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Astera Labs shares jump over 70% in stellar Nasdaq debut

By Arasu Kannagi Basil and Echo Wang

(Reuters) -Shares of Astera Labs jumped as much as 76% in their Nasdaq debut on Wednesday, giving the chip firm a market capitalization of $9.68 billion, as it tapped into the investor enthusiasm for artificial intelligence.

The stock traded as high as $63.50, after opening at $52.56 each, versus its initial public offering (IPO) price of $36 apiece. The stock was last up 69% at $60.88.

Chip companies are seen as the main beneficiaries of the AI boom as businesses race to adopt the technology, bolstering the demand for advanced semiconductors used in data centers.

Astera is the first big technology firm to list this year amid a stuttering rebound in the U.S. IPO market. Its strong debut shows Wall Street's demand for AI-linked companies remains strong, even following a 12.9% jump in the Philadelphia Semiconductor index so far this year.

The company, the name of which is inspired by astronomy and means "star-like", sells high-speed data transfer technology for artificial intelligence computing and other cutting-edge data center applications. It competes with chip companies such as Broadcom, Marvell Technology and Parade Technologies.

"We are just in the early innings of AI," said Astera CEO Jitendra Mohan. "We like to think at least that the bottleneck for AI is now shifted from compute to connectivity."

"Hot areas like AI can make for some very volatile IPOs. So in order for Astera to maintain a premium valuation post-IPO, it will need to hit its growth targets and improve profitability," said Matthew Kennedy, senior strategist at Renaissance Capital.

Social media platform Reddit's long-awaited market debut is slated for Thursday, while cybersecurity software startup Rubrik is planning to list as early as April, Reuters reported last month.

Astera, along with some of its existing investors, raised $712.8 million by selling 19.8 million shares priced at $36 each, above the marketed range in its upsized U.S. IPO.

(Reporting by Arasu Kannagi Basil and Mehnaz Yasmin in Bengaluru and Echo Wang in New York; Editing by Shilpi Majumdar and Ravi Prakash Kumar)