Astera Labs, Inc. ($ALAB)

I think we can go -- all right. All right. Welcome to the Astera Labs' fireside chat. My name is Mark Lipacis, I'm the senior semiconductor analyst at Evercore ISI. And so very excited to have Astera Labs. So we have Desmond Lynch, who is the CFO; and Nick Aberle, who is Senior Vice President of Finance and Head of Investor Relations. So gentlemen, Welcome, and thanks for joining.

Thank you for having us, Mark.

Yes. So Des, you're the new guy right? So maybe as a way to get started and kick us off, can you tell us like why did you decide to join Astera Labs? Like what did you find attractive? And how have the first months been?

Yes. Thanks, Mark. Joining us at the labs, it's been a really good sort of first couple of months here. I've been really excited to sort of join the company. And if I go back to my initial decision to join the company, I would say there's a couple of things that stood out. Number 1 was the overall size of the market opportunity that the company is going after. And the company is very well positioned within these end markets. Secondly, I would say the broadening of the portfolio that the company has been able to achieve over a short period of time, the company has made the right investments to go after this market opportunity, which is really exciting from there. And then thirdly, I would say that I've been really the superior business and financial model that the company is driving towards. Having been within the company for the past couple of months, I would say that all of these factors are sort of playing out but being within the sort of 4 walls of the company, what's really stood out to me has been the engineering focus of the sort of company, the focus on execution and delivering to customer needs. I saw that up close hand with the Scorpio X release that we've just done earlier in the quarter, and that was a phenomenal effort by the team. And the other thing that really stands out to me is really the strong relationships that we with the customers, and we continue to solve complex engineering sort of problems. And as I look further ahead, I continue to see the sort of growth opportunities within the company. So really excited to be in the company. And the first 90 days have played out really well for me.

Excellent. All right. Well, I think you talk about the broadening of the portfolio. We have a lot -- I want to talk about lot of these products. So we're going to jump right into it. So starting with Scorpio, the smart fabric switches, can you provide like a brief overview of the product segments, how the business has grown how do we think about growth over the next couple of years?

Yes. We've been very pleased on the Scorpio switching family. This was a product line we announced in 2024. It does have 2 different sort of product lines under it. We call it Scorpio P, which is associated with scale-out technologies and then Scorpio X, which is for scale-up applications. Our growth rate on the sort of business has really been phenomenal sort of last year. This quickly became our fastest-growing product line within the company and accounted for about 15% of total company revenue last year. Much of the growth was really driven by the P-Series sort of products and scale-out applications. And as we look ahead to the sort of second half of the year, we just announced our 320-lane high radix solution for scale up. That will contribute in volume production in the second half of the year. So we're very excited about the opportunities there. We continue to have strong engagements with our sort of customers. Much of the growth really has been driven by our lead customer. But if you look at our diversification efforts on the P-Series and what we will see is 2 hyperscalers contributing to revenue here in the second half of the year. And then on the X Series, we continue to have strong engagements with our customers, and we expect to see some design wins towards the end of the year, which will contribute into the sort of '27 and beyond sort of time frame from there. But we are going after a large market here, Mark. We're talking about $4 billion on the scale-out applications as well as $10 billion on the scale up, which is really a greenfield sort of opportunity for us. And we feel we're very well positioned to continue to grow. And by the end of the year, I do expect that Scorpio will become our largest product line within the company. So very excited about the growth opportunities ahead of us here.

How is the -- high growth. It's a great market. How do you think about the competitive dynamics? What is -- how do you think about share? What kind of share can you achieve in the market?

Yes. So I would say that as D pointed out, I mean, we're talking about a pretty new greenfield opportunity that's very open-ended from a market opportunity and growth standpoint. So very excited to be one of the first guys to really be shipping in material volume. We've done over $100 million of P-Series business last year, first to be shipping Gen 6 solutions for PCI Express for both scale out and scale up. and we're just really getting started. So I think what you'll see over the balance of this year is us continuing to grow that very aggressively and positioning ourselves to continue to grow in '27 versus the competition, which is still trying to get kind of standing up with a solution and get it into customers' hands. I think our approach is just a bit fundamentally different than other folks when you talk about addressing the market. What we've seen historically is general purpose switching solutions trying to be jammed into AI types of applications, where from the beginning, we specifically designed and developed our solution for AI-based applications. So you would see that with the P-Series in terms of how we staged the lane counts and the radix and how it would support all the different elements within the head node within these AI racks. And then now you're seeing it with the X-Series in terms of what we can support both for smaller Radix solutions and the larger Radix solution that Doug just alluded to on the 320 lane 80 port that's really going to allow you to do single hop to an entire kind of 72 XPU rack. I think the other piece, and you've seen this in our signal conditioning business that we're taking and kind of applying to our approach on fabrics is this eye towards providing information, diagnostics, telemetry metrics not just raw horsepower and low latency and low power, right? Being able to tell our customers and fleet managers exactly what's happening in their systems. And when you talk about Cosmos, our telemetry software working on a single conditioning platform, we can tell you about temperatures and link health. But when you're talking about on the AI fabric side, you have much more information to digest and feedback and serve as a feedback loop to the customer. So being able to have that baseline of software and that visibility into the platform across multiple products and now higher value, higher protein products like the fabric is a huge differentiator for us from a competitive standpoint because we're basically providing higher utilization, higher productivity back to our customers and our parts are effectively more than paying for ourselves in those situations.

So -- and when we when we think about the original product you came out with the retimer, you guys made the argument that the Cosmos was a real differentiator, right? Is this -- is what you're doing on the Scorpio product, is this an extension of this? Is this like -- is this an idea where your customer is used to Cosmos and then this makes it easier for them to Scorpio assumption...

That's exactly right. So I would view it as Cosmos being the baseline infrastructure that's sitting down and integrated within hyperscaler operating stacks at a fundamental layer. The blood, the sweat, the tears, all that that's been poured in over the last couple of years to help support signal conditioning can now be reused and leveraged with the AI fabric portfolio as well. So a lot of the work has been done, and now you have more tools from Astera to be able to monitor and observe exactly what's happening in your systems, not just from a link-to-length standpoint, but actually what's happening with this traffic. And like I said earlier, I mean, it just yields higher productivity, better utilization, and that's really what these guys are striving to deliver. They're spending tens of billions of dollars on infrastructure. So if we can squeeze in an extra couple of percent, it starts to really.

Yes. I think it's forecasted to be over $1 trillion right now for -- at least in our model for '27. So you started off with in Scorpio 64 lanes and then you -- now you have a product line 32 to 320. So what is the motivation to go down and have the broader product line? Could you just tell that? Normally you think, oh, you want more lanes.

Yes, yes. So I mean, I think there's -- if you look at the lay of the land, there's going to be like lots of applications across AI topologies that are going to demand different shapes and sizes of solutions. It was very strategic from our standpoint to get into the market with the P-Series initially with that 64-lane solution because there was customers that were demanding that. And it's been very widely deployed across NVIDIA NVL-based platforms that are customized by hyperscalers. But we've always known that this was just the initial foray into this market. There was going to be a portfolio of solutions, and we've been developing that obviously, for the last couple of years. So this kind of formal announcement we did kind of in conjunction with earnings was really to highlight that we have multiple solutions across both scale-out and scale-up types of applications to service all these different sockets. And it's not kind of trying to jam our 64 lane into places where it might not fit or it might not be able to service a wider radix kind of demand profile. So super excited about expanding the portfolio. It's going to generate a lot more shots on goal for the company. And now we can kind of go in with more strategic products and attack these different sockets and try to pick up share as a function of a breadth -- a broad portfolio rather than just kind of 2 solutions.

We talk -- we spend a lot of time doing field work, talking to all the different hyperscalers. And the one thing that comes through is the hyperscaler as a group is not a monolith, like everybody has a different approach. And I guess I'm wondering, as you talk about this broad portfolio, is this a reflection of your -- the different customers on the hyperscalers and Neo cloud? Are they -- because they have different approaches? Or is this a given hyperscaler will be using a 32 and 64 and a 320 lane solution? .

Yes. it's a one-two punch from us, and we've been saying this since IPO that no 2 clouds are the same. What these guys are trying to accomplish with their customer bases are completely different. Their workloads are different. So you want to be able to the best of your ability to service all these different clouds with all the different products and applications that they're trying to deliver to their end customers, right? You're never going to have the perfect choice for each socket. So I think broadening the portfolio is definitely one big step towards that direction. But I think the other piece, and we've been talking about this for a long time as well, is fundamentally building the solution with the software-first mindset such that we can go iterate and tweak on the fly and be able to turn off and turn on or turn off or enhance certain features or optimize certain capabilities in order to specifically support that customer and their cloud. So I think it's a great one-two punch for us to be able to provide a larger buffet of solutions from a hardware standpoint, but then also being able to leverage the core software-defined architecture that we've had embedded within our products since day 1 in order to give them as much flexibility and optionality as possible.

And then on Scorpio X, can you just talk about what -- why your customers are adopting that for scale up when you compare to other alternative solutions that they have.

Yes. I mean, so we're still in the early stages, like we mentioned, of clustering XPUs and GPUs in large arrays. So you had NVIDIA really kind of was the first guy to go down that path with NBL 72, and now you're starting to see the hyperscalers do very similar things, right? So they all skin the cat in different ways, like we just mentioned and the choice of protocol or approach on the back end for scale-up is going to be a customer-by-customer decision. And at the end of the day, you have -- if you kind of add all those up, if you exclude NVLink and you just look at the merchant-based switching or fabric solutions that will ultimately be available in the market. We see that as being a $20 billion-plus opportunity. And there will be opportunities for PCI Express. There will be opportunities for PC Express evolving to UALink. There will be opportunities for Ethernet. and each of these guys will pick their different paths. So where you've seen us gain traction initially is in this PCI Express domain for Gen 6 specifically where we're first to market. We have engagements with over 10 additional unique customers that will use PCI Express in some form today or tomorrow and then eventually evolve to UALink down the road. But we've been very kind of strategic in terms of supporting open protocols and open standards to allow for these customers to kind of build their systems around an open approach. So that's why we've seen a lot of the initial solid traction, especially on the PCI Express side and then ultimately expect to see that on the UAL side over the medium and longer term.

Got you. And then like how do we think about like pricing here? Is there a do we think of a rule of thumb in dollars per PCI Express lane? Or as you add features like hypercast or in-network computes this do you get more.

Yes. So we try not to talk specifically about ASPs or even maybe even dollars per PCIe lane. I think what we've talked about in general is since the beginnings of the company, targeting with ARS $50 to maybe $100 worth of content for ARS. But as we sit here today, being able to service a customer with over $1,000 of content per accelerator as we bolted on additional products like Taurus, P-Series Scorpio, X-Series Scorpio. So the broadening of the portfolio has been certainly a nice content driver for us. If you look at it on a per product basis, I mean, I think there's -- it's very obvious that as we move from generation to generation, you're going to be having faster speeds. You're going to have more features and functionality like you mentioned. So the capabilities that we're able to provide continue to be higher value add for the customers, and they're certainly willing to kind of pay out for that. So I would say as you look from generation to generation on a like-for-like basis, you will continue to see ASPs go higher in general, driven by faster speeds and greater functionalities. And it's incumbent upon us to continue to deliver these kind of new technologies so that they can grab that productivity and utilization gains like we have in prior generations.

Well, I mean, from my standpoint, that's exciting to hear because normally in semis, you think you're giving the same ASP for improved functionality over time, if I think about historically the CPU. So when ASPs goes up, that's a very good thing. So you mentioned UALink. Amazon and AMD have publicly stated plans to deploy UALink. I think Jitendra has also mentioned additional customers who are planning to deploy. Can you just talk about the UA Link ecosystem? Where is it in its development cycle, the maturity, how -- talk about your position in this market?

Yes, yes. It's been very dynamic and fast kind of evolving situation. So UA Link consortium was formed almost 2 years ago now. They put the first spec out in April of last year. And as we sit here today, they just released the second version of the spec month, 1.5 months ago. So we've gone through a couple of rounds now. The ecosystem continues to mature across kind of the supplier base, the technology and the IP availability so that folks can go use UA Link IPs and embed it within their solutions. The testing and the qualification machines and equipment are starting to come available as well. So you see a very well-rounded ecosystem starting to form. And similar to what we talked about our evolution as a company and our ability to be successful in the market being driven by building something specifically for AI, that's exactly what UAL set out to do from the beginning, right? So if you think of PCI Express, PCI Express has been around for decades. I don't think they ever assumed that scale-up clustering applications were going to be even a thing when you go back into the '70s and the '80s. So we're really kind of leveraging kind of older standards and protocols to drive up some of these initial scale-up systems today. So it works and it's effective, but it's not as efficient as you could be. So UAL is really taking that next step and to say, hey, we're going to build something from the ground up that's going to be specifically tailored to driving scale up within AI infrastructure. We're going to take -- we're going to pick and choose the best of all the worlds. We're going to use low latency memory semantic approaches from PCI Express. We're going to use the high horsepower front-end SerDes from Ethernet, and we can combine it together to provide like a best-in-class solution for the masses of folks who want to leverage an open ecosystem and open architecture to drive the platform. So I think that's the big piece that's driving people towards checking out the technology and ultimately adopting it. Like I mentioned, we have over 10 customers that are planning on using PCI Express to scale up over the course of the next year, 1.5 years. And almost all of them are like, hey, we're going to use UALink as the next extension of this, whether it's next generation or the one after -- so it's a very natural evolution. It's optimized and specifically tailored for these applications and the progress that we've seen has been certainly compelling.

And is the long pole in the tent, it's just the maturity of the ecosystem? Is that?

Yes, I would say, yes. I mean, the ecosystem will continue to mature. Folks have to build products. We're building products. So we'll have fabric solutions supporting UALink. We'll have signal conditioning solutions supporting UALink. So those will start to kind of become prevalent and in customers' hands, I would say, towards the later part to early -- later part of this year, early part of next year. Customers, as you mentioned, a couple, AMD and AWS have endorsed it as kind of the go-to scale-up protocol. I think those guys in general have pointed to late part of next year is initial platform deployment on UAL. So I would say revenue kind of 28%, but in between now and then, obviously, a lot of work to be done on our customer standpoint, from our standpoint, getting these products out, getting them up, getting them qualified. But yes, I'm really enthusiastic about the progress that's been made to date.

Great. Let's shift gear to the optical road map. You acquired AI xScale Photonics. How do we think about your rack opportunity -- content opportunity? How does it relate to CPO scale up? Is this a scale-up technology, scale-out technology? -- give us kind of the lay of the land on this product.

Yes. I mean, so optical has been leveraged for scale-out for some period of time now. There's a very large market there, as you well know. Optics within a scale-up domain is still very nascent. And when you think about it, the characteristics that make copper so great in terms of kind of performance, low power, low cost, reliability, you're going to continue to use copper everywhere you can. And if you listen to some of the keynotes at CpyTax, it's like copper, if you can, only optical, if you must. But I think in terms of looking at the next generation to 2 generations out, certainly, you will see an expansion of cluster sizes, and we will start to move to these multi-rack scale-up topologies where you're not only scaling up within 1 rack or maybe 2 racks, but maybe 3, 4 or more than that, more racks than that going forward. So then you start to get into the problem of distance to scale up and you start to expand beyond the domain of copper. And in these situations, you want to have an optical solution in order to support those larger cluster size and scale-up opportunities. So we see it as a big market enhancer for us. We plan on obviously shipping a ton of copper-based product into the market for the foreseeable future. But to the extent that we can grab these longer distance kind of bigger dollar opportunities on the optical side as you move to multi-raack scale up, that's something that we definitely want to participate in as well. I think one of the key points to remember for us, as we attack the market with an anchor socket like Scorpio X, we become a very key piece of that connectivity backbone for scale-up topologies. And we want to be able to support electrical connections with that. We also want to be able to support optical connections with that. So I would say the long-term goal, you mentioned CPO is to ultimately optically enable Scorpio X, and you will have a CPO-based switching solution with Scorpio X at the heart of that and optical engines basically bolted on and around it. In the intermediate term, there certainly will be opportunities to ship the fiber coupler that we acquired through the xScale acquisition. And then there will be an intermediate step towards NPO as well, where we plan to service that market with some analog mixed signal solutions as well. So very -- so we see the signposts. We're working closely with customers to intercept these different market opportunities as they evolve. But having that critical position within the backbone of connectivity with Scorpio X puts us in a really nice place over the long term to benefit from the transition to optical.

What IP have you developed on the copper side that you leverage into the optical side?

Yes. So I mean the switch itself is going to be a huge piece of the equation. And I think that we've also talked about, we haven't unveiled the full plans yet, and we'll continue to provide signposts going forward. But a lot of the telemetry and observability data that we drive and support with Cosmos today will be very critical within the optical domain. We're working on building out custom Pies that will be very prevalent and material within the optical domain as well. So there's different pieces of the puzzle that we continue to gather. The fiber coupler is a differentiated technology that I think that will provide us some very nice advantages in terms of the connector capabilities of the solution. So all in all, software, hardware, IP, I think we're in a really good spot. But yes, I mean, we've got to continue to execute. There's a lot of work to be done still, but pretty excited about the opportunity.

So let's come back to the original product, the retimers -- by our estimate, it grew 65% in 2025, what's continuing to drive the strong growth here?

Yes. So we've been very pleased with our performance on the retimer business. As you mentioned, it really has been the backbone of the company, and we saw some really nice sort of growth sort of last year. And we expect that growth to continue in '26 and beyond. It's really speeds and complexities that continue to sort of grow. The attach rates for retimers continues to remain sort of strong. And the other factor I would point out is we're in the middle of the sort of transition from Gen 5 to Gen 6. Just in the recent earnings call, we talked about 1/3 of our sort of revenue be attracted towards the Gen 6 solutions. And the important part here is as you move from generation to generation, you usually see a 20% to 25% uplift in the ASP. So that ASP, coupled with the strong attach rates gives us sort of confidence in the sort of growth rates of the business going forward, and we're very pleased with our performance here, Mark.

Got you. When you guys IPO-ed, I don't -- I'll admit I did not know what a retimer was. So -- and now it seems lots of companies are coming out with retimers also. And so what is -- what helps you keep share in this market?

Yes. So I would say that incumbency is a very strong factor and especially within an environment where you're sitting on a link and conditioning signals back and forth across an extremely eclectic backdrop of different types of CPUs, different types of memory, different types of networking devices, different types of storage, different types of CPUs. You have a whole variety of different things that you need to support in different combinations. So interop and understanding all the nuances within all these different endpoints is a highly critical kind of valuable piece of the equation here. And being able to -- I mean, we've shipped millions and millions and millions of these devices into the field. There's very few AI systems that have been deployed globally that don't have ARIES embedded in them today. So the amount of learnings and tribal knowledge that has been gathered over the course of the last couple of years through this very wide deployment, basically battle tested through the gauntlet is a huge differentiating factor for us. As we move to Gen 6, kind of same story, kind of first to market. We've talked about 1/3 of our total business being PCx+ Gen 6 in just the most recent quarter, I don't think anybody else is really shipping any type of material volume at this point. And it's a very easy transition for customers that know that we've been proven, we've been battle tested with Gen 5, and we're well positioned to kind of help and service and support on Gen 6. and you can continue to use and leverage the Cosmos infrastructure that you've already kind of spent money and time and resources on to embed into your operating stack. So certainly, it's going to become more competitive. This is a very large and fast-growing market. So it's not like going to be handed to us, but I feel like we have a very good strong position, and we view ourselves as being the leader in this space for Gen 6 and the generations to come.

Got you. All right. Let's shift to the LEO CXL controllers. When I think about this market, I always think whenever there's this new protocol, it's hard to get the industry to embrace it and like it always seems to take longer to play out than once it starts playing out, it plays out faster than you expect. And it seems that, that may be the case with CXL. Can you talk about what -- where we are in the cycle, what's driving increased interest?

Yes. I would say some of the supply chain dynamics within the memory sort of space is really leading to renewed interest from sort of customers. Historically, our sort of play here has really been associated with general purpose compute. And just at the end of sort of last year, we did announce our sort of deployment with the Microsoft Azure platforms, which will come into the revenue profile in the back half of this year and continue to ramp 27 mark. What I would say is we're also having interesting sort of discussions on AI inferencing sort of opportunities. Just as part of the earnings call, we did announce our KV Cash option, and we did announce the fact that we did have a design win with a hyperscaler, which will ramp into sort of 2027 time frame. I agree with your sort of comment. We've seen the market been sort of stop start and also the deployment of these sort of new technologies does sort of take time. And with that, we will be cautious with the overall sort of outlook. But we do see this as being a sort of large market opportunity for us. We've sized it over sort of $4 billion. But what we'll continue doing is providing signposts for investors as we sort of go along to indicate the sort of progress. But again, we've invested very early into the sort of CXL space, and we're excited now we're seeing this come back around from opportunity perspective.

Got you. Is there a synergy on the LEO CXL and Scorpio when we talk about like KV cash offload use cases?

Yes. So synergy from the perspective of, as I've been talking about Cosmos running underneath all of this, right? So Cosmos is going to be leveraged across Ares, Taurus, LEO, Scorpio. So that's all a common framework that's going to be utilized by our customers. But I think that is an important piece. We're getting a lot more questions around CXL. And certainly, we've seen activity and engagement kind of start to percolate around this for obvious reasons. So it's a situation where we just need to kind of block and tackle along our way here. Everybody is trying to skin the cat a little bit differently. But we have the ability to ultimately service these customers and these appliances and these applications with not just the CXL controllers, but these oftentimes you're going to need switching products that could need signal conditioning products. So again, kind of speaking to the breadth of the portfolio, our goal is always going to be to maximize the amount of content that we see on a per system or per platform basis. And we see CXL just being additive to that and being able to kind of pull in some of our other pieces.

Got you. Okay. We didn't talk about Taurus and the AECs. Where is Taurus in kind of the deployment cycle? What kind of traction are you seeing on...

Yes. We continue to see sort of strong traction and sort of good growth on the sort of Taurus product family. Last year, it was probably around 15% of total company revenue. Most of this growth has really been driven by the 200 and 400-gig solutions. We do expect 400 gig to continue to be strong throughout this year. And really importantly, our growth has really been driven by our sort of lead customer. But as we move to the 800 gig transition, which we expect to take place in the second half of this year, we will see diversification beyond our sort of lead customer, which will be nice for us to see here. And then looking sort of further beyond that, we'll continue to see the 1.6T deployments, and we have strong sort of engagements with customers. So we continue to see strong sort of growth rates in terms of the Taurus and it remains an important part of the portfolio here.

Okay. I want to ask about your content per accelerator. I think when you IPO-ed, you were in the hundreds of dollar range. I think now you're in the $1,000-plus range. So how do we think about the next 3 to 5 years? As a sell-side analyst, I would pull out my log scale, semi-log scale chart and draw a line from $100 to $1,000 and then say, well, in 3 to 5 years, it should be $10,000. What's wrong with that now?

Yes. I mean that's certainly the goal. And like I mean, we have -- we're in a great position today with higher value, more critical pieces of the overall portfolio such as Corpio X that we're sitting at the table with our customers talking about the next generation, the next generation after that. And the connectivity challenges that you see coming down the road are going to be only more complex and more critical than they are today. So there's a very kind of long-term visibility here in terms of what we need to do in order to service those next pieces. So you bring up a very good point. When we started cutting our teeth in the market, it was kind of with these IO-based products, signal connectivity solutions, which are great, and they've built a very substantial piece of business for us. but the ability to layer on and build out the portfolio to service these next-generation connectivity challenges is really what's driving that content growth. So you have the big secular trend that you mentioned earlier, $1 trillion worth of infrastructure going in the space will certainly benefit from that trend. But our goal is to grow faster than the market. And the way that we do that is with more capable solutions as we go generation to generation and then the additive nature of new solutions coming to market. So when you start to think about us getting into the custom solution space, we start to get into the optical connectivity space. These are all going to be incremental opportunities above and beyond what we service today and drive that $1,000 of content with. So I don't want to quote an exact number at some point, maybe you draw a line, you do get up to that level. But from what we can see today in the next several generations, we very confidently saying that our content opportunity per accelerator will continue to grow at a very robust clip.

And I think a lot of people in this market, they are concerned about customer diversification. Can you just -- just at the highest level, at the IPO, GPU versus ASIC attach? And then today, where it could go 2 to 3 years from now?

Yes. So I mean -- and this is another amazing point of just how much the market has changed from when we went IPO just to today, is not a long time ago, a couple of years plus. And what we called an AI system back then was an hopper-based platform, HGX with 8 hopper GPUs. And as we sit here today, it's a rack of 72 GPUs altogether in a very dense situation. So yes, I mean, a lot of our initial traction in the market was, by definition, GPU-based when we started to come into the market. NVIDIA was the frontrunner and deployed widely across all the big hyperscalers, all the Neo clouds, AI factories. But as we've evolved over the last couple of years, you've started to see the rise of the XPU and these guys designing and developing and delivering solutions that are optimized for their own workloads and their own platforms to give them optionality to use AMD and NVIDIA and then their own solutions. So yes, as a function of that, we have seen kind of a faster-growing business on the XPU side. And I think -- so just in terms of those volumes growing, number one. But number two, NVIDIA does a great job of servicing their customers with the full shop, right? Up and down, left to right, you have switches, you have GPUs, you have the GPUs, now you have CPUs as well. In the XPU domain, we can service and support more because they don't do their own scale-up switches. So we participate in all the same places we would on a GPU-based platform, and we can help support the scale-up platform, which is good for our signal conditioning business, tons of connections with Ares that we can service for scale up. And then obviously, with the big Scorpio X switch to scale up as well, that's another big opportunity. So both sides growing very fast, XPU, just more dollar content per platform and then those volumes have started to kick up as well. So it's been a great spot.

Got you. We're running close to the end here. I want to ask, what do you think, as you talk to investors, is the biggest either misperception or the biggest disconnect between your view of your market position and the fundamentals and where the investment community is?

Yes. I would say I can start. I think folks tend to get hung up on exactly what's happening in the next month or 2 months or a quarter or 2 quarters and what's happening with the next generation of this or that, what are the attach rates? But hopefully, what we try to paint a picture of today is we're really looking at multiple generations, and we have high confidence that as these generation -- next-generation solutions come to market, the content opportunities start to get a lot more meaningful for guys like us that are supporting the connectivity backbone, which is becoming a much more critical piece of the overall platform to be able to service and support the scale-up of very dense cluster sizes. So I would say that we're really excited not just about what's happening in the next quarter or 2 with certain design wins, but what we can accomplish over the next 2, 3, 4 years down the road. And as our position as an AI infrastructure connectivity provider continues to become even more critical and drive that content higher. So I don't know if that's misunderstood, but I feel like you're almost kind of come up out of the weeds a little bit to realize that there's a longer-term path there, a lot of opportunity, and we're building the company and really scaling our operations to be able to support that.

I've only been here a couple of months, but I would say the couple of things that really stand out is investors are really looking at how big the switching scale-up opportunities could be. I think we've touched upon that today. We see this as being a greenfield opportunity and really a sizable sort of market by the 2030 time frame. And the other thing that I would say that gets a lot of attention is the optical sort of road map. I think Nick gave you some sort of good color on our sort of progress. We've been investing here the past couple of years into the optical road map. We see some nice plays on the NPO and then ultimately leading to the CPO sort of road map, and we'll be a good participant in this market in that sort of time frame. But again, as Nick sort of said, it's usually dealing with sort of what's going on today, tomorrow, but we are much more focused on the long term. We have that very robust sort of road map here, Mark.

Continue.

I thought -- Nick, I thought you were going to lead with the death of copper for...

That was so That was 3 minutes...

Right. Is that -- do you think investors are aligned with you? I think you probably alluded to this in your -- when you talk about your road map. Are investors fixated on this still? Or there's a fixation on the...

Yes, I was like the metaphor is when everybody freaked out about deep seq and inferencing was bad for demand for compute, right? I think we view optical as not something that's going to take away from copper, but something that's going to be an incremental opportunity for -- so -- and we'll provide more color and information and market data around this over the next couple of quarters, but it's going to add meaningful amounts of incremental market opportunity for Stera Labs above and beyond what we support today. And we want to be a diverse supplier across all these connectivity mediums. So yes, we see it as a positive. And yes, I think as we've talked more about it and started to give some signposts around it, I think it's giving people a little bit more confidence. But we have a lot of work to do still. So I totally understand that there will be a lot more questions and discussions around it.

And I think you talked about CPO and your package optics and the photonics product, that growth vector, kind of a plight way to suggest that maybe people are not completely tuning...

I would say it's been -- again, we've been dropping sort of breadcumbs along the way here, Mark. The acquisition of the xScale was really important for us as it helps to provide that sort of piece. But as we continue, we see -- we're developing our sort of NPO solution in-house just now that will come out to the market and we will be in time for that sort of ramp. And then further out, we'll have the CPO sort of solution. So excited about the continued investments we're making within the optical space.

Well, the red light blinking means we ran over as I thought we would, Des, Nick, thanks so much for joining. Thanks for sharing the insights about Astera Labs. Looking forward to...

Yes. I appreciate it.

Success. Yes. Thank you. Thank you.

Thanks.