By Arasu Kannagi Basil
(Reuters) -Astera Labs said on Friday it was targeting a valuation of up to $4.51 billion in its U.S. initial public offering, as the chip firm looks to list amid a wave of enthusiasm for artificial intelligence.
The demand for high-end chips used in AI has surged given the recent generative AI advances, which have led to a rally in technology firms and propelled the stock market to record highs.
The company said it, along with some of its existing shareholders, is aiming to raise up to $534 million by selling 17.8 million shares priced between $27 and $30 each.
Astera is offering nearly 14.8 million shares, while the selling stockholders are offering about 3 million shares.
The company, which was valued at more than $3 billion in its last founding round in 2022, offers vital data center components to its customers including large cloud service providers.
"Astera is pitching a premium valuation compared to its last round, which could be justified on both accounts — AI optimism and strong revenue growth," said Matthew Kennedy, senior strategist at IPO research firm Renaissance Capital.
"IPO investors have been cautious on valuations, but AI may be the exception, given the amount of growth and enthusiasm in the space," Kennedy added.
Social media platform Reddit is also set to go public this month.
Astera's Aries product, which generates the majority of its revenue and helps CPUs and GPUs scale their data input/output bandwidth, competes with those offered by chip companies Broadcom (NASDAQ:AVGO), Marvell (NASDAQ:MRVL) Technology and Parade Technologies.
Astera, the name of which is inspired by astronomy and means "star-like", uses a fabless manufacturing model and has a partnership with Taiwan Semiconductor Manufacturing Co to manufacture its integrated circuits.
Founded in 2017, the Santa Clara, California-based company will list on Nasdaq under the symbol "ALAB".