Astera Labs beats Arm as the 2027 pick, analyst says

The comparison comes as the AI boom pushes investors to look for the next high-growth hardware name. Astera Labs sells the connectivity hardware that links AI chips together, while Arm licenses chip designs and collects royalties on devices. The analyst's preference rests on trajectory rather than size: Astera is building a position, while Arm is defending one. Astera's rapid revenue growth and its push to embed software into customers' systems, which the analyst says makes its chips harder to swap out, are central to that view. The counterweight is concentration. One end customer accounted for over 70% of revenue, and the top three combined for roughly 86%, so a pause by any large buyer would sting. Arm, by contrast, draws steady royalties across phones, PCs, cars and data centers. Both companies carry heavy stock-based compensation, which inflates reported cash generation.