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Can CRDO Tap a $10B+ Market With Record Q2 & New Growth Pillars?
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Key Takeaways
CRDO posts a record quarter with 272% revenue growth driven by AI infrastructure demand.
New pillars include ZF optics, ALCs and OmniConnect gearboxes targeting multibillion-dollar markets.
Five growth pillars now expand CRDO's total market opportunity to more than $10 billion.
Credo Technology Group Holding Ltd (CRDO - Free Report) delivered a record fiscal second quarter with 272% year-over-year revenue growth, driven by soaring AI infrastructure demand and strong adoption of its active electrical cables (AECs), high-speed SerDes ICs and new optical and gearbox products. As hyperscalers race to expand AI capacity, Credo is witnessing explosive momentum, fueling triple-digit revenue gains and stronger profitability.
Credo has outlined three new growth pillars, each unlocking multibillion-dollar opportunities. The first, Zero Flap (ZF) optics, is a laser-based connectivity solution delivering AEC-level reliability through a custom optical DSP tightly integrated with Credo’s software stack. ZF optics are already in live data-center trials, with sampling to a second U.S. hyperscaler expected later in fiscal 2026. Supporting any connection length within the data center, ZF is expected to generate initial revenue in fiscal 2027 and represents a long-term multibillion-dollar market.
The second growth pillar is its association with micro-LED specialist Hyperlume, acquired in September 2025, which is accelerating the development of a new connectivity category:active LED cables (ALCs). These pluggable solutions utilize micro LEDs, delivering AEC-level reliability and power efficiency, and support up to 30-meter connections for row-scale data center networks. Sampling is planned for fiscal 2027 with revenue in fiscal 2028, and Credo expects the ALC market to grow to more than twice the size of the AEC market.
Its third growth pillar is OmniConnect gearboxes, designed to optimize XDU connectivity. Working with a lead customer, Credo introduced Weaver, a gearbox that addresses the “memory wall” by enhancing memory-to-compute links. Powered by Credo’s 112-gig VSR SerDes, it provides 10× higher I/O density with up to 10 inches of reach. The first customer plans an XPU with 2 TB of memory, marking a significant advancement for AI workloads. The memory-to-compute connectivity market is expected to reach a multibillion-dollar level by the end of the decade.
Credo now has five main high-growth pillars—AECs, IC solutions (retimers and optical DSPs), Zero-Flap optics, ALCs and OmniConnect gearboxes. Collectively, these present a total market opportunity likely to surpass $10 billion, more than tripling Credo’s market reach just 18 months ago. However, rising competition from Astera Labs (ALAB - Free Report) and Marvell Technology (MRVL - Free Report) amid macro uncertainties, including tariff pressures, remains a key concern.
Where Do CRDO’s Industry Peers Stand?
Astera Labs benefits from an innovative portfolio despite tariff and competitive pressures. Revenues jumped 103.9% year over year in the last reported quarter, driven by strong AI platform ramps across multiple product families. ALAB expects accelerated shipments of Scorpio P-Series switches and Aries 6 retimers on a customized rack-scale AI platform based on market-leading GPUs to boost top-line growth. It has emerged as a key player in next-generation data center connectivity, with a full-stack portfolio spanning PCIe 6.0, Ultra Accelerator (UA) Link and CXL 3.0. An innovative portfolio supported by strong demand from hyperscalers is expected to drive top-line growth over the long term. ALAB expects fourth-quarter 2025 revenues at $245-$253 million, growing 6-9% sequentially.
Marvell is rapidly scaling its connectivity portfolio by introducing products, like Active Copper Cable Linear Equalizers, DSPs, AEC, scalable data center interconnect, ethernet switch and co-packaged optics as AI workloads demand faster connectivity. It is solidifying its foothold in AI interconnect and optical technologies, a critical backbone of next-generation data centers. Management expects its electro-optics portfolio to deliver double-digit sequential growth in the third quarter, reflecting unmatched positioning in AI interconnect. Considering the continued robust demand for its custom AI chips, it issued strong revenue guidance for the third quarter. It expects revenues to be $2.06 billion (+/- 5%).
Image: Bigstock
Can CRDO Tap a $10B+ Market With Record Q2 & New Growth Pillars?
Key Takeaways
Credo Technology Group Holding Ltd (CRDO - Free Report) delivered a record fiscal second quarter with 272% year-over-year revenue growth, driven by soaring AI infrastructure demand and strong adoption of its active electrical cables (AECs), high-speed SerDes ICs and new optical and gearbox products. As hyperscalers race to expand AI capacity, Credo is witnessing explosive momentum, fueling triple-digit revenue gains and stronger profitability.
Credo has outlined three new growth pillars, each unlocking multibillion-dollar opportunities. The first, Zero Flap (ZF) optics, is a laser-based connectivity solution delivering AEC-level reliability through a custom optical DSP tightly integrated with Credo’s software stack. ZF optics are already in live data-center trials, with sampling to a second U.S. hyperscaler expected later in fiscal 2026. Supporting any connection length within the data center, ZF is expected to generate initial revenue in fiscal 2027 and represents a long-term multibillion-dollar market.
The second growth pillar is its association with micro-LED specialist Hyperlume, acquired in September 2025, which is accelerating the development of a new connectivity category:active LED cables (ALCs). These pluggable solutions utilize micro LEDs, delivering AEC-level reliability and power efficiency, and support up to 30-meter connections for row-scale data center networks. Sampling is planned for fiscal 2027 with revenue in fiscal 2028, and Credo expects the ALC market to grow to more than twice the size of the AEC market.
Its third growth pillar is OmniConnect gearboxes, designed to optimize XDU connectivity. Working with a lead customer, Credo introduced Weaver, a gearbox that addresses the “memory wall” by enhancing memory-to-compute links. Powered by Credo’s 112-gig VSR SerDes, it provides 10× higher I/O density with up to 10 inches of reach. The first customer plans an XPU with 2 TB of memory, marking a significant advancement for AI workloads. The memory-to-compute connectivity market is expected to reach a multibillion-dollar level by the end of the decade.
Credo now has five main high-growth pillars—AECs, IC solutions (retimers and optical DSPs), Zero-Flap optics, ALCs and OmniConnect gearboxes. Collectively, these present a total market opportunity likely to surpass $10 billion, more than tripling Credo’s market reach just 18 months ago. However, rising competition from Astera Labs (ALAB - Free Report) and Marvell Technology (MRVL - Free Report) amid macro uncertainties, including tariff pressures, remains a key concern.
Where Do CRDO’s Industry Peers Stand?
Astera Labs benefits from an innovative portfolio despite tariff and competitive pressures. Revenues jumped 103.9% year over year in the last reported quarter, driven by strong AI platform ramps across multiple product families. ALAB expects accelerated shipments of Scorpio P-Series switches and Aries 6 retimers on a customized rack-scale AI platform based on market-leading GPUs to boost top-line growth. It has emerged as a key player in next-generation data center connectivity, with a full-stack portfolio spanning PCIe 6.0, Ultra Accelerator (UA) Link and CXL 3.0. An innovative portfolio supported by strong demand from hyperscalers is expected to drive top-line growth over the long term. ALAB expects fourth-quarter 2025 revenues at $245-$253 million, growing 6-9% sequentially.
Marvell is rapidly scaling its connectivity portfolio by introducing products, like Active Copper Cable Linear Equalizers, DSPs, AEC, scalable data center interconnect, ethernet switch and co-packaged optics as AI workloads demand faster connectivity. It is solidifying its foothold in AI interconnect and optical technologies, a critical backbone of next-generation data centers. Management expects its electro-optics portfolio to deliver double-digit sequential growth in the third quarter, reflecting unmatched positioning in AI interconnect. Considering the continued robust demand for its custom AI chips, it issued strong revenue guidance for the third quarter. It expects revenues to be $2.06 billion (+/- 5%).
CRDO Price Performance, Valuation and Estimates
Shares of CRDO have gained 169.6% in the past six months compared with the Electronics-Semiconductors industry’s growth of 47.8%.
Image Source: Zacks Investment Research
Regarding the forward 12-month Price/Sales ratio, CRDO is trading at 26.23, higher than the Electronic-Semiconductors sector’s multiple of 8.13.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CRDO earnings for fiscal 2026 has been revised upward marginally 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 (Strong Buy) Rank stocks here.