Amazon boosts AI company Astera Labs IPO with 72% hit

Amazon CEO Andy Jassy loves to talk about how his company is benefiting from the artificial intelligence boom. On Wednesday, Amazon enhanced its AI in another way.

shares of Astera Research InstituteThe company, which sells data center connectivity chips to cloud and AI infrastructure companies, soared 72% in its Nasdaq debut, closing at $62.03. This brings Astera’s market capitalization to nearly $9.5 billion.

Astera’s IPO taps into Wall Street’s thirst for all things AI. Established by former employees in 2017 texas instruments Executive, Astera Count Nvidia, AMDand intel among its customers. It is also sold in large quantities on Amazon.

The company entered into a deal with Amazon in 2022, giving it stock acquisition rights to buy up to 1.5 million shares of Astera stock at $20.34 each. The following year, the agreement was amended to give Amazon a warrant to buy more than 830,000 additional shares. As of the end of last year, Amazon controlled 232,608 shares, according to securities filings.

Based on Wednesday’s closing price, Amazon’s stock and warrants are worth a total of about $144 million.

But the agreement requires Amazon to buy up to $650 million worth of Astella products over the next few years to vest its remaining shares and take full advantage of the higher prices. This is a lot of money for Astera, which had total sales of $115.8 million last year, up from $79.9 million in 2022.

All three products Amazon agreed to acquire are designed to address “critical bottlenecks in AI infrastructure,” according to Astera’s IPO prospectus.

Astera enters the public market as investors await social media company Reddit’s scheduled New York Stock Exchange debut on Thursday. His IPO market for tech companies has been largely dormant since late 2021. arm holdings, instacart and Claviyo He was one of the very few who kept the offerings for that period of time.

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