Q1 Guidance

Astera’s call has started, and shares are now down 8%.

We expect Wall Street to focus deeply on the company’s margin guidance. How Astera’s management answers these questions will determine where the stock opens tomorrow.

That’s up from 3.9 million last quarter.

One metric that jumps out from Cloudflare’s earnings is RPO growth. The company noted that last quarter had RPO growth of 48%.

That metric speaks to continuing revenue acceleration in the future.

Here’s what CEO Matt Prince had to say:

“We had an exceptionally strong end to 2025. In Q4, we closed our largest annual contract value deal ever—averaging $42.5 million per year—and total new ACV grew nearly 50 percent year-over-year, our fastest growth rate since 2021.”

“The shift toward AI and agents represents a fundamental re-platforming of the Internet that’s driving demand across Cloudflare’s services. If agents are the new users of the web, Cloudflare is the platform they run on and the network they pass through. This creates a virtuous flywheel: more agents drive more code to Cloudflare Workers, which fuels demand for our performance, security, and networking services. We were built for this moment and the rise of the Agentic Internet.”

Astera’s shares initially popped as investors focused on last quarter’s beat and strong forward revenue guidance, but later dropped.

As we noted earlier, operating margin pressures are likely to blame. Forward operating income of $101M slightly missed expectations despite very strong revenue guidance.

Strong Points in the Earnings Report

Massive Revenue Beat: Q4 revenue of $270.6M crushed estimates of $249.55M. The company demonstrated 103.9% year-over-year revenue growth, indicating significant market share capture.

Blowout Q1 Guidance: Q1 revenue guidance of $292M versus expectations of $260M signals accelerating momentum. This 12% sequential beat suggests strengthening product cycles.

Proven Beat History: Astera has beaten EPS estimates in all eight prior quarters, averaging 31.8% upside. The latest $0.58 EPS beat versus $0.51 estimates extends this streak.

Strategic Expansion: The new Israel R&D center hiring hundreds of employees positions the company for next-generation AI connectivity.

Concerns Raised by the Market Reaction

Margin Concerns: Shares dropped 5% after hours, suggesting operating leverage disappointment.

Extreme Valuation: At 153x trailing earnings, much growth is priced in. Zacks rates the stock Hold due to stretched valuation.

Insider Selling: Executives sold over $87M in shares over 90 days.

Sector Skepticism: Reddit sentiment turned bearish with a score of 38, questioning whether “data center networking hype is over.”

• Revenue of $270.6M beats estimates of $249.55M
• EPS of $.58 beats expectations of $.51

Shares leapt, then dropped about 3%.

While we wait for Astera Labs’ earnings (expected at about 4:05 p.m. ET), check out our AI Investor Podcast.

Each week we break down the biggest news in the AI investing space and highlight our best ideas in the space. So far, our average recommendation is up 86%. Best of all? Its free to subscribe and listen to each episode.

Astera Labs shares started the day slightly positive and climbed back to nearly even at midday, but have been sliding in the afternoon.

They’re currently down about 3% in late trading. Results have been choppy across AI infrastructure stocks today. Celestica is down 6.6%, Intel 6.6%, Fabrinet 6.4%, and Coherent 5.6%.

On the other end of the spectrum, Credo is up 8.5% after announcing outstanding earnings last night.