We recently published an article titled Why These 15 Semiconductor Stocks Have Been Plunging So Far in 2025. In this article, we are going to take a look at where Astera Labs, Inc. (NASDAQ:ALAB) stands against the other semiconductor stocks.

Wall Street has gotten increasingly bearish on semiconductor stocks over the past few months as concerns about the profitability and sustainability of AI have gained traction. This was compounded by DeepSeek at first. The market recovered from that, but as Microsoft started canceling some data center leases and Nvidia failed to beat earnings by stellar margins, sentiment has turned sour again.

AI-related semiconductor stocks, which have been pick-and-shovel plays, are bearing the brunt of the selloffs, as they are the ones sitting on top of a two-year-long rally. This is a cyclical industry, so it’s possible that semiconductor stocks are now shifting into a bearish phase.

You should keep up with these stocks, as they’ve delivered multibagger gains over the past two years. There’s a good chance that the AI narrative recovers from here. And even if it doesn’t, it’s still worth looking into the big losers and the reasons behind their decline.

Methodology

For this article, I screened the worst-performing semiconductor stocks year-to-date.

I will also mention the number of hedge fund investors in these stocks. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

A robotic arm holding a semiconductor chip, emphasizing the precision and quality of the company's production equipment.

Astera Labs, Inc. (NASDAQ:ALAB)

Number of Hedge Fund Holders In Q4 2024: 51

Astera Labs, Inc. (NASDAQ:ALAB) makes semiconductor-based connectivity products.

The stock is down significantly so far in 2025 as CFO Michael Tate sold 125,800 shares at an average price of $82.53. It totaled $10.38 million and spooked investors.

This is on top of an earlier Morgan Stanley report that downgraded Astera Labs from Overweight to Equal Weight. Analysts flagged Astera Labs as being overvalued relative to its fundamentals after significant gains in late 2024 and early 2025. Heavy selling pressure has persisted since then.

The consensus price target of $115.33 implies 70.41% upside.

Astera Labs, Inc. (NASDAQ:ALAB) stock is down 48.95% year-to-date.

Overall ALAB ranks 3rd on our list of the semiconductor stocks that have been plunging so far in 2025. While we acknowledge the potential of ALAB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ALAB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

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Disclosure: None. This article is originally published at Insider Monkey.