Credo Bets Big on AEC Business: Will It Deliver Sustainable Growth?
The growth is driven by its increasing adoption in the data center market. CRDO highlighted that AECs are fast becoming the 'de-facto standard for intra-rack applications.'
The demand is increasing as ZeroFlap AECs offer more than 100 times improved reliability than laser-based optical solutions. It offers improved signal integrity compared with traditional direct attached cables ('DACs'). This made AECs an increasingly attractive option for data center applications, contributing to the new expansion of AEC usage and further solidifying Credo's position in the market.
Moreover, Credo's system-level approach is giving it a competitive edge. 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. With demonstration of PCIe Gen6 AECs for scale-up AI networks, strong customer growth and increasing hyperscaler interest, this product line is expected to remain a growth engine going ahead and drive overall revenues.
Apart from AEC, CRDO stands to gain from its Optical DSP and retimer product lines. For fiscal 2026, Credo anticipates revenues to surpass $800 million, implying more than 85% year-over-year growth.
Catalysts Driving Top Line for Competitors
CRDO's main competitors are Broadcom AVGO and Marvell Technology MRVL.
Broadcom is a leading player in the semiconductor market. AVGO is gaining from strong AI momentum as it witnessed increasing demand for networking and custom AI chips. It reported 20% revenue growth in the last quarter, driven by strength in AI semiconductors and the momentum in VMware. AI semiconductor revenues of over $4.4 billion jumped 46% year over year, with AI networking improving more than 170%.
Broadcom projects AI semiconductor revenues to reach $5.1 billion in the third quarter of fiscal 2025, up nearly 60% year over year and representing the 10th consecutive quarter of AI growth. Heavy demand for Broadcom's Ethernet-based networking portfolio, which includes Tomahawk switches, Jericho routers and NICs bodes well.
Marvell Technology's top-line performance continues to be driven by a strong demand environment across the data center end market. Higher demand for AI-driven custom silicon and strong shipments of electro-optics products for AI and cloud applications are driving data-center revenues. The segment accounted for 76% of the quarter's total revenues in the last reported quarter. Ongoing recovery in carrier infrastructure and enterprise networking end markets is another catalyst.
MRVL expects revenues to be $2 billion (+/- 5%) for the second quarter of fiscal 2026, indicating growth of 57% year over year at midpoint. It expects data-center revenues to increase in the mid-single-digit range sequentially and maintain strong year-over-year growth.
CRDO Price Performance, Valuation and Estimates
Shares of CRDO have gained 28.7% over the past month compared with the Electronics-Semiconductors industry's growth of 9.9%.
In terms of the forward 12-month price/sales ratio, CRDO is trading at 20.75, higher than the Electronic-Semiconductors sector's multiple of 8.75.
The Zacks Consensus Estimate for CRDO earnings for fiscal 2026 has seen a significant upward revision over the past 60 days.
CRDO currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
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Marvell Technology, Inc. (MRVL): Free Stock Analysis Report
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Geek Dad
36 minutes ago
- Geek Dad
The Play's the Thing With the Polycade Sente Modular Arcade
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In a nice touch, the Polycade Sente boxes are designed to be something for the kids to play with and enjoy while the parents put together their arcade machine. I don't have young kids of my own, but my neighbor was throwing a birthday party for one of her grandkids, so the empty boxes found a perfect new home. Ready for the neighbors to enjoy some analog play! Image by Paul Benson. The Polycade Sente comes standard with a bracket to mount it onto a wall. However, as I don't have a dedicated game room in the house, or even a dedicated wall to mount it on, I needed something a little more mobile. So the first thing that I would be putting together would be the stand. Like the Polycade Sente itself, the stand is made of powder-coated steel. The good news? It's easy to assemble. The bad news? It's super heavy, so you'll definitely want to have two people for the assembly. The assembled stand. Image by Paul Benson. 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National Post
36 minutes ago
- National Post
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Globe and Mail
36 minutes ago
- Globe and Mail
Emerson Gears Up to Report Q3 Earnings: What's in Store?
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Today, you can download 7 Best Stocks for the Next 30 Days. Emerson Electric Co. (EMR): Free Stock Analysis Report Parker-Hannifin Corporation (PH): Free Stock Analysis Report Eaton Corporation, PLC (ETN): Free Stock Analysis Report Dover Corporation (DOV): Free Stock Analysis Report
