Astera Lab’s and Palantir’s earnings beats confirm AI trend is alive and well
Astera Lab’s and Palantir’s earnings beats confirm AI trend is alive and well
Both Astera Labs ALAB and Palantir PLTR beat the market this week announcing stellar earnings for their respective AI focused companies. This is indeed great news for the emerging trends in both companies, but also for the continuation of the general Ai trend as a whole. For those of you who thought that NVDA was getting long in the tooth and the share price couldn’t support the growth…
You are wrong.
Proof of that is the growth these two companies are experiencing, at the heart of the Ai trend. 
ALAB provides semiconductor- based solutions for cloud and artificial intelligence infrastructure. Its intelligent Connectivity Platform is built from the ground up for Ai and cloud infrastructure by providing a matrix of microcontrollers and sensors combined with its COSMOS software delivering critical connectivity performance. ALAB’s EPS has only just doubled each previous quarter 3 consecutive times after breaking into the green.
Their revenues only grow at a 20% CAGR rate. If there is a sweet spot for investing in growth, its a company with 20% growth in annual revenues while smashing through that breakeven point. I don’t know about you, but even though Astera Labs is trading 15% above its price target consensus, this is a stock whose earnings will grow into the valuation.
The stock was rewarded today with a 35% increase on the day. Those are penny stock type moves.
OMFG.
All I am going to say is the trend is your friend…. two or three years from now 20% year over year means revenues that could be double that of today… and nobody really knows where the EPS will end up in terms of revenues, but with only 263 employees you would think that the EPS is highly leveraged to their revenues. Generally, the less employees you have per dollar of revenue, means the better for delivering high margin results.
PLTR is another big mover on the day up almost 25%.
Everyone said it was priced to perfection at $40, but look at the stock now… $51.
And yes, unlike ALAB whose earnings growth each quarter is something not many will ever replicate, PLTR beat the market as well. 3% on the top line of $723M revenue for the quarter and a 10% beat on the bottom line, which is pretty good too. Nothing like ALAB’s beat but very strong nevertheless an certainly does not replicate the EPS growth ALAB is currently experiencing. PLTR is also a niche Ai player, being a designer of software for counter terrorism operations. While ALAB has 260 employees PLTR has 3600, so its easy to see why ALAB is more easily leveraging their EPS to their top line growth.
It’s hard to recommend either company trading well above their analyst price targets, but if I had to pick one…. I would favor Astera Labs over Palantir any day of the week. PLTR rally has gone 5x since February while the ALAB rally has only done 2x since its IPO. ALAB has way more room to run IMHO.
My top 5 Ai stocks?!?!?! Let’s not rock the boat here…
- Crowdstrike CRWD BUY
- Market Cap: $75.4B SP: $307.58 Target: $326.38
- Ai security software for pretty much all the computers in the world. That outage earlier in the world which affected a huge portion of the world’s computers should tell you just how integral CRWD is to everyone.
- Astera Labs ALAB STRONG BUY
- Market Cap: $15.02B SP : $95.91 Target:$81.50
- They got the goods for physical ai infrastructure and the revenue growth with the EPS leverage is second to none.
- Nvidia NVDA STRONG BUY
- Market Cap: $3.43T SP: $139.91 Target: $150.70
- They have the leading ai chips plus ai data center. Surprisingly its not the CPU’s that is driving NVDA earnings… its their data center growth!!! I know a lot of other data centers getting into the ai business.
- Micron MU STRONG BUY
- Market Cap: $116.96B SP: $105.49 Target: $146.07
- They got the memory chips, for when the cloud isn’t good enough. the only one matching NVDA’s growth numbers is yes, you guessed it… MICRON.
- Microsoft MSFT STRONG BUY
- Market Cap: $3.06T SP: $411.46 Target: $504.59
- They got chat GPT this head start on AGI should keep them head in this field for good unless some how Sasha Nutella completely fucks it up.
Christopher Skidmore
Beat the Market Stock Picks