Astera Labs ALAB and Cisco Systems CSCO are major players in the AI infrastructure market. Astera Labs develops semiconductor-based connectivity solutions for cloud and AI infrastructure, while Cisco Systems specializes in high-performance networking, security, and connectivity that help AI workloads scale efficiently across enterprise and cloud environments.
So, ALAB or CSCO — Which of these AI Infrastructure stocks has the greater upside potential? Let’s find out.
The Case for ALAB Stock
ALAB is rapidly expanding its portfolio to meet growing demand for AI infrastructure and connectivity solutions. The company’s product portfolio, including Scorpio, Aries and Taurus, has been a key catalyst. In the second quarter of 2026, PCIe 6 products, including the Scorpio AI Fabric Switches and Aries Retimers, accounted for more than 50% of total revenue, underscoring ALAB’s Gen 6 market leadership.
In the second quarter of 2026, the company reported record revenue growth, driven by strong adoption of its Scorpio AI Fabric Switches, Aries Retimers and Taurus Smart Cable Modules. The Leo CXL memory controller line is gaining traction, with new design wins at major U.S. hyperscalers and expectations for volume shipments in 2027.
Astera Labs is benefiting from strong demand for its expanding AI connectivity portfolio, which is expected to drive growth in the third quarter of 2026. For the same quarter, revenues are expected to be between $540 million and $560 million. The midpoint implies sequential growth of about 40%, driven by the Scorpio X-Series production ramp, continued strength in Aries PCIe 6 retimers, and preproduction Taurus shipments for 800-gigabit Ethernet applications.
However, ALAB faces stiff competition from other industry players also making strong efforts in the connectivity space. The company also incurred higher operating expenses in the second quarter of 2026 due to continued investment in its product roadmap.
The Case for CSCO Stock
Cisco is benefiting from accelerating AI infrastructure investments, strong networking demand and an expanding portfolio of security and observability solutions. The growing adoption of agentic AI is driving demand for high-bandwidth, low-latency networking infrastructure across hyperscale data centers, enterprises and cloud environments, strengthening Cisco’s growth prospects.
Cisco’s AI infrastructure business continues to gain momentum. In the fourth quarter of fiscal 2026, the company secured $4 billion in hyperscaler AI infrastructure orders, bringing fiscal 2026 orders to $9.3 billion, approximately 4.5 times the previous year’s level. The company’s Silicon One architecture, particularly its P200 and G200-powered systems and Acacia optical solutions, is strengthening its competitive position. Cisco expects hyperscaler AI infrastructure revenues to reach $7.5 billion in fiscal 2027 compared with approximately $4 billion in fiscal 2026.
Strong networking demand has been noteworthy. In the fourth quarter of fiscal 2026, networking revenues surged 28% year over year, supported by triple-digit growth in AI infrastructure and double-digit growth in data center switching. Networking product orders increased 40%, marking the eighth consecutive quarter of double-digit growth. Data center networking orders grew more than 35%, while campus networking orders increased 20%, reflecting strong demand for infrastructure upgrades.
Price Performance and Valuation of ALAB and CSCO
In the year-to-date period, shares of ALAB and CSCO have surged 81.5% and 42.6%, respectively. ALAB’s outperformance can be attributed to its robust, diversified product portfolio that addresses growing demand for AI infrastructure and connectivity solutions, as well as its expanding partner base. Strong demand for its PCIe solutions has also been a major growth driver.
Despite CSCO’s expanding portfolio, a hardware-led revenue mix is expected to limit gross-margin expansion, while services recovery should remain gradual. Competition across networking and security still requires sustained product execution.
ALAB and CSCO Stock Performance
Image Source: Zacks Investment Research
Valuation-wise, ALAB and CSCO shares are currently overvalued, as suggested by a Value Score of F and D, respectively.
On a forward 12-month price-to-sales basis, ALAB shares trade at 18.67X, higher than CSCO’s 5.94X.
ALAB and CSCO Valuation
Image Source: Zacks Investment Research
How Do Earnings Estimates Compare for ALAB & CSCO?
The Zacks Consensus Estimate for ALAB’s 2026 earnings is pegged at $3.98 per share, which has been unchanged over the past 30 days. This indicates a 116.30% increase year over year.
Astera Labs, Inc. Price and Consensus
Astera Labs, Inc. price-consensus-chart | Astera Labs, Inc. Quote
The Zacks Consensus Estimate for CSCO’s fiscal 2027 earnings is pegged at $5.11 per share, which has been unchanged over the past 30 days. This indicates an 18.01% increase year over year.
Cisco Systems, Inc. Price and Consensus
Cisco Systems, Inc. price-consensus-chart | Cisco Systems, Inc. Quote
Conclusion
While both ALAB and CSCO stand to benefit from the booming AI infrastructure market, Cisco offers greater upside potential, with strong AI infrastructure momentum and robust networking demand.
Astera Labs is well-positioned to benefit from strong AI infrastructure spending, supported by the rapid adoption of its Scorpio, Aries, Leo and Taurus product families. However, its rising operating expenses and intensifying competition remain concerns.
Currently, Cisco carries a Zacks Rank #2 (Buy), making the stock a stronger pick than ALAB, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).