ALAB Earnings Preview: Riding Amazon’s Hundred-Billion-Dollar Spending Wave, Awaits Scorpio Performance Surge

Author | Eric

ALAB (Astera Labs) is a leading enterprise in the global AI connectivity chip sector, focusing on solving high-speed interconnect bottlenecks in cloud data centers. Its core products include Aries PCIe/CXL Retimer and Scorpio Smart Fabric Switch.

The global connectivity chip giant $Astera Labs (ALAB.US)$ is set to announce its Q4 earnings after the market closes on February 10 Eastern Time. The market will focus on Astera Labs' progress in ramping up its Aries PCIe Retimer and Scorpio Switch product lines amid Amazon’s increased capital expenditure.

Consensus estimates for key financial data in Q4:

- Revenue consensus estimate250 million US dollars, growing by77%, an 8% increase from the previous quarter, with the company's guidance upper limit at 253 million US dollars.

- The market consensus for Non-GAAP gross margin is75.1%, up 1.1 percentage points year-over-year and 0.1 percentage points quarter-over-quarter, with company guidance at 75%.

- GAAP net profit market consensus isUSD 51.24 million, growing by107%, down 44% quarter-over-quarter, with the upper limit of company guidance at USD 36.6 million. Non-GAAP net profit market consensus isUSD 94.8 million, growing by43%, up 8% quarter-over-quarter, with the upper limit of company guidance at USD 93.33 million.

Three key highlights of this earnings report:

1. Positive impact from Amazon's ultra-high Capex expectations and large-scale deployment of Trainium

$Amazon (AMZN.US)$ In Q4 earnings, AWS grew year-over-year24%，recording the fastest growth rate in nearly 13 quarters. The management willrevise the capital expenditure forecast for 2026 to an unprecedented $200 billion, while also mentioning that nearly4GWof computing power has been added in 2025, with plans to roughly double the overall capacity of AWS by 2027. Amazon's cumulative deployment of 1.4 million Trainium2 chips has already been reserved by customers. Project Rainier data center owns 500,000 Trainium2 chips used for training the Claude model. Demand for Trainium3 is also strong, with almost all Trainium3 production capacity expected to be reserved by customers by mid-2026, and Trainium4 is scheduled for delivery in 2027.

For $Astera Labs (ALAB.US)$ For both GPU clusters and Trainium clusters, any increase in the number of racks typically drives up the total number of PCIe/CXL links per rack, thereby creating incremental demand for Retimer/Switch chips.

2. What are the mass production progress and revenue inflection points for the Scorpio product line?

As the future core product line of ALAB, management mentioned last quarter that Scorpio P series was in volume ramp-up with key customers, while Scorpio X series was shipping on a trial production basis,and is expected to achieve full volume ramp-up throughout 2026,with the overall dollar value opportunity corresponding to each AI accelerator set to significantly increase.

ALAB management expects the future connected market potential TAM to betens of billions of US dollars, and is collaborating with more than 10 AI platform providers. These existing design wins and partnerships will continue to ramp up through 2029.The revenue inflection point is expected to occur at some point in 2026, when Scorpio's revenue surpasses Aries and other product lines.The market is focused on whether management will update guidance on the timing of the revenue inflection point in this earnings report.

3. How will significant changes in product mix impact gross margin?

Although ALAB's revenue has maintained rapid growth in recent years, the gross margin has been consistently suppressed at around75%. Management previously indicated that as low-margin products like Taurus gain volume, the long-term gross margin would decline to approximately70%. Andwhether the scaling up of Scorpio in 2026 will have a positive or negative impact on gross marginsstill requires management to provide direction.

Options Update:

As ALAB is about to announce its earnings report, the options market is signaling strong expectations of volatility. The current implied volatility has surged to 104.99%, sitting at the 90th percentile, significantly higher than the historical volatility of 92.54%. The total open interest in options reached 201,200 contracts, with a put/call ratio of0.85, indicating that traders are moderately bullish overall.

Looking at the flow of funds in weekly options expiring on February 13th, active buying of call options is concentrated around the strike price ofUSD 200, while open interest shows notable accumulation near the strike price ofUSD 145. This indicates that market participants are positioning this level as a key support ahead of the critical catalyst event - the earnings report.

Summary

In summary, $Astera Labs (ALAB.US)$ In the long term, the company will continue to benefit from hyperscalers' substantial capital expenditures, while in the short term, the market is more focused on the arrival of an inflection point in revenue for the Scorpio product line. At that time, the company's core business will undergo restructuring. Reviewing the closing performance on the last seven quarterly earnings days, there were three instances of gains.

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