In this photo illustration, the logo of Astera Labs can be seen on a smartphone and a PC screen. Amazon CEO Andy Jassy often talks about how his company is benefiting from the boom in artificial intelligence. On Wednesday, Amazon received a boost in AI in a different way. Shares of Astera Labs, a company that sells data center connectivity chips to cloud and AI infrastructure companies, skyrocketed 72% during its Nasdaq debut, closing at $62. 03. This puts Astera's market cap at around $9. 5 billion. Astera's initial public offering aligns with Wall Street's interest in all things AI. Established in 2017 by former Texas Instruments executives, Astera has customers including Nvidia, AMD, Intel, and Amazon. In 2022, Astera received a significant vote of confidence by striking a deal with Amazon. This deal granted Amazon warrants to purchase up to 1. 5 million shares of Astera's stock at $20. 34 per share.

The agreement was amended the following year, giving Amazon a warrant for more than 830, 000 additional shares. As of the end of last year, Amazon controlled 232, 608 shares, as reported in a securities filing. Based on the closing price on Wednesday, the combined value of Amazon's shares and warrants is almost $144 million. However, in order for Amazon to fully benefit from this price increase, it must purchase up to $650 million worth of Astera's products in the upcoming years, according to the agreement. This is a substantial amount for Astera, which reported total sales of $115. 8 million last year, up from $79. 9 million in 2022. Astera's IPO includes three types of products that Amazon has agreed to purchase, all of which are designed to address "critical bottlenecks in AI infrastructure, " as stated in Astera's IPO prospectus. Astera is entering the public markets at a time when investors eagerly await the planned New York Stock Exchange debut of social media company Reddit on Thursday. The tech IPO market has been relatively quiet since late 2021, with only a few companies, including Arm Holdings, Instacart, and Klaviyo, having held offerings during that time. WATCH: Reddit nears IPO