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CRDO vs. ALAB: Which High Speed Connectivity Stock Is the Smarter Buy?
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Key Takeaways
Credo posted 274% revenue growth to $223.1M, driven by its AEC product strength.
ALAB expects Q3 2025 revenues of $203-$210M, fueled by Aries, Taurus and Scorpio product lines.
Both firms joined Arm's Total Design ecosystem to advance AI and hyperscale connectivity solutions.
Credo Technology Group Holding Ltd. (CRDO - Free Report) and Astera Labs, Inc (ALAB - Free Report) are companies that specialize in high-speed connectivity solutions essential for artificial intelligence (“AI”) and data center infrastructure. Amid rapid AI proliferation, investors are focusing on companies that offer the infrastructure behind it.
The semiconductor companies are at the core of AI workloads as these offer solutions to enable augmented processing power and efficiency. Both CRDO and ALAB are key players in this domain and bring to the table unique strengths. This makes it an intriguing comparison for investors.
This sets up a natural comparison: which company is better positioned to capture the next wave of connectivity growth? Let us unpack.
CRDO: Explosive Growth Trajectory
Strong market presence in both Ethernet and Active Electrical Cables (“AEC”) is the central pillar of CRDO’s explosive top-line growth. Credo’s revenues grew a staggering 274% year over year to $223.1 million in the last reported quarter, with the AEC product line increasing by healthy double digits sequentially.
The demand for AECs is increasing as these offer up to 1,000 times more reliability with 50% lower power consumption than optical solutions, added CRDO. The extensive elimination of link fabs or intermittent losses of connection results in increased cluster reliability while lowering power consumption. The adoption from intra-rack to rack-to-rack deployments is expected to boost further revenues from this product line. Moreover, the system-level approach provides it with a strong competitive moat. It owns the entire stack of SerDes IP, Retimer ICs, system-level design, qualification and production. This integrated approach allows faster innovation cycles and strong cost efficiency.
Apart from the AEC product line, CRDO is investing heavily in both copper and optical solutions to diversify its market position. Its optical DSP segment maintained strong momentum, positioning the company to achieve a doubling of optical revenues again in the current fiscal year. CRDO recently collaborated with the Arm Total Design ecosystem to integrate its high-speed SerDes and mixed-signal DSP IP (including its SerDes chiplets) with Arm’s processor technology. The integration will allow for faster and efficient design of custom silicon solutions for next-generation AI, cloud computing and hyperscale data center applications.
CRDO is focused on innovation to gain further market share in the optical DSP space. The company recently unveiled its new ZeroFlap (“ZF”) optical transceiver product line, designed to deliver superior reliability, energy efficiency and stability for AI backend networks. Supporting 400G, 800G and 1.6T speeds, the ZF optical portfolio addresses a key industry challenge, optical link flaps, where connections repeatedly drop and reconnect, disrupting network performance.
Image Source: Zacks Investment Research
Last month, CRDO introduced its Bluebird DSP, a high-performance, low-power solution for 1.6Tbps optical transceivers that delivers 224Gbps per lane PAM4 data transmission. Bluebird enables transceivers to operate under 20 watts, making them ideal for dense AI and hyperscale data centers.
While top-line growth often grabs eyeballs, Credo’s strength lies in its margin profile and operational discipline. The company is not only driving substantial product momentum but also showcasing the profitability of its business model. In the last reported quarter, non-GAAP operating income was $96.2 million compared with $2.2 million reported in the prior-year period.
It reported free cash flow of $51.3 million and had $479.6 million of cash and cash equivalents and short-term investments at the quarter’s end. For a company riding the AI infrastructure wave, this liquidity is a potential accelerator to seize revenue opportunities. The company recently made its first acquisition. By acquiring Hyperlume, CRDO now has access to miniature light-emitting diode (microLED) technology-based optical interconnects for chip-to-chip communications.
Amid multiple tailwinds, for fiscal 2026, Credo anticipates mid-single-digit sequential revenue growth, resulting in a roughly 120% year-over-year surge. That said, increasing market competition and macroeconomic uncertainties may impact CRDO’s growth trajectory.
ALAB: Younger Entrant but Gaining Ground Rapidly
Founded in 2017, Astera designs advanced interconnect products like PCIe, CXL and Ethernet semiconductor-based connectivity solutions used widely by hyperscalers and the data center ecosystem. The company’s top line is gaining from strength in signal conditioning (Aries, Taurus) and Switch Fabric (Scorpio) product lines, suggesting broad-based strength rather than reliance on a single segment. Management has highlighted that this particular performance established a “meaningful new revenue baseline,” indicating sustained demand momentum.
Astera’s Scorpio PCIe Fabric Switches are emerging as the fastest-ramping product line, exceeding 10% of total revenues in the second quarter. Management emphasized that the Scorpio product line remains on track to surpass 10% of total revenues in 2025 and is expected to become the “largest product line” in the coming years. Astera expects third-quarter 2025 revenues between $203 million and $210 million, up 6-9% quarter over quarter.
For Aries, diversification across GPU and custom ASIC-based systems for various applications (like scale-up and scale-out connectivity) is the key catalyst. ALAB started volume ramp of the Aries 6 solution supporting PCIe 6 during the second quarter in rack-scale merchant GPU systems, strengthening its position in the high-speed signal conditioning market.
Strong AEC demand is benefiting the Taurus product line, while Leo is progressing through preproduction shipments, aligning with emerging CXL memory architectures. Additionally, ALAB views the expansion of UALink as a growth driver. Further tailwinds also include PCIe Gen 7, 800-gig Ethernet and CXL 3.
Image Source: Zacks Investment Research
It remains focused on product innovation to support growing demand for AI infrastructure. ALAB recently, at the OCP Global Summit, demonstrated support for solutions built with Ethernet, PCIe, UALink, CXL and OpenBMC standards. Like CRDO, Astera has also joined the Arm Total Design ecosystem to integrate its Intelligent Connectivity Platform with Arm Neoverse Compute Subsystems to develop next-gen chiplet solutions for custom AI infrastructure.
Astera announced the acquisition of aiXscale Photonics GmbH, subject to customary closing conditions. The buyout will enable ALAB to develop photonic scale-up solutions by integrating aiXscale's fiber-chip coupling technologies with its own connectivity and signal processing solutions. . ALAB’s increasing R&D investment, while a necessity, might prove a drag on margins if revenue growth falters. Operating expense is expected to be between $76 million and $80 million in the third quarter of 2025, driven by higher R&D expenses. Intensely competitive semiconductor landscape, along with dynamic macro environment, and other variables, including tariffs and changing tax rates that could pressure the bottom line, remain concerns.
Price Performance and Valuation for CRDO & ALAB
Over the past month, CRDO has gone up 4.2% while ALAB is down 18.4%.
Image Source: Zacks Investment Research
In terms of the forward 12-month price/sales ratio, CRDO is trading at 23.8X, lower than ALAB’s 28.23X.
Image Source: Zacks Investment Research
How Do Zacks Estimates Compare for CRDO & ALAB?
Analysts have significantly revised estimates for CRDO’s bottom line in the past 60 days.
Image Source: Zacks Investment Research
Meanwhile, for ALAB, there is no estimate revision.
Image Source: Zacks Investment Research
CRDO or ALAB: Which Is a Better Pick?
Both CRDO and ALAB are well-positioned to gain from the rapidly growing AI-driven data center market.
CRDO flaunts a Zacks Rank #1 (Strong Buy) at present, while Astera carries a Zacks Rank #3 (Hold). Consequently, in terms of Zacks Rank, CRDO seems to be a better pick at the moment.
Image: Bigstock
CRDO vs. ALAB: Which High Speed Connectivity Stock Is the Smarter Buy?
Key Takeaways
Credo Technology Group Holding Ltd. (CRDO - Free Report) and Astera Labs, Inc (ALAB - Free Report) are companies that specialize in high-speed connectivity solutions essential for artificial intelligence (“AI”) and data center infrastructure. Amid rapid AI proliferation, investors are focusing on companies that offer the infrastructure behind it.
The semiconductor companies are at the core of AI workloads as these offer solutions to enable augmented processing power and efficiency. Both CRDO and ALAB are key players in this domain and bring to the table unique strengths. This makes it an intriguing comparison for investors.
This sets up a natural comparison: which company is better positioned to capture the next wave of connectivity growth? Let us unpack.
CRDO: Explosive Growth Trajectory
Strong market presence in both Ethernet and Active Electrical Cables (“AEC”) is the central pillar of CRDO’s explosive top-line growth. Credo’s revenues grew a staggering 274% year over year to $223.1 million in the last reported quarter, with the AEC product line increasing by healthy double digits sequentially.
The demand for AECs is increasing as these offer up to 1,000 times more reliability with 50% lower power consumption than optical solutions, added CRDO. The extensive elimination of link fabs or intermittent losses of connection results in increased cluster reliability while lowering power consumption. The adoption from intra-rack to rack-to-rack deployments is expected to boost further revenues from this product line. Moreover, the system-level approach provides it with a strong competitive moat. It owns the entire stack of SerDes IP, Retimer ICs, system-level design, qualification and production. This integrated approach allows faster innovation cycles and strong cost efficiency.
Apart from the AEC product line, CRDO is investing heavily in both copper and optical solutions to diversify its market position. Its optical DSP segment maintained strong momentum, positioning the company to achieve a doubling of optical revenues again in the current fiscal year. CRDO recently collaborated with the Arm Total Design ecosystem to integrate its high-speed SerDes and mixed-signal DSP IP (including its SerDes chiplets) with Arm’s processor technology. The integration will allow for faster and efficient design of custom silicon solutions for next-generation AI, cloud computing and hyperscale data center applications.
CRDO is focused on innovation to gain further market share in the optical DSP space. The company recently unveiled its new ZeroFlap (“ZF”) optical transceiver product line, designed to deliver superior reliability, energy efficiency and stability for AI backend networks. Supporting 400G, 800G and 1.6T speeds, the ZF optical portfolio addresses a key industry challenge, optical link flaps, where connections repeatedly drop and reconnect, disrupting network performance.
Image Source: Zacks Investment Research
Last month, CRDO introduced its Bluebird DSP, a high-performance, low-power solution for 1.6Tbps optical transceivers that delivers 224Gbps per lane PAM4 data transmission. Bluebird enables transceivers to operate under 20 watts, making them ideal for dense AI and hyperscale data centers.
While top-line growth often grabs eyeballs, Credo’s strength lies in its margin profile and operational discipline. The company is not only driving substantial product momentum but also showcasing the profitability of its business model. In the last reported quarter, non-GAAP operating income was $96.2 million compared with $2.2 million reported in the prior-year period.
It reported free cash flow of $51.3 million and had $479.6 million of cash and cash equivalents and short-term investments at the quarter’s end. For a company riding the AI infrastructure wave, this liquidity is a potential accelerator to seize revenue opportunities. The company recently made its first acquisition. By acquiring Hyperlume, CRDO now has access to miniature light-emitting diode (microLED) technology-based optical interconnects for chip-to-chip communications.
Amid multiple tailwinds, for fiscal 2026, Credo anticipates mid-single-digit sequential revenue growth, resulting in a roughly 120% year-over-year surge. That said, increasing market competition and macroeconomic uncertainties may impact CRDO’s growth trajectory.
ALAB: Younger Entrant but Gaining Ground Rapidly
Founded in 2017, Astera designs advanced interconnect products like PCIe, CXL and Ethernet semiconductor-based connectivity solutions used widely by hyperscalers and the data center ecosystem. The company’s top line is gaining from strength in signal conditioning (Aries, Taurus) and Switch Fabric (Scorpio) product lines, suggesting broad-based strength rather than reliance on a single segment. Management has highlighted that this particular performance established a “meaningful new revenue baseline,” indicating sustained demand momentum.
Astera’s Scorpio PCIe Fabric Switches are emerging as the fastest-ramping product line, exceeding 10% of total revenues in the second quarter. Management emphasized that the Scorpio product line remains on track to surpass 10% of total revenues in 2025 and is expected to become the “largest product line” in the coming years. Astera expects third-quarter 2025 revenues between $203 million and $210 million, up 6-9% quarter over quarter.
For Aries, diversification across GPU and custom ASIC-based systems for various applications (like scale-up and scale-out connectivity) is the key catalyst. ALAB started volume ramp of the Aries 6 solution supporting PCIe 6 during the second quarter in rack-scale merchant GPU systems, strengthening its position in the high-speed signal conditioning market.
Strong AEC demand is benefiting the Taurus product line, while Leo is progressing through preproduction shipments, aligning with emerging CXL memory architectures. Additionally, ALAB views the expansion of UALink as a growth driver. Further tailwinds also include PCIe Gen 7, 800-gig Ethernet and CXL 3.
Image Source: Zacks Investment Research
It remains focused on product innovation to support growing demand for AI infrastructure. ALAB recently, at the OCP Global Summit, demonstrated support for solutions built with Ethernet, PCIe, UALink, CXL and OpenBMC standards. Like CRDO, Astera has also joined the Arm Total Design ecosystem to integrate its Intelligent Connectivity Platform with Arm Neoverse Compute Subsystems to develop next-gen chiplet solutions for custom AI infrastructure.
Astera announced the acquisition of aiXscale Photonics GmbH, subject to customary closing conditions. The buyout will enable ALAB to develop photonic scale-up solutions by integrating aiXscale's fiber-chip coupling technologies with its own connectivity and signal processing solutions.
.
ALAB’s increasing R&D investment, while a necessity, might prove a drag on margins if revenue growth falters. Operating expense is expected to be between $76 million and $80 million in the third quarter of 2025, driven by higher R&D expenses. Intensely competitive semiconductor landscape, along with dynamic macro environment, and other variables, including tariffs and changing tax rates that could pressure the bottom line, remain concerns.
Price Performance and Valuation for CRDO & ALAB
Over the past month, CRDO has gone up 4.2% while ALAB is down 18.4%.
Image Source: Zacks Investment Research
In terms of the forward 12-month price/sales ratio, CRDO is trading at 23.8X, lower than ALAB’s 28.23X.
Image Source: Zacks Investment Research
How Do Zacks Estimates Compare for CRDO & ALAB?
Analysts have significantly revised estimates for CRDO’s bottom line in the past 60 days.
Image Source: Zacks Investment Research
Meanwhile, for ALAB, there is no estimate revision.
Image Source: Zacks Investment Research
CRDO or ALAB: Which Is a Better Pick?
Both CRDO and ALAB are well-positioned to gain from the rapidly growing AI-driven data center market.
CRDO flaunts a Zacks Rank #1 (Strong Buy) at present, while Astera carries a Zacks Rank #3 (Hold). Consequently, in terms of Zacks Rank, CRDO seems to be a better pick at the moment.
You can see the complete list of today’s Zacks #1 Rank stocks here.