Astera Labs, Inc. has set terms for its initial public offering, following a surge of record-breaking interest in semiconductors in Silicon Valley.
The Santa Clara-based chip developer is taking advantage of the increased interest in artificial intelligence-related stocks are having and now plans to raise upwards of $534 million through an initial public offering, according to a regulatory filing.
The startup plans to sell 17.8 million shares for between $27 and $30 a piece, according to a regularity filing with the Securities and Exchange Commission. Astera is also setting aside 2.67 million shares for its underwriters — Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, Barclays Capital Inc., Deutsche Bank Securities Inc., Evercore Group L.L.C., Jefferies LLC, Needham & Company LLC, Stifel, Nicolaus & Company Inc., Craig-Hallum Capital Group LLC, Roth Capital Partners LLC, Loop Capital Markets LLC, Siebert Williams Shank & Co. LLC.
At the middle of its range, the offering would give Astera a $5 billion fully diluted market value, assuming the underwriters don't exercise their option on its shares. The company plans to list its stock on the Nasdaq under the ticker ALAB. On the low end, the company would hit a valuation of $4.51 billion.
Astera specializes in designing chips and boards tailored for AI and machine learning workloads, playing a crucial role in AI infrastructure. Their products are engineered to facilitate lightning-fast data transfer with minimal degradation, enhancing overall system performance.
Key offerings from Astera include the COSMOS intelligent connectivity platform, the Aries PCle/CXL Smart Cable Modules, and the Taurus Ethernet Smart Cable Modules. These solutions significantly expand the range of data transmission without compromising quality. Additionally, the Leo CXL Memory Connectivity Platform streamlines provisioning processes, elevating availability, bandwidth, and performance for various applications.
Despite its own designs, Astera does not manufacture its products. Instead, the company relies on specialized manufacturers like Taiwan Semiconductor Manufacturing Co.
The company — headed by Jitendra Mohan — warned potential investors of the risk of investing in the “growth stage company” due to lack of sustainable growth.
“You should not rely on our operating results for any prior quarterly or annual periods as an indication of our future operating performance,” read the offering. “If we are unable to maintain adequate revenue growth, our financial results could suffer, and our stock price could decline.”
The company displayed what it categorizes as “significant growth in a short period of time.” By the end of financial year 2022 the company reported $79.9 million in revenue, which then grew to $115.8 million in the same time frame in 2023. However, the company also said it incurred $84.6 million in net losses, collectively, across FY22 and FY 23.
Additionally, the company had a deficit of $99.1 million and $125.4 million for 2022 and 2023, respectively.
“We expect our costs will increase over time and our losses may continue if such increases in costs are not more than fully offset by increases in our revenue,” the company said. “We expect to continue to invest significant additional funds in expanding our business and research and development activities as we continue to develop new products. We also expect to incur additional general and administrative expenses as a result of our growth and expect our costs to increase to support our operations as a public company. Historically, our costs have increased over the years due to these factors, and we expect to continue to incur increasing costs to support our anticipated future growth.”
To date, the company has raised $235 million in funding at a $3.15 billion valuation, according to PitchBook Data. The company’s push into the AI sector was emphasized in a 2022 funding round that garnered the company $150 million. Its largest investors to date are Sutter Hill Ventures, which holds a 13.7% pre-IPO stake; affiliates with Fidelity, which holds a pre-IPO state of 7%; and Atreides Management.
