Credo Technology Shapes Up As A New AI Superstar

Credo Technology is an amazing business.

Fiscal 26 marked another defining year for Credo. Revenue exceeded $1.3 billion, more than tripling year over year. While non GAAP net income increased more than 5x, to $662 million.

Very few semiconductor companies have scaled at this pace while sustaining product leadership strong margins, and operational execution. In the fourth quarter fiscal 26, revenue reached a record $437 million. Notably, our revenue in the quarter exceeded our entire fiscal 25 revenue. Q4 non GAAP gross margin was 68.3%. non-GAAP net income grew to $227 million. And was more than 30% greater than our revenue in the year ago quarter. Producing these results required incredible effort and expertise and I want to sincerely thank team Credo for their continued stellar performance. These results reflect Credo’s ability to capitalize on a fundamental shift occurring across AI infrastructure.

As AI clusters scale from tens of thousands to hundreds of thousands of GPUs, connectivity is no longer just about bandwidth. Reliability, power efficiency, signal integrity, and telemetry have become critical architectural requirements. Today’s AI infrastructure is increasingly constrained not by compute, but by the reliability and efficiency of the connectivity fabric tying these systems together. Over the past several years, AI network reliability has become Credo’s north star. Our road map, our product investments, our software architecture, and our system level approach have all been built around helping customers accelerate cluster bring up maximize GPU utilization, and maintain stable operation at unprecedented scale. Credo was purpose built for this transition.

Our strategy is centered on delivering connectivity solutions across the full spectrum of AI infrastructure from die to die and chip to chip connectivity to multirack scale copper and to row scale and facility wide optical interconnect. By extending both inward toward the silicon and outward across the data center, we have positioned Credo to become a foundational network architecture partner for our customers. Importantly, Hyperscale and Neo Cloud operators increasingly want partners capable of delivering multiple generations of connectivity solutions with deep system level integration This is where Credo differentiates itself through our vertically integrated approach spanning core series technology, silicon and system level solutions, firmware and telemetry software, and operational execution.

Like the memory stocks, Credo is being affected by a major ‘something new’. AI is scaling so fast that the infrastructure requirements and complexity are growing exponentially, creating a dramatic tailwind for companies supplying the nuts and bolts of the AI revolution.

Amazingly, Credo is talking about a second inflexion point for its business. The first came in 2025 for its copper connectivity solutions, since when sales and profits have exploded. Now it is the optical side of the business, beefed up by a recent acquisition, which is seeing an inflexion point.

We believe fiscal 27 represents an inflection point for Credo’s optical business. First, at an optical DSP component level, we see momentum in both design wins and revenue contribution.

We are looking forward to continued growth in this product family and we have received excellent customer feedback on the solutions we announced last quarter. Both Robin a highly optimized DSP at 100 gig per lane, and Cardinal, a leading edge DSP at 200 gig per lane. Next, the acquisition of Dust Photonics, which closed last week, significantly expands our optics position with highly differentiated silicon photonics PIC technology. Dust brings strong design win momentum and a portfolio spanning 800 gig and 1.6 t solutions along with a road map to 3.2 Tbps and beyond. Importantly, their architecture enables simplified optical designs with substantially fewer lasers.

The outlook for the optical business is extremely promising.

In summary, we are very enthusiastic about the prospects of our optical portfolio. In fiscal 27, we expect our optical DSPs, SiPho PICs, and ZeroFlap optics will each contribute more than $100 million of revenue. And in total, more than $600 million of revenue.

With this expected ramp accelerating in the second half of the year Based on customer and market feedback, we believe this portfolio will deliver sustained rapid growth in future years. 

Credo is not only growing fast but investing heavily in next-generation solutions for its increasingly demanding AI infrastructure customers.

As AI infrastructure becomes increasingly complex, and protocol diversity expands, we believe our system level expertise and software integration capabilities position us well for continued share gains. Now moving to our emerging growth categories. We also continue to make strong progress across our newer growth vectors, including active LED-based cables, and the OmniConnect. Our ALC solutions will extend the reliability and power profile of AECs into raw scale optical connectivity by replacing traditional lasers with micro LED technology. This creates a highly differentiated connectivity category capable of delivering AEC class reliability with optical reach of up to 30 meters.

Our OmniConnect family expands our solutions inward towards the silicon Our first gearbox solution, Weaver, will address growing memory bandwidth and density challenges by enabling substantially higher memory IO density and more flexible architectures. Customer engagement remains strong, especially around next generation inference designs. We continue to expect production ramps for both ALC and OmniConnect solutions beginning in our fiscal 28. And in conclusion, the data center connectivity market continues to evolve As AI scales toward gigawatt class deployments, and increasingly dense architectures, network reliability becomes even more critical. Even isolated link instabilities can impact cluster bring up times, GPU utilization, and overall system availability. that is why reliability, Credo’s north star over the past several years.

It drives our system level philosophy our telemetry first software architecture, and the investments across the full spectrum of our solutions. Fiscal 26 was another transformative year for Credo. And yet we believe we are still in the early innings of the opportunity ahead.

In terms of 3G, Credo Technology is a classic – explosive growth (one of the fastest growing businesses in the world), an incredibly story, supplying critical and fast-improving connectivity technology for the still-accelerating data cente infrastructure boom (with Space X and others already plotting low orbiting data centres in space) and a chart in an explosive (day in the sun) uptrend.

Share Recommendations

Credo Technology. CRDO

Strategy – Buy Now, Add More On Volatility

Credo is an incredibly volatile share but this is taking place within a strong uptrend. We are promised accelerated growth in the optical business in the second half of fiscal 2027 (year end 30 April/ 2 May 2027), with continuing strong growth in the copper connectivty business which plays other roles in the AI infrastructure build-out boom.

There are plenty of bears of Credo because of the valuation with the prospective PE ratio somewhere around 40. That doesn’t seem way out of line to me for such a fast-growing business but means there may be opportunities to buy more cheaply. Who knows? As always the future is a mystery. The present reality is that Credo Technology is a phenomenally exciting business.