Astera Labs Pitches A Rack With About $100,000 Of Its Content, Plans To Double Chip Content Per Generation
Management also reported third-quarter revenue of $584.9 million and guided the fourth quarter to $730 million to $750 million.
Astera Labs, which designs connectivity chips and software for AI and cloud data centers, said its new Orion rack-scale design carries about $100,000 of Astera content per rack, President Sanjay Gajendra told analysts on the company's Tuesday earnings call. The pitch moves the company from selling chips toward selling boards, software and royalties, alongside record third-quarter revenue of $584.9 million.
How the $100,000 is built
Answering a JPMorgan analyst, Gajendra said the first version, Orion 1.0, is built on PCI Express scale-up and carries "about $100,000 of SRA content" to be sold through components, boards and software.
Pressed by another analyst, he said the figure covers a single rack of 80 GPUs, even though the reference design supports up to 160. It includes fabric switches, signal conditioning products and Cosmos, the company's management software, which it is monetizing for the first time.
He named three revenue streams: baseboards, software, and royalties from OEM and ODM partners (the system makers and contract manufacturers that build and sell the racks). He expects the business to add to gross margin but called it "early days for this platform."
Gajendra said Astera is "yet to sort of get a full handle" on Orion revenue. He promised more concrete data on the next quarterly call and a fuller picture of the profit-and-loss impact in the first quarter. Initial shipments are expected in 2027 through ODM and OEM partners.
Doubling content on every generation
Chief Executive Jitendra Mohan told a Loop Capital analyst that content in highly loaded systems already exceeds $1,000 per accelerator. The company expects to "double the content on a per-XPU basis on each successive generation of XPU," he said, with next-generation switching alone adding $1,000 or more.
Gajendra framed Orion as part of a shift from component supplier to rack-scale platform provider. It is one of four new growth vectors, with optical connectivity, custom silicon and memory controllers. Optical revenue should start in late 2027, and custom volume ramps in 2028. Management estimates scale-up optical interconnect at a $40 billion market in 2030.
The quarter behind the pitch
Third-quarter revenue rose 49% from the prior quarter and 154% from a year earlier. Scorpio, the company's AI fabric family, became its largest product line and topped $1 billion in annualized revenue.
Chief Financial Officer Desmond Lynch reported an adjusted gross margin of 72.4% and adjusted earnings of $1.32 per share. Cash and securities stood at $1.38 billion. For the fourth quarter, the company guided revenue to $730 million to $750 million and adjusted earnings of $1.62 to $1.66 per share. Astera's market value was $39.8 billion after the call.
Management said Orion revenue detail will come on its next quarterly call, with profit-and-loss impact in the first quarter.
