Morgan Stanley upgraded Astera Labs' price target to $335 from $240, citing long-term potential in AI infrastructure despite near-term risks, and expects the company's revenue to grow 17.4% sequentially in Q2 and 12% in Q3 driven by the Trainium 3 Scorpio switch ramp.
The bank simultaneously lowered GlobalFoundries' target to $57 from $65 because Qualcomm—which supplied 15% of GFS's revenue last year—recently guided below consensus and expects a lower share of iPhone 18 orders.
What happened
Morgan Stanley raised its price target on Astera Labs (ALAB) to $335 from $240, and lowered GlobalFoundries (GFS) to $57 from $65. The bank said both companies remain well positioned for AI infrastructure growth despite near-term execution risks. Astera Labs is expected to report earnings Tuesday after market close.
Why it matters
Astera Labs' revenue is projected to grow 17.4% sequentially in Q2 and 12% in Q3, with the H2 ramp of the Trainium 3 Scorpio switch expected to drive another quarter of revenue upside and higher guidance. For GlobalFoundries, Qualcomm's recent guidance below consensus—including expectations for a lower share of iPhone 18—creates near-term risk since Qualcomm accounted for 15% of GFS's revenue last year.
What to watch
Key focus areas this quarter for Astera Labs are new design wins, customer diversification beyond Amazon, and gross margins, which could face short-term pressure from higher product investments and non-cash customer warrant expenses. Morgan Stanley will be looking for updates on customer demand in AI and manufacturing reshoring.
Morgan Stanley issued a note Monday assessing the long-term AI infrastructure positioning of Astera Labs and GlobalFoundries, with notably divergent conclusions on near-term risk and reward. The bank raised Astera Labs' price target to $335 from $240, citing the company's well-positioned status despite execution risks. The driver is the anticipated H2 ramp of the Trainium 3 Scorpio switch, which the bank expects will generate another quarter of revenue upside and higher guidance. Morgan Stanley projects Astera Labs' revenue to grow 17.4% sequentially in Q2 and 12% in Q3, with room for modest upside as Scorpio-X shipments accelerate.
This quarter, the bank is focused on three areas for Astera Labs: new design wins, customer diversification beyond Amazon, and gross margins. Gross margins could face short-term pressure from higher product investments and non-cash customer warrant expenses—a headwind that may limit upside even as revenue expands. Astera Labs is set to report earnings after the market closes on Tuesday, making the earnings call a key test of these forward expectations.
GlobalFoundries faces a different near-term dynamic. Qualcomm's recent results prompted a more cautious outlook: Qualcomm guided below consensus and expects a lower share of the iPhone 18, which would reduce GlobalFoundries' RF (radio frequency) content in Apple devices. Since Qualcomm accounted for 15% of GFS's revenue last year, this creates concrete near-term risk for the company's smartphone segment. As a result, Morgan Stanley lowered GlobalFoundries' price target to $57 from $65. The bank nonetheless said AI and manufacturing reshoring remain important focus areas and will be looking for updates on customer demand in both areas later this week, suggesting that longer-term positioning remains intact despite the near-term smartphone headwind.
AI-summarized, only the topics you pick — one digest a day via Email, Slack, or Discord.
Free · takes 30 seconds · unsubscribe anytime
Ask AI anything about this article. Q&As are published on this page for other readers too.
The AI news that matters, in one minute each morning.
Sign up free