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How Does Credo's System-Level Strategy Provide an Edge in the AI Era?
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Key Takeaways
Credo's system-level approach integrates SerDes, retimers, system design and production.
Adoption of AECs, DSPs and retimers highlights strong demand for Credo's connectivity solutions.
Credo projects fiscal 2026 revenues above $800M, with net margin nearing 40% on disciplined costs.
Credo Technology Group Holding Ltd’s (CRDO - Free Report) is carving out a strong position in the AI era through its system-level strategy, which is emerging as a defining edge in the race to power next-generation data centers. Unlike approaches that focus on incremental chip-level improvements, Credo’s model integrates the entire solution stack—ranging from SerDes IP and Retimer ICs to system design, qualification and production.
This holistic approach not only accelerates time-to-market but also fosters innovation, giving Credo a competitive advantage as hyperscale workloads and AI-optimized architectures continue to evolve. At the core of its competitive edge lies Credo’s mastery of SerDes technology, combined with a customer-centric approach and differentiated advantages in latency, reach and power efficiency. Its PILOT (Predictive Integrity, Link Optimization and Telemetry) software platform further enhances time-to-market, improves yields and strengthens system monitoring—expanding the company’s value proposition.
PILOT delivers an industry-leading interface, advanced debugging and telemetry optimized for large-scale deployments. This innovation enables Credo to provide superior copper and optical connectivity with unmatched performance, reliability and energy efficiency, fueling strong fiscal 2025 growth.
Strong adoption of Active Electrical Cables (AEC), Optical Digital Signal Processors (DSPs) and retimers demonstrates the strength of a system-level approach. Demand for AECs is rising, driven by ZeroFlap AECs that deliver more than 100 times greater reliability than laser-based optical solutions, with the AEC product line achieving double-digit sequential growth in the fiscal fourth quarter.
Credo Technology Group Holding Ltd. Price and Consensus
CRDO sees strong momentum in its optical business, particularly for DSPs, with its 3nm 200G-per-lane optical DSP (supporting port speeds up to 1.6 Tbps) set to accelerate the transition to 200G lane speeds. Growth in PCIe and Ethernet retimers adds further catalysts, while the industry shift to 100G-per-lane solutions and rising demand for system-level expertise in AI-optimized architectures strengthen its retimer outlook. Customer adoption of PCIe Retimers is gaining pace, with design wins expected in 2025 and revenues projected in 2026, signaling solid market traction.
The company’s optical business also showed strong execution in fiscal 2025. Credo expects this momentum to accelerate, particularly with the industry shift toward 100 gig-per-lane solutions and increasing demand for advanced system-level expertise and software capabilities. Beyond traditional optical DSPs, Credo sees tremendous opportunity in optical connectivity, extending the same type of system-level innovation seen in its AEC.
Credo’s system-level strategy tackles current infrastructure challenges with high-performance solutions while shaping the future backbone of connectivity. For fiscal 2026, Credo expects revenues to surpass $800 million, implying more than 85% year-over-year growth. Non-GAAP operating expenses are expected to rise at less than half the revenue growth rate, driving non-GAAP net margin to nearly 40%, highlighting operational discipline. For a company riding the AI infrastructure wave, this liquidity is a potential accelerator to seize revenue opportunities.
However, increasing market competition and macroeconomic uncertainties amid tariff troubles remain a concern. Credo competes with semiconductor giants like Broadcom (AVGO - Free Report) and Marvell Technology (MRVL - Free Report) .
Taking a Look at Broadcom and Marvell’s AI Growth Strategies
Broadcom is capitalizing on the AI wave, driven by soaring demand for its networking and custom AI chips. In the second quarter of fiscal 2025, the company reported 46% year-over-year growth in AI revenues to $4.4 billion, with AI networking alone surging more than 170%. This segment now accounts for 40% of Broadcom’s total AI revenues, underscoring the critical role networking plays in supporting massive AI workloads. Broadcom expects its AI semiconductor revenues to hit $5.1 billion in the third quarter of fiscal 2025, indicating a 60% year-over-year increase and marking its 10th consecutive quarter of AI growth.
Marvell is a promising player in the solid-state drive controllers market. The company expects continued growth in 5G-related revenues in the near term, driven by continued deployment in Korea and the beginning of higher 5G adoption in the United States, Japan and other countries. Marvell posted second-quarter of fiscal 2026 revenues of $2.006 billion, marking a 58% year-over-year increase, and anticipates continued growth into the third quarter, along with operating margin and earnings expansion. For the third quarter of fiscal 2026, the company projects net revenues of approximately $2.060 billion, plus or minus 5%, with a non-GAAP gross margin in the range of 59.5-60%. Non-GAAP diluted net income per share is expected to be 74 cents, within a margin of plus or minus 5 cents.
Image: Bigstock
How Does Credo's System-Level Strategy Provide an Edge in the AI Era?
Key Takeaways
Credo Technology Group Holding Ltd’s (CRDO - Free Report) is carving out a strong position in the AI era through its system-level strategy, which is emerging as a defining edge in the race to power next-generation data centers. Unlike approaches that focus on incremental chip-level improvements, Credo’s model integrates the entire solution stack—ranging from SerDes IP and Retimer ICs to system design, qualification and production.
This holistic approach not only accelerates time-to-market but also fosters innovation, giving Credo a competitive advantage as hyperscale workloads and AI-optimized architectures continue to evolve. At the core of its competitive edge lies Credo’s mastery of SerDes technology, combined with a customer-centric approach and differentiated advantages in latency, reach and power efficiency. Its PILOT (Predictive Integrity, Link Optimization and Telemetry) software platform further enhances time-to-market, improves yields and strengthens system monitoring—expanding the company’s value proposition.
PILOT delivers an industry-leading interface, advanced debugging and telemetry optimized for large-scale deployments. This innovation enables Credo to provide superior copper and optical connectivity with unmatched performance, reliability and energy efficiency, fueling strong fiscal 2025 growth.
Strong adoption of Active Electrical Cables (AEC), Optical Digital Signal Processors (DSPs) and retimers demonstrates the strength of a system-level approach. Demand for AECs is rising, driven by ZeroFlap AECs that deliver more than 100 times greater reliability than laser-based optical solutions, with the AEC product line achieving double-digit sequential growth in the fiscal fourth quarter.
Credo Technology Group Holding Ltd. Price and Consensus
Credo Technology Group Holding Ltd. price-consensus-chart | Credo Technology Group Holding Ltd. Quote
CRDO sees strong momentum in its optical business, particularly for DSPs, with its 3nm 200G-per-lane optical DSP (supporting port speeds up to 1.6 Tbps) set to accelerate the transition to 200G lane speeds. Growth in PCIe and Ethernet retimers adds further catalysts, while the industry shift to 100G-per-lane solutions and rising demand for system-level expertise in AI-optimized architectures strengthen its retimer outlook. Customer adoption of PCIe Retimers is gaining pace, with design wins expected in 2025 and revenues projected in 2026, signaling solid market traction.
The company’s optical business also showed strong execution in fiscal 2025. Credo expects this momentum to accelerate, particularly with the industry shift toward 100 gig-per-lane solutions and increasing demand for advanced system-level expertise and software capabilities. Beyond traditional optical DSPs, Credo sees tremendous opportunity in optical connectivity, extending the same type of system-level innovation seen in its AEC.
Credo’s system-level strategy tackles current infrastructure challenges with high-performance solutions while shaping the future backbone of connectivity. For fiscal 2026, Credo expects revenues to surpass $800 million, implying more than 85% year-over-year growth. Non-GAAP operating expenses are expected to rise at less than half the revenue growth rate, driving non-GAAP net margin to nearly 40%, highlighting operational discipline. For a company riding the AI infrastructure wave, this liquidity is a potential accelerator to seize revenue opportunities.
However, increasing market competition and macroeconomic uncertainties amid tariff troubles remain a concern. Credo competes with semiconductor giants like Broadcom (AVGO - Free Report) and Marvell Technology (MRVL - Free Report) .
Taking a Look at Broadcom and Marvell’s AI Growth Strategies
Broadcom is capitalizing on the AI wave, driven by soaring demand for its networking and custom AI chips. In the second quarter of fiscal 2025, the company reported 46% year-over-year growth in AI revenues to $4.4 billion, with AI networking alone surging more than 170%. This segment now accounts for 40% of Broadcom’s total AI revenues, underscoring the critical role networking plays in supporting massive AI workloads. Broadcom expects its AI semiconductor revenues to hit $5.1 billion in the third quarter of fiscal 2025, indicating a 60% year-over-year increase and marking its 10th consecutive quarter of AI growth.
Marvell is a promising player in the solid-state drive controllers market. The company expects continued growth in 5G-related revenues in the near term, driven by continued deployment in Korea and the beginning of higher 5G adoption in the United States, Japan and other countries. Marvell posted second-quarter of fiscal 2026 revenues of $2.006 billion, marking a 58% year-over-year increase, and anticipates continued growth into the third quarter, along with operating margin and earnings expansion. For the third quarter of fiscal 2026, the company projects net revenues of approximately $2.060 billion, plus or minus 5%, with a non-GAAP gross margin in the range of 59.5-60%. Non-GAAP diluted net income per share is expected to be 74 cents, within a margin of plus or minus 5 cents.
CRDO Price Performance, Valuation and Estimates
Shares of CRDO have surged 258% in the past year compared with the Electronics-Semiconductors industry’s growth of 41.3%.
Image Source: Zacks Investment Research
In terms of the forward 12-month Price/Sales ratio, CRDO is trading at 26.02, higher than the Electronic-Semiconductors sector’s multiple of 9.02.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CRDO earnings for fiscal 2026 has remained unchanged over the past 60 days.
Image Source: Zacks Investment Research
CRDO currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.