adviser, Womble Bond Dickinson (US) LLP and Cravath, Swaine & Moore LLP as its U.S. legal counsel and Stikeman Elliott LLP as its Canadian legal counsel in connection with the Transaction. Additional information and where to find it This communication may be deemed to be solicitation material in respect of the proposed acquisition of Augusta Gold by AngloGold Ashanti. In connection with the proposed transaction, Augusta Gold intends to file relevant materials with the U.S. Securities and Exchange Commission (the ' SEC '), including Augusta Gold's proxy statement in preliminary and definitive form. INVESTORS AND STOCKHOLDERS OF AUGUSTA GOLD ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING AUGUSTA GOLD'S PROXY STATEMENT (WHEN THEY ARE AVAILABLE), BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. 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