ASTS Inks Partnership to Boost Satellite Bandwidth: Stock to Gain?

AST SpaceMobile, Inc. ASTS recently inked a partnership with Cadence Design Systems, Inc. CDNS to augment its cellular satellite service by leveraging the latter’s system tools, high-speed SerDes PHYs and controllers on the AST5000 ASIC chip. The Application-Specific Integrated Circuit or ASIC is a low-power architecture that enables up to a tenfold jump in processing bandwidth on each satellite for seamless space-based cellular broadband connectivity.The AST5000 ASIC chip is currently being used in AST SpaceMobile’s Bluebird commercial satellites. Utilizing Cadence’s specialized hardware components, ASTS aims to cater to the burgeoning bandwidth requirements that are straining the existing cloud data center server, storage and networking infrastructure. In addition to optimal power and performance tradeoffs through an extensive suite of robust, high-performance AI (artificial intelligence)-driven EDA (electronic design automation) tools, the collaboration has led to the development of a comprehensive solution spanning custom and digital design and verification supporting a broad industrial temperature range.This is likely to help AST SpaceMobile eliminate connectivity gaps for ubiquitous space-based network connectivity. This, in turn, will enable ASTS to support up to 10,000 MHz of processing bandwidth per satellite in the future, with data transmission speeds of up to 120 Mbps across a space-based cellular broadband network accessible to everyday smartphones.ASTS Riding on Carrier InvestmentsThe SpaceMobile service is compatible with all major brands available in the market and connects directly to everyday mobile phones. It is based on a novel technology that delivers broadband connectivity from space to unmodified mobile devices, providing a service to fill cellular coverage gaps in a differentiated approach compared to other space-based communication services.AST SpaceMobile has partnered with leading carriers such as AT&T Inc. and Verizon Communications Inc. to tap into a pre-existing pool of cell customers as well as avail funds to help build a worldwide satellite network. With AT&T, ASTS has entered into a definitive commercial agreement, extending until 2030, to provide a space-based direct-to-mobile technology to complement and integrate with the former’s mobile network. This approach aims to provide customers with connectivity in locations previously deemed unreachable, enhancing AT&T’s industry leadership in utilizing emerging satellite technologies.ASTS also collaborated with Verizon, wherein the latter made a $100 million commitment for satellite direct-to-cellular service for its customers. The two back-to-back deals sent the ASTS stock price soaring. It further enhanced cellular coverage in the United States, essentially eliminating dead zones and empowering remote areas of the country with space-based connectivity.Bluebird Satellites Propelling ASTSAST SpaceMobile has successfully sent its first five commercial satellites in low Earth orbits, marking a key advancement in developing a space-based mobile network infrastructure. Dubbed Bluebird, these satellites have the largest-ever commercial communications arrays spanning 693 square feet. They offer non-continuous service across the United States using more than 5,600 cells within the premium low-band spectrum. This achievement follows the success of AST SpaceMobile's in-orbit BlueWalker 3 satellite. It marks significant progress in the company's mission to create a space-based cellular broadband network that directly links with mobile devices, eliminating the need for ground-based infrastructure. By expanding its connectivity to remote areas, the company aims to ensure that more people have access to vital communication services.Stock Price Performance of ASTSASTS stock has gained 383.2% over the past year compared with the wireless equipment industry’s growth of 34.8%. It has also outperformed its peers like Aviat Networks, Inc. AVNW and Comtech Telecommunications Corp. CMTL over this period.ASTS Stock One-Year Price PerformanceImage Source: Zacks Investment ResearchEarnings Estimate Revision Trend of ASTSDespite stellar price performance, the Zacks Consensus Estimate for AST SpaceMobile for 2024 and 2025 has widened 77.9% and 12.5%, respectively, to a loss of $1.53 and a loss of 45 cents per share over the past year. The negative estimate revision depicts pessimism about the stock’s growth potential as investors remain skeptical about the success of its business model. Image Source: Zacks Investment ResearchASTS Stock Trading at a PremiumThe company is currently valued at a premium compared to its industry on a forward 12-month P/S basis. From a valuation standpoint, AST SpaceMobile appears relatively expensive compared to the industry and above its mean. Going by the price/sales ratio, the company shares currently trade at 84.07 forward sales, higher than 5.29 for the industry and the stock’s mean of 24.59.Image Source: Zacks Investment ResearchEnd NoteAST SpaceMobile is using Cadence tools to build a resilient and highly accessible space-based cellular broadband network. The collaboration with leading carriers is seen as a pathway to unlocking the potential of space-based cellular broadband, promising seamless, reliable service across the continental United States. The successful launch of the Bluebird satellites has transformed network connectivity to help bridge the digital divide, expanding its global presence and enhancing AST SpaceMobile’s capabilities in providing ubiquitous connectivity.However, the downtrend in estimate revisions portrays skepticism about the company’s business model. The stock is also trading at premium valuation metrics compared with its peers.Nevertheless, with a Zaks Rank #2 (Buy), ASTS appears primed for further price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. 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