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CRDO vs. COHR: Which AI Connectivity Stock Is the Better Buy?
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Key Takeaways
CRDO & COHR are benefiting from AI data center expansion, with distinct plans for high-speed connectivity.
Credo forecasts over 85% revenue growth in FY2027, driven by AEC demand and its expanding optical business.
COHR targets quarterly revenues above $3 billion by FY2027-end, fueled by AI optics and capacity expansion.
Both Credo Technology Group Holding Ltd (CRDO - Free Report) and Coherent Corp (COHR - Free Report) are beneficiaries of the AI data center buildout, but approach the opportunity from different angles.
Credo specializes in high-speed connectivity solutions, including integrated circuits (ICs), retimers, optical DSPs, Active Electrical Cables (AECs), SerDes chiplets and SerDes IP licensing.
Coherent is a manufacturer of lasers, transceivers, optoelectronic devices and modules, and engineered materials for verticals spanning industrial, instrumentation, communications and electronics markets.
For investors, the choice between CRDO and COHR is not straightforward. Let us break down the fundamentals, valuations, growth outlook and risks for each company to determine which stock stands out.
The Case for CRDO
As AI clusters grow larger, connectivity is emerging as a critical constraint. Management highlighted that the challenge is no longer just bandwidth, but also reliability, power efficiency, signal integrity, telemetry and serviceability. Credo believes its system-level approach, which combines silicon, firmware, manufacturing tests and qualification, remains a key differentiator.
AEC is a system-level product for CRDO and its core growth engine. The company now has deep relationships with five hyperscalers, alongside expanding engagement with Neocloud customers. Credo continues to see higher AEC penetration within existing customers as deployments scale, while the shift toward 200-gig-per-lane 1.6T ports provides another growth opportunity.
The retimer business is another lucrative opportunity. Management noted that the retimer business also delivered record quarterly revenues, supported by scale-up deployments of Screaming Eagle at 100-gig-per-lane and initial contributions from its 200-gig-per-lane Blue Heron retimer.
The most significant shift in Credo’s business mix is unfolding in its optical segment. On the last earnings call, management added that it continues to project more than $600 million in optical revenues, with ZeroFlap optics, silicon photonics PICs and optical DSPs each contributing over $100 million. Credo added that its optical DSP business generated “record revenues” in the fiscal first quarter. The company also recognized its first silicon-photonics PIC revenues following the DustPhotonics acquisition, with initial wins involving 800-gig and 1.6T optical transceivers. Credo continues to forecast more than 85% year-over-year revenue growth for fiscal 2027, aided by an expected second-half inflection.
The company's recent product announcements further strengthen its growth prospects. At the October 2026 OCP Global Summit, the company introduced its 1.6T ZeroFlap Active Light Cable (“ALC”). The wide-parallel optical interconnect solution is built for next-generation AI infrastructure, addressing rising reliability and energy-efficiency requirements. The solution targets AI scale-out and front-end networks, strengthening Credo’s position in next-generation optical interconnects. Shipments are expected to begin in 2027.
Image Source: Zacks Investment Research
Alongside the new ALC, the company announced the launch of the Short-Reach Micro-Emitter Optics Workstream within the Open Compute Project community. The initiative, backed by a leading hyperscaler and optical technology providers, including AFL, ams OSRAM and BizLink, aims to advance the development of the wide, parallel optical connectivity ecosystem.
The latest developments build on the company’s expanding product portfolio. In September 2026, Credo launched its new family of 224G-based ZF optical transceivers. The new products extend Credo’s ZF architecture to 1.6T port speeds and combine its 224G-per-lane optical DSP with the Kfir200 silicon photonics-based PICs and latest-generation PILOT diagnostics platform. The products are available in 2xDR4, 2xFR4 and DR8 configurations, supporting a range of AI scale-out interconnect architectures.
CRDO's growth does not come without meaningful risks. In the fiscal first quarter, four customers generated roughly 84% of quarterly revenues. Customer concentration is a major concern as it exposes the company to shifts in customer spending decisions and could materially affect results.
Execution risk is another risk factor. Much of the expected growth in fiscal 2027 is dependent on a successful ramp in the optical business. Any delay in deployment or broader industry transitions could affect this ramp. Macroeconomic uncertainties and exposure to the AI investment cycle amid increasing market competition remain additional concerns. The DustPhotonics acquisition also reduced its cash balance to $764.3 million at the end of the fiscal first quarter.
The Case for COHR
Explosive growth in AI data center infrastructure is driving unprecedented demand for optical networking solutions, positioning Coherent for long-term growth.
The Datacenter & Communications segment remains Coherent's core engine, contributing 79% of total revenues in the fourth quarter of fiscal 2026. Segment revenues increased 59% year over year, while data center revenues surged 66% on broad-based strength. Growing adoption of 800G and 1.6T optical transceivers bodes well. Management expects the 1.6T transceiver ramp to accelerate in calendar 2026 and 2027 as customer adoption increases.
Coherent expects first-quarter fiscal 2027 revenues between $2.2 billion and $2.4 billion, with non-GAAP earnings per share of $1.85-$2.05. The company expects to achieve its first-ever quarter with over $3 billion in revenue by the end of fiscal 2027.
The launch of PhotonLink strengthens its product portfolio. This integrated optics platform combines lasers, silicon photonics, specialty fibers, isolators, specialty fibers, micro-optics and detectors to support co-packaged optics (“CPO”), near-packaged optics (“NPO”) and emerging chip-to-chip connectivity. PhotonLink-related revenues are expected to begin ramping in the fourth quarter of calendar 2026.
Beyond transceivers, CPO, multi-rail systems, optical circuit switching (“OCS”) and advanced materials for data center, thermal and power management offer additional growth opportunities. OCS revenues increased sequentially in the fiscal fourth quarter, while multi-rail revenues are expected to begin ramping in the first half of calendar 2027. The company expects OCS revenues to improve, supported by capacity expansion, in the upcoming quarters.
Image Source: Zacks Investment Research
On the last earnings call, COHR noted that OCS represented more than $4 billion of addressable opportunity across data center interconnect, scale-up and scale-out networks. Further, management added that CPO, NPO and other forms of integrated optics represent more than $15 billion of incremental addressable opportunity over the coming years as these technologies enable the transition from copper connectivity.
Aggressive capacity expansion strategy bodes well. On the last earnings call, management said that the company was expanding its six-inch indium phosphide production capacity, targeting a doubling of internal output year over year by the end of the first quarter of fiscal 2027. Management expects capacity to more than double again by the end of calendar 2027.
However, the company is witnessing rising operating and capital expenses as it focuses on capacity expansion. While these investments are necessary for long-term growth, they may pressure margins and free cash flow if revenues do not materialize as expected. Capital expenditures reached $556 million in the fiscal fourth quarter, compared with $290 million in the preceding quarter, and management expects further sequential increase in the fiscal first quarter.
Heavy reliance on the Datacenter & Communications segment increases volatility linked to AI spending cycles amid increasing competition and macroeconomic troubles. Weakness in the Industrial segment, owing to softness in broader industrial markets, is concerning.
Price Performance & Valuations of CRDO & COHR
Year to date, CRDO and COHR are up 24.5% and 42.6%, respectively.
Image Source: Zacks Investment Research
CRDO is trading at a forward price-to-earnings multiple of 23.41X, lower than COHR’s 24.73X.
Image Source: Zacks Investment Research
How Do the Consensus Estimates Compare for CRDO & COHR?
Analysts have raised their earnings estimates for COHR by 0.9% for the current fiscal year in the past 60 days.
Image Source: Zacks Investment Research
Estimates have been revised up 4.2% for CRDO’s bottom line in the same period.
Image Source: Zacks Investment Research
CRDO or COHR: Which Is a Better Pick
CRDO offers strong revenue growth prospects but customer concentration and execution risks remain concerns. COHR benefits from a broader optical portfolio, expanding manufacturing capacity and strong AI-driven demand, though rising capital expenditures could pressure cash flow.
COHR carries a Zacks Rank #2 (Buy) while CRDO carries a Zacks Rank #3 (Hold). Coherent appears to be a better pick now based on the Zacks Rank.
View the Zacks #1 Rank List
Image: Bigstock
CRDO vs. COHR: Which AI Connectivity Stock Is the Better Buy?
Key Takeaways
Both Credo Technology Group Holding Ltd (CRDO - Free Report) and Coherent Corp (COHR - Free Report) are beneficiaries of the AI data center buildout, but approach the opportunity from different angles.
Credo specializes in high-speed connectivity solutions, including integrated circuits (ICs), retimers, optical DSPs, Active Electrical Cables (AECs), SerDes chiplets and SerDes IP licensing.
Coherent is a manufacturer of lasers, transceivers, optoelectronic devices and modules, and engineered materials for verticals spanning industrial, instrumentation, communications and electronics markets.
For investors, the choice between CRDO and COHR is not straightforward. Let us break down the fundamentals, valuations, growth outlook and risks for each company to determine which stock stands out.
The Case for CRDO
As AI clusters grow larger, connectivity is emerging as a critical constraint. Management highlighted that the challenge is no longer just bandwidth, but also reliability, power efficiency, signal integrity, telemetry and serviceability. Credo believes its system-level approach, which combines silicon, firmware, manufacturing tests and qualification, remains a key differentiator.
AEC is a system-level product for CRDO and its core growth engine. The company now has deep relationships with five hyperscalers, alongside expanding engagement with Neocloud customers. Credo continues to see higher AEC penetration within existing customers as deployments scale, while the shift toward 200-gig-per-lane 1.6T ports provides another growth opportunity.
The retimer business is another lucrative opportunity. Management noted that the retimer business also delivered record quarterly revenues, supported by scale-up deployments of Screaming Eagle at 100-gig-per-lane and initial contributions from its 200-gig-per-lane Blue Heron retimer.
The most significant shift in Credo’s business mix is unfolding in its optical segment. On the last earnings call, management added that it continues to project more than $600 million in optical revenues, with ZeroFlap optics, silicon photonics PICs and optical DSPs each contributing over $100 million. Credo added that its optical DSP business generated “record revenues” in the fiscal first quarter. The company also recognized its first silicon-photonics PIC revenues following the DustPhotonics acquisition, with initial wins involving 800-gig and 1.6T optical transceivers. Credo continues to forecast more than 85% year-over-year revenue growth for fiscal 2027, aided by an expected second-half inflection.
The company's recent product announcements further strengthen its growth prospects. At the October 2026 OCP Global Summit, the company introduced its 1.6T ZeroFlap Active Light Cable (“ALC”). The wide-parallel optical interconnect solution is built for next-generation AI infrastructure, addressing rising reliability and energy-efficiency requirements. The solution targets AI scale-out and front-end networks, strengthening Credo’s position in next-generation optical interconnects. Shipments are expected to begin in 2027.
Image Source: Zacks Investment Research
Alongside the new ALC, the company announced the launch of the Short-Reach Micro-Emitter Optics Workstream within the Open Compute Project community. The initiative, backed by a leading hyperscaler and optical technology providers, including AFL, ams OSRAM and BizLink, aims to advance the development of the wide, parallel optical connectivity ecosystem.
The latest developments build on the company’s expanding product portfolio. In September 2026, Credo launched its new family of 224G-based ZF optical transceivers. The new products extend Credo’s ZF architecture to 1.6T port speeds and combine its 224G-per-lane optical DSP with the Kfir200 silicon photonics-based PICs and latest-generation PILOT diagnostics platform. The products are available in 2xDR4, 2xFR4 and DR8 configurations, supporting a range of AI scale-out interconnect architectures.
CRDO's growth does not come without meaningful risks. In the fiscal first quarter, four customers generated roughly 84% of quarterly revenues. Customer concentration is a major concern as it exposes the company to shifts in customer spending decisions and could materially affect results.
Execution risk is another risk factor. Much of the expected growth in fiscal 2027 is dependent on a successful ramp in the optical business. Any delay in deployment or broader industry transitions could affect this ramp. Macroeconomic uncertainties and exposure to the AI investment cycle amid increasing market competition remain additional concerns. The DustPhotonics acquisition also reduced its cash balance to $764.3 million at the end of the fiscal first quarter.
The Case for COHR
Explosive growth in AI data center infrastructure is driving unprecedented demand for optical networking solutions, positioning Coherent for long-term growth.
The Datacenter & Communications segment remains Coherent's core engine, contributing 79% of total revenues in the fourth quarter of fiscal 2026. Segment revenues increased 59% year over year, while data center revenues surged 66% on broad-based strength. Growing adoption of 800G and 1.6T optical transceivers bodes well. Management expects the 1.6T transceiver ramp to accelerate in calendar 2026 and 2027 as customer adoption increases.
Coherent expects first-quarter fiscal 2027 revenues between $2.2 billion and $2.4 billion, with non-GAAP earnings per share of $1.85-$2.05. The company expects to achieve its first-ever quarter with over $3 billion in revenue by the end of fiscal 2027.
The launch of PhotonLink strengthens its product portfolio. This integrated optics platform combines lasers, silicon photonics, specialty fibers, isolators, specialty fibers, micro-optics and detectors to support co-packaged optics (“CPO”), near-packaged optics (“NPO”) and emerging chip-to-chip connectivity. PhotonLink-related revenues are expected to begin ramping in the fourth quarter of calendar 2026.
Beyond transceivers, CPO, multi-rail systems, optical circuit switching (“OCS”) and advanced materials for data center, thermal and power management offer additional growth opportunities. OCS revenues increased sequentially in the fiscal fourth quarter, while multi-rail revenues are expected to begin ramping in the first half of calendar 2027. The company expects OCS revenues to improve, supported by capacity expansion, in the upcoming quarters.
Image Source: Zacks Investment Research
On the last earnings call, COHR noted that OCS represented more than $4 billion of addressable opportunity across data center interconnect, scale-up and scale-out networks. Further, management added that CPO, NPO and other forms of integrated optics represent more than $15 billion of incremental addressable opportunity over the coming years as these technologies enable the transition from copper connectivity.
Aggressive capacity expansion strategy bodes well. On the last earnings call, management said that the company was expanding its six-inch indium phosphide production capacity, targeting a doubling of internal output year over year by the end of the first quarter of fiscal 2027. Management expects capacity to more than double again by the end of calendar 2027.
However, the company is witnessing rising operating and capital expenses as it focuses on capacity expansion. While these investments are necessary for long-term growth, they may pressure margins and free cash flow if revenues do not materialize as expected. Capital expenditures reached $556 million in the fiscal fourth quarter, compared with $290 million in the preceding quarter, and management expects further sequential increase in the fiscal first quarter.
Heavy reliance on the Datacenter & Communications segment increases volatility linked to AI spending cycles amid increasing competition and macroeconomic troubles. Weakness in the Industrial segment, owing to softness in broader industrial markets, is concerning.
Price Performance & Valuations of CRDO & COHR
Year to date, CRDO and COHR are up 24.5% and 42.6%, respectively.
Image Source: Zacks Investment Research
CRDO is trading at a forward price-to-earnings multiple of 23.41X, lower than COHR’s 24.73X.
Image Source: Zacks Investment Research
How Do the Consensus Estimates Compare for CRDO & COHR?
Analysts have raised their earnings estimates for COHR by 0.9% for the current fiscal year in the past 60 days.
Image Source: Zacks Investment Research
Estimates have been revised up 4.2% for CRDO’s bottom line in the same period.
Image Source: Zacks Investment Research
CRDO or COHR: Which Is a Better Pick
CRDO offers strong revenue growth prospects but customer concentration and execution risks remain concerns. COHR benefits from a broader optical portfolio, expanding manufacturing capacity and strong AI-driven demand, though rising capital expenditures could pressure cash flow.
COHR carries a Zacks Rank #2 (Buy) while CRDO carries a Zacks Rank #3 (Hold). Coherent appears to be a better pick now based on the Zacks Rank.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.