Amazon Receives Boost as AI Firm Astera Labs’ IPO Skyrockets by 72%

Amazon CEO Andy Jassy frequently highlights his company’s gains from the AI surge. This Wednesday, Amazon experienced a different kind of AI boost.

Astera Labs, a provider of data center connectivity chips to cloud and AI infrastructure firms, witnessed a staggering 72% surge in its Nasdaq debut, with its shares closing at $62.03, giving it a market cap nearing $9.5 billion.

Astera, founded in 2017 by former Texas Instruments executives, caters to industry giants like Nvidia, AMD, Intel, and notably, Amazon.

Amazon Receives Boost as AI Firm Astera Labs' IPO Skyrockets by 72%
Amazon holds warrants for Astera shares worth nearly $144 million post-IPO.

The company received significant validation in 2022 when it inked a deal with Amazon, granting the tech titan warrants to purchase up to 1.5 million shares of Astera at $20.34 each.

In the subsequent year, the agreement expanded, providing Amazon with warrants for over 830,000 additional shares. By the end of the previous year, Amazon held 232,608 shares, as per regulatory filings.

At the latest market close Amazon’s shares and warrants were valued at nearly $144 million.

Amazon Receives Boost as AI Firm Astera Labs' IPO Skyrockets by 72%
To unlock remaining shares Amazon must invest $650 million in Astera’s products.

However, for Amazon to unlock the remaining shares and capitalize fully on the price surge, it must procure up to $650 million worth of Astera’s products in the forthcoming years, as stipulated by the agreement.

This represents a substantial investment for Astera, which reported total sales of $115.8 million last year, up from $79.9 million in 2022.

The products Amazon commits to purchasing target crucial bottlenecks in AI infrastructure, as outlined in Astera’s IPO prospectus.

Astera’s entry into the public markets coincides with investors’ anticipation of social media platform Reddit’s planned New York Stock Exchange debut on Thursday. The tech IPO landscape has been relatively quiet since late 2021, with only a handful of offerings including Arm Holdings, Instacart, and Klaviyo.

Sajda Parveen
Sajda Parveen
Sajda Praveen is a market expert. She has over 6 years of experience in the field and she shares her expertise with readers. You can reach out to her at [email protected]
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