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How are Active Electrical Cables Driving Credo's Growth?
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Key Takeaways
Credo expects AECs to remain a key growth driver as AI clusters demand reliable, power-efficient connectivity.
CRDO says ZeroFlap AECs offer up to 1,000x greater reliability while using significantly less power.
Credo expects over 80% fiscal 2027 revenue growth, with AECs supporting its copper portfolio expansion.
Credo Technology Group Holding Ltd (CRDO - Free Report) continues to see Active Electrical Cables (AECs) as one of its primary growth drivers, supported by increasing demand for reliable and power-efficient connectivity in AI infrastructure. The company highlighted that as AI clusters expand, reliability and power efficiency have become major design considerations. As a result, AECs have become the preferred choice for in-rack connectivity and many multi-rack deployments extending up to seven meters.
Credo also stated that its ZeroFlap AECs deliver up to 1,000 times greater reliability than conventional laser-based optical modules while consuming significantly less power. In environments where network downtime can delay AI deployments and increase costs, the company believes network reliability has become increasingly important.
Credo reported continued customer adoption of its AEC portfolio across hyperscale and Neo cloud operators for both 100-gigabit-per-lane deployments and emerging 200-gigabit-per-lane applications. The company’s vertically integrated approach, spanning core SerDes technology, silicon, system-level solutions, firmware and telemetry software, supports its position as connectivity speeds and AI cluster complexity continue to increase. It also remains on track with its PCIe Gen 6 AEC family, where customer engagement and design activity continue to strengthen.
On the last earnings call, management highlighted that growth in its existing copper portfolio, led primarily by AECs along with retimers, is expected to support first-half fiscal 2027 performance. The company also stated that approximately half of its projected fiscal 2027 revenue growth is expected to come from its optical portfolio, while the remaining half is anticipated to be driven by its existing copper portfolio, predominantly AECs. Management further stated that AEC adoption is expanding across both hyperscalers and Neo cloud customers, with additional opportunities to deepen deployments across customer networks. Credo expects AECs to remain an important long-term contributor to the company's growth.
For fiscal 2027, management expects more than 80% year-over-year revenue growth. Management anticipates more than $600 million in optical revenues, with ZeroFlap optics, silicon photonics PICs and optical DSPs each contributing more than $100 million.
Taking a Look at CRDO’s Competitors
Broadcom Corporation (AVGO - Free Report) is benefiting from rising AI semiconductor demand, led by custom XPUs and AI networking, while VMware continues to support infrastructure software growth. AI semiconductor revenues reached a record level in the fiscal second quarter, and management expects further growth in the fiscal third quarter, supported by multi-year commitments with core customers. Broadcom’s networking leadership, expanded XPU relationships and healthy free cash flow provide long-term growth support. Non-AI semiconductors are also showing signs of cyclical recovery. For the third quarter of fiscal 2026, Broadcom expects revenues of approximately $29.4 billion, indicating 84% year-over-year growth.
Marvell Technology (MRVL - Free Report) is benefiting from AI-led demand across the data center end market, with custom silicon, interconnect, switching and optics driving record revenues and a higher multi-year outlook. Management now expects about 40% revenue growth for fiscal 2027. The expanded NVIDIA partnership, including NVLink Fusion and optics collaboration, embeds Marvell deeper in hyperscaler roadmaps and supports program ramp. Recent acquisitions broaden scale-up capabilities. Communications and other areas are recovering as inventories normalize. Marvell expects fiscal 2027 revenues to grow about 40% year over year to nearly $11.5 billion and sees fiscal 2028 revenues rising about 45% to roughly $16.5 billion.
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How are Active Electrical Cables Driving Credo's Growth?
Key Takeaways
Credo Technology Group Holding Ltd (CRDO - Free Report) continues to see Active Electrical Cables (AECs) as one of its primary growth drivers, supported by increasing demand for reliable and power-efficient connectivity in AI infrastructure. The company highlighted that as AI clusters expand, reliability and power efficiency have become major design considerations. As a result, AECs have become the preferred choice for in-rack connectivity and many multi-rack deployments extending up to seven meters.
Credo also stated that its ZeroFlap AECs deliver up to 1,000 times greater reliability than conventional laser-based optical modules while consuming significantly less power. In environments where network downtime can delay AI deployments and increase costs, the company believes network reliability has become increasingly important.
Credo reported continued customer adoption of its AEC portfolio across hyperscale and Neo cloud operators for both 100-gigabit-per-lane deployments and emerging 200-gigabit-per-lane applications. The company’s vertically integrated approach, spanning core SerDes technology, silicon, system-level solutions, firmware and telemetry software, supports its position as connectivity speeds and AI cluster complexity continue to increase. It also remains on track with its PCIe Gen 6 AEC family, where customer engagement and design activity continue to strengthen.
On the last earnings call, management highlighted that growth in its existing copper portfolio, led primarily by AECs along with retimers, is expected to support first-half fiscal 2027 performance. The company also stated that approximately half of its projected fiscal 2027 revenue growth is expected to come from its optical portfolio, while the remaining half is anticipated to be driven by its existing copper portfolio, predominantly AECs. Management further stated that AEC adoption is expanding across both hyperscalers and Neo cloud customers, with additional opportunities to deepen deployments across customer networks. Credo expects AECs to remain an important long-term contributor to the company's growth.
For fiscal 2027, management expects more than 80% year-over-year revenue growth. Management anticipates more than $600 million in optical revenues, with ZeroFlap optics, silicon photonics PICs and optical DSPs each contributing more than $100 million.
Taking a Look at CRDO’s Competitors
Broadcom Corporation (AVGO - Free Report) is benefiting from rising AI semiconductor demand, led by custom XPUs and AI networking, while VMware continues to support infrastructure software growth. AI semiconductor revenues reached a record level in the fiscal second quarter, and management expects further growth in the fiscal third quarter, supported by multi-year commitments with core customers. Broadcom’s networking leadership, expanded XPU relationships and healthy free cash flow provide long-term growth support. Non-AI semiconductors are also showing signs of cyclical recovery. For the third quarter of fiscal 2026, Broadcom expects revenues of approximately $29.4 billion, indicating 84% year-over-year growth.
Marvell Technology (MRVL - Free Report) is benefiting from AI-led demand across the data center end market, with custom silicon, interconnect, switching and optics driving record revenues and a higher multi-year outlook. Management now expects about 40% revenue growth for fiscal 2027. The expanded NVIDIA partnership, including NVLink Fusion and optics collaboration, embeds Marvell deeper in hyperscaler roadmaps and supports program ramp. Recent acquisitions broaden scale-up capabilities. Communications and other areas are recovering as inventories normalize. Marvell expects fiscal 2027 revenues to grow about 40% year over year to nearly $11.5 billion and sees fiscal 2028 revenues rising about 45% to roughly $16.5 billion.
CRDO Price Performance, Valuation and Estimates
Shares of CRDO are up 136.1% in the past three months compared with the Electronics-Semiconductors industry’s growth of 40.5%.
Image Source: Zacks Investment Research
Regarding the forward 12-month price/sales ratio, CRDO is trading at 17.75, higher than the industry’s multiple of 8.99.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CRDO earnings for fiscal 2026 has been revised up over the past 60 days.
Image Source: Zacks Investment Research
CRDO currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.