Astera Labs ( ALAB ) reported a strong fourth quarter and issued encouraging guidance on Wednesday. Shares still fell more than 20% as the company confirmed it has issued new warrants for Amazon (AMZN).

The sell-off on February 11 saw ALAB break below its key moving averages (50-day, 100-day, 200-day), indicating that downward pressure could continue now that the bears are firmly in control.

Compared to its 52-week high, Astera Labs shares are down more than 40%.

Investors bailed out ALAB shares today mainly on dilution concerns after the semiconductor firm issued fresh orders for Amazon to buy about $466 million of its stock.

However, the disclosed deal also represents a significant revenue opportunity, as it is contingent on product purchases reaching $6.5 billion.

Meanwhile, Jitendra Mohan, CEO of Astera Labs, said that “artificial intelligence (AI) is still in its infancy,” in a subsequent interview with CNBC.

In fact, AI tailwinds helped management guide up to $297 million in revenue for the current quarter, miles ahead of the $259 million consensus, offering long-term investors to buy this dip in Astera Labs.

Astera Labs stock is also attractive because the company occupies an increasingly valuable position within the AI ​​infrastructure ecosystem.

It has become a critical bottleneck in bringing data center capacity online as hyperscalers competing intensely for AI infrastructure dominance must ensure reliable connectivity solutions.

With the Magnificent 7 expected to spend more than $650 million on AI infrastructure this year, it’s reasonable to assume that demand for “pick and shovel providers” like ALAB will remain strong in 2026.

While AI stock looks expensive at a price-to-sales (P/S) multiple of about 44x, the premium is justified given its remarkable 92% revenue growth in the fourth quarter and an adjusted gross margin of nearly 76%.

What’s also worth mentioning is that Wall Street analysts recommend buying ALAB stock in the post-earnings dip as well.

According to Barchart, Astera Labs’ consensus rating remains at “moderate buy,” with the average target of roughly $207 indicating a potential upside of 45% from here.

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As of the date of publication, Wajeeh Khan had no positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com