ALAB Earnings Preview: Riding the Amazon Capex Wave and the Scorpio Inflection Point

Global connectivity chip giant $Astera Labs, Inc.(ALAB)$   is set to release its Q4 financial results after the bell on February 10, Eastern Time. The market is laser-focused on the volume ramp-up of its Aries PCIe Retimer and Scorpio Switch product lines against the backdrop of Amazon increasing its capital expenditures.

Core Financial Indicators

– Revenue: The consensus estimate for Q4 revenue is $250 million, representing a 77% increase YoY and an 8% increase QoQ. The upper end of the company's guidance stands at $253 million.

– Gross Margin: The market consensus for Q4 Non-GAAP gross margin is 75.1%, up 1.1 percentage points YoY and 0.1 percentage points QoQ. The company's guidance is 75%.

– Net Income: The consensus for Q4 GAAP net income is $51.24 million, up 107% YoY but down 44% QoQ, compared to the company's guidance cap of $36.6 million. For Non-GAAP net income, the consensus is $94.80 million, up 43% YoY and 8% QoQ, against a guidance cap of $93.33 million.

Three Things to Watch

Tailwinds from Amazon's Massive Capex and Large-Scale Trainium Deployment

In $Amazon.com(AMZN)$   's Q4 earnings, AWS grew by 24%, marking its fastest growth rate in nearly 13 quarters. Management revised its 2026 capital expenditure expectation upward to an unprecedented $200 billion. They also noted adding nearly 4GW of compute capacity in 2025 and plan to roughly double total AWS capacity by 2027. The cumulative 1.4 million Trainium2 chips deployed have already been booked by customers. Furthermore, the Project Rainier data center houses 500,000 Trainium2 chips used for training Claude models. Demand for Trainium3 is also robust, with nearly all capacity expected to be booked by mid-2026, and Trainium4 delivery is slated for 2027.

For $Astera Labs (ALAB.US)$ , whether it is a GPU cluster or a Trainium cluster, an increase in rack count typically drives up the total number of PCIe/CXL links per rack. This consequently generates incremental demand for Retimer and Switch chips.

Scorpio Production Progress: When Will the Revenue Inflection Point Arrive?

Scorpio is ALAB's core product line for the future. Last quarter, management stated that the Scorpio P-Series was ramping up in volume with major customers, while the Scorpio X-Series was shipping in pre-production. Volume ramping is expected throughout 2026, which will significantly increase the total dollar content opportunity per AI accelerator.

ALAB management estimates the potential Total Addressable Market (TAM) for connectivity to be in the tens of billions of dollars. They are currently working with over 10 AI platform providers. These existing design wins and partnerships are expected to continue ramping through 2029. The revenue inflection point is anticipated sometime in 2026, at which point Scorpio revenue is expected to surpass that of Aries and other product lines. The market is watching closely to see if management updates the timeline for this inflection point in this report.

Impact of Structural Product Mix Changes on Gross Margin

Although ALAB has maintained high revenue growth in recent years, gross margin has been persistently capped at around 75%. Management previously indicated that as lower-margin products like Taurus scale up, the long-term gross margin could slide to around 70%. Management needs to provide direction on whether the 2026 volume ramp of Scorpio will have a positive or negative impact on margins.

Option Market Signals

Ahead of ALAB's earnings report, options markets are signaling elevated expectations for volatility, with implied volatility surging to 104.99% and ranking in the 90th percentile, significantly outpacing historical volatility at 92.54%. Total open interest stands at 201.19K contracts with a put/call ratio of 0.85, suggesting a moderately bullish tilt among traders.

The options flow for the February 13 weekly expiration reveals concentrated call buying activity at higher strike prices near the $200 level, while open interest clustering around the $145 strike indicates that level as a key support zone being watched by market participants positioning into the catalyst event.

Summary

Overall, $Astera Labs (ALAB.US)$ remains a long-term beneficiary of massive hyperscaler capex. In the short term, however, the market is more concerned with the arrival of the revenue inflection point for the Scorpio product line, as this will mark a restructuring of the company's core business. 

Looking back at the stock's closing performance on the last seven earnings days, it has risen three times.

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