Inquire about the drivers behind Aries' record revenue and design traction for retimers in next-generation AI servers.

Aries' record revenue is driven by continued expansion of Gen 5 for inference applications and strong adoption of Gen 6 retimers in new platforms and cabled applications. This trend is expected to continue with new Gen 6 platforms and GPUs. “Aries 6, which is for Gen 6 supporting the higher data rate, the 64 gigabit per second, obviously, that is -- comes in with higher attach rate and going into several new platforms.”

Discuss the UALink roadmap, potential transition from PCIe, and expected customer adoption breadth.

UALink is gaining traction due to higher throughput, low latency, and an open ecosystem, particularly for inferencing. Astera Labs is fully engaged in its development cycle, planning to intercept 2027 XPU releases with a full portfolio of UALink solutions, expecting increased dollar content per XPU. “As things move from the PCI Express generation to UALink, we do expect the dollar content per XPU to increase, and that's going to be a favorable trend for us.”

How the CXL opportunity plays out for switching content and the market progression.

CXL momentum is driven by memory market dynamics (alternative to high-cost memory), GPU/accelerator attach for inference performance, and general compute/HPC applications. Astera Labs is seeing multiple design wins, with high-volume production expected in 2027, and is investing heavily to solve memory wall problems. “Now we see actually 3 main use cases. One is largely driven around sort of the memory market dynamics, people wanting to find alternates to the availability or the high cost of memory today.”

ALAB

Astera Labs (ALAB) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 4, 2026

Source: earnings call transcript

Executive summary

Astera Labs Q2 FY26 — Record Revenue and Scorpio X-Series Volume Production

Astera Labs delivered exceptional Q2 FY26 results, driven by record revenue and significant progress in its AI fabric and signal conditioning portfolios. The company's Scorpio X-Series entered volume production ahead of schedule, positioning it to become the largest product line in Q3. Astera Labs is strategically expanding its market opportunity through optical interconnects and custom solutions, while also seeing renewed momentum in CXL for memory-intensive AI applications.

Highlights

Achieved record revenue of $392.4 million, representing a 27% sequential increase and 104% year-over-year growth.
PCIe 6 products accounted for over 50% of total revenue in Q2, a significant increase from 1/3 in Q1, demonstrating market leadership.
Scorpio X-Series entered volume production and is projected to become the largest product family by revenue in Q3, one quarter ahead of prior expectations.
Reported non-GAAP diluted EPS of $0.80, an increase of over 30% from Q1.
Expanded non-GAAP operating margin to 39.1%, up 290 basis points sequentially, driven by strong revenue growth and operating leverage.

Concerns

While absolute revenues from China are expected to increase, they will likely remain in the single digits as a percentage of total revenue due to faster growth in other regions.

Guidance & targets

Category	Target	Timeline	Confidence
Revenue	$540 million to $560 million high materiality	Q3 · FY26	High
Non-GAAP Gross Margin	approximately 72% medium materiality	Q3 · FY26	High
Non-GAAP Operating Expenses	$156 million and $160 million medium materiality	Q3 · FY26	High
Non-GAAP Operating Margin	approximately 43% medium materiality	Q3 · FY26	High
Interest and Other Income	approximately $12 million low materiality	Q3 · FY26	High
Non-GAAP Tax Rate	approximately 12% low materiality	Q3 · FY26	High
Diluted Share Count	approximately 185 million shares low materiality	Q3 · FY26	High
Non-GAAP Diluted EPS	$1.16 and $1.21 high materiality	Q3 · FY26	High
Scorpio X-Series volume production	scale materially in the second half of this year high materiality	H2 FY26	High
Scorpio X-Series shipments to additional customers	ship Scorpio X-Series to additional customers by year-end medium materiality	FY26	High
Scorpio P-Series ramp	expected to ramp more meaningfully in 2027 medium materiality	FY27	Medium
Taurus growth	continue its growth trajectory in the second half of the year medium materiality	H2 FY26	High
Taurus portfolio market opportunity	over $4 billion medium materiality	CY30	High
Leo CXL memory controllers volume shipments	ship both standard and custom Leo CXL memory controllers in volume medium materiality	FY27	Medium
UALink-enabled Scorpio X-Series scale-up switches	on track to deliver UALink-enabled Scorpio X-Series scale-up switches in 2027 high materiality	FY27	High
Optical connectivity initial opportunity volume production	expected to enter volume production in 2027 medium materiality	FY27	Medium
Near packaged optics (NPO) chipsets production	targeted for 2027 production medium materiality	FY27	Medium
Fully integrated Scorpio X-Series Fabric Switches with CPO optical engine module	longer-term road map for 2028 and beyond medium materiality	FY28+	Low
Custom solutions initial shipments	expect initial shipments for these custom design wins to commence in 2027 medium materiality	FY27	Medium
Long-term Non-GAAP Gross Margin	78% medium materiality	Long-term	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Scorpio Product Family Driven by high-radix Scorpio X-Series scaling materially in H2 2026 and Scorpio P-Series expanding across hyperscalers and AI infrastructure providers. Scorpio X-Series: entered volume productionScorpio P-Series: expanding across multiple customersExpected to become largest product family by revenue: Q3 FY26 (1 quarter ahead of prior expectations)	strong Q2	—	—	—
Aries Product Family Driven by strong adoption of retimers and gearboxes across scale-up and scale-out topologies in AI and general-purpose compute platforms, fueled by increased AI system deployments and higher ASPs for PCIe 6. PCIe 6 retimer adoption: strongPCIe 5: continued expansion for inference applications	record quarterly revenue	—	—	—
Taurus Product Family Expected to continue growth trajectory in H2 2026 as 800-gig deployments expand, driving improved attach rates and higher ASPs. Expanded portfolio with new 3.2T Smart Retimers and Smart Redrivers supporting 200 gig per lane. Units shipped: increased across AI and general-purpose platformsPreproduction volume: 100 gig per lane Smart Cable Modules for 800-gig AECs shipped	strong revenue growth	—	—	—
Leo Product Family (CXL) Seeing renewed momentum as industry recognizes its potential for agentic AI applications, addressing memory capacity and utilization constraints. New design win: standard Leo memory controller at a U.S. hyperscaler closedVolume shipments expected: 2027 to 2 U.S. hyperscalers	—	—	—	—

Product announcements

Product	Type	Timeline	Details
3.2T Smart Retimers and Smart Redrivers	launch	Q2 FY26

Deals & partnerships

aiXscale Photonics Acquisition to assemble capabilities spanning analog and mixed-signal design, DSP, electronic and photonic IC integration, and optical packaging.

Acquired late last year, provides core technology for high-density fiber attach solutions.

Risks & headwinds

Memory supply and pricing dynamics current

null

Mitigation:CXL attached memory offers attractive cost performance relative to local HBM, and hyperscalers are looking to address these dynamics with CXL.

China revenue growth as percentage of total future

single digit

Mitigation:While absolute revenues from China will increase, the rest of the world is expected to grow faster, keeping China's share in the single digits.

What to watch in Q3 FY26

Scorpio Product Family Revenue Contribution

Q3 FY26

Current strong Q2

Target largest product line by revenue

Why it matters

This indicates the successful transition of Scorpio X-Series to volume production and its increasing importance to the company's top line, validating the AI fabric strategy.

As Jitendra mentioned, we expect Scorpio to become our largest product line by revenue in the third quarter, marking an important milestone in our journey from smart signal conditioning products to mission-critical AI fabric solutions.

Find out whether ALAB delivers this. Inve re-checks your case every morning.

Q&A highlights

Clarification on Scorpio X-Series ramp timing for different hyperscalers and whether Scorpio X revenue will exceed Scorpio P revenue in Q3.

Scorpio X-Series is shipping for preproduction to multiple customers, with a lead opportunity ramping to high-volume production in Q3, expected to surpass Scorpio P revenue. Additional customers are expected to ramp to production by year-end or early next year.

“We do expect Q3 for -- at least for a lead opportunity and lead customer to ramp to high-volume production in Q3 and essentially taking over the -- or surpassing the revenue from Scorpio P-Series.”

asked by Harlan Sur · answered by Sanjay Gajendra

2 min read 6 chapters

Detailed narrative

AI Infrastructure Market Expansion

The AI infrastructure market continues to accelerate, with industry forecasts projecting hyperscaler AI and cloud infrastructure spending to reach $1 trillion by 2027. This expansion, coupled with sovereign AI initiatives and enterprise adoption, is driving increased demand for intelligent connectivity solutions, significantly expanding Astera Labs' long-term growth opportunities.

Scorpio Product Family Momentum

The Scorpio AI Fabric Switches are rapidly gaining traction, with the high-radix X-Series entering volume production and expected to become the largest product family by revenue in Q3 FY26, one quarter ahead of schedule. The P-Series is also expanding across multiple customers, with both series positioned for multi-year growth due to higher dollar content per XPU, an expanding customer base, and a rapidly growing greenfield TAM.

Signal Conditioning Strength

The Aries signal conditioning business achieved record quarterly revenue in Q2, fueled by strong adoption of PCIe 6 retimers and gearboxes in AI and general-purpose compute platforms. Taurus also delivered strong growth, with preproduction volumes of 100-gig per lane Smart Cable Modules shipping for 800-gig AECs, and new 200-gig per lane Smart Retimers and Redrivers expanding its market opportunity to over $4 billion by 2030.

CXL and Memory-Intensive AI

Astera Labs is seeing renewed momentum in CXL, particularly for memory-intensive inference and agentic AI applications, as hyperscalers seek solutions for memory capacity and utilization constraints. The company closed a new design win with its Leo memory controller at a U.S. hyperscaler and expects volume shipments to two U.S. hyperscalers in 2027 for both general-purpose compute and AI inferencing.

Strategic Expansion into Optical and Custom Solutions

The company is strategically expanding into optical interconnects and custom silicon solutions, which are expected to unlock tens of billions of dollars in additional market opportunity. This includes high-density fiber attach solutions, near packaged optics (NPO) chipsets targeted for 2027 production, and fully integrated Scorpio X-Series Fabric Switches with CPO optical engine modules by 2028 and beyond.

Custom solutions for hybrid rack architectures and specialized interfaces are also expected to commence shipments in 2027.

Software-Driven Differentiation

Astera Labs' COSMOS software platform is evolving beyond basic fleet management to include advanced capabilities like hardware-accelerated Hypercast and In-Network Compute. These features, delivered through the Scorpio X-Series, provide up to 2x improvement in collective performance for large-scale training and inference workloads, enhancing stickiness and enabling direct orchestration of workloads by XPUs.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.