ALAB vs. AVGO: Which AI-Connectivity Stock Is the Better Buy Now?

Astera Lab ALAB and Broadcom AVGO are major players in the semiconductor connectivity landscape, particularly in PCIe/CXL retimers and AI infrastructure. While Astera Labs focuses on PCIe 6, CXL, and Ethernet products, Broadcom has established itself as a long-standing leader in PCIe switches and infrastructure software.Per the Mordor Intelligence report, the AI infrastructure market was worth $87.6 billion in 2025 and is expected to grow to $197.64 billion by 2030, registering a 17.71% CAGR during this period. Both ALAB and AVGO are expected to benefit from the rapid growth pace.So, ALAB or AVGO — Which of these AI-Connectivity stocks has the greater upside potential? Let’s find out.The Case for ALABALAB is benefiting from the strong momentum across its three key product families, Aries, Taurus, and Leo, which is driving its top-line growth. In the second quarter of 2025, the company achieved revenues of $191.9 million, representing a 20% sequential increase and a 150% year-over-year increase.ALAB’s increasing demand for AI platforms, particularly those leveraging high-performance GPUs and AI accelerators, drove strong design wins and sales for products like Aries Retimers, Taurus Smart Cable Modules, and Scorpio Fabric Switches.Expanding portfolio has been noteworthy. In May 2025, Astera Labs announced that its PCIe 6 connectivity portfolio is ramping production to fast-track the deployment of modern AI platforms at scale. The offerings include new Aries 6 PCIe Smart Gearbox, Scorpio P-Series Smart Fabric Switches, Aries 6 PCIe/CXL Smart DSP Retimers, Aries 6 PCIe/CXL Smart Cable Modules (Aries 6 SCMs), and PCIe 6 over Optics Technology.The Case for AVGOBroadcom is making strong efforts in the connectivity space through its strong efforts in the PCIe retimers market. The company’s launch of PCIe Gen 6 portfolio, featuring high-port switches and retimers tested for interoperability with partners like Micron and Teledyne LeCroy, is a noteworthy development. AVGO also expanded its portfolio of optical interconnect solutions to enable AI infrastructure. The expansion includes advancements in co-packaged optics, 200G/lane DSP and SerDes, 400G optics and PCIe Gen6 over optics.The company is experiencing strong momentum fueled by growth in AI semiconductors and continued success with its VMware integration. In the third quarter of fiscal 2025, AI semiconductor revenues reached $5.2 billion, up 63% year over year, marking 10 consecutive quarters of robust growth.Price Performance and Valuation of ALAB and AVGOIn the year-to-date period, ALAB and AVGO’s shares have gained 61.5% and 49.6%, respectively. The outperformance in ALAB stock can be attributed to its robust and diversified portfolio.Despite AVGO’s strong portfolio and expanding partner base, the company is suffering from challenging macroeconomic uncertainties and stiff competition.ALAB and AVGO Stock PerformanceImage Source: Zacks Investment ResearchValuation-wise, ALAB and Broadcom shares are currently overvalued as suggested by a Value Score of F.In terms of forward 12-month Price/Book, ALAB shares are trading at 34.35X, higher than Broadcom’s 21.34X.ALAB and AVGO ValuationImage Source: Zacks Investment ResearchHow Do Earnings Estimates Compare for ALAB & AVGO?The Zacks Consensus Estimate for ALAB’s 2025 earnings is currently pegged at $1.58 per share, which has remained unchanged over the past 30 days, indicating an 88.10% year-over-year rise.Astera Labs, Inc. Price and Consensus Astera Labs, Inc. price-consensus-chart | Astera Labs, Inc. QuoteThe Zacks Consensus Estimate for Broadcom’s 2025 earnings is currently pegged at $6.61 per share, which has remained unchanged over the past 30 days, indicating a 35.73% year-over-year rise.Broadcom Inc. Price and Consensus Broadcom Inc. price-consensus-chart | Broadcom Inc. QuoteAstera Lab’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, delivering an average surprise of 32.20%. Broadcom earnings beat the Zacks Consensus Estimate in all the trailing four quarters, delivering an average surprise of 2.82%. The average surprise of Astera Lab is higher than that of Broadcom.ConclusionWhile both ALAB and AVGO are well-positioned to capitalize on the booming AI infrastructure market, ALAB offers higher growth potential and stronger earnings surprises. Despite AVGO’s expanding portfolio, it operates in a highly competitive market. The company faces significant competition in most of its operating markets, which negatively impacts top-line growth. Pricing pressure also keeps margins under pressure. Gross margin in the fiscal fourth quarter is expected to contract sequentially. The slow recovery in non-AI semiconductor demand is also hurting AVGO.Currently, Astera Lab sports a Zacks Rank #1 (Strong Buy), making the stock a stronger pick than Broadcom, which has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Broadcom Inc. (AVGO): Free Stock Analysis Report Astera Labs, Inc. (ALAB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks