Networking Key To The AI Revolution

Networking delivered record revenue of $7.3 billion as escalating demands of AI compute clusters necessitate high efficiency and low latency networking. This represents a 46% sequential and 98% year-on-year increase with strong demand across Spectrum- X Ethernet, InfiniBand and NVLink. Our Spectrum-X enhanced Ethernet solutions provide the highest throughput and lowest latency network for Ethernet AI workloads. Spectrum-X Ethernet delivered double-digit sequential and year-over-year growth with annualized revenue exceeding $10 billion. At Hot Chips, we introduced Spectrum-XGS Ethernet, a technology design to unify disparate data centers into giga-scale AI super factories. [ CoreWeave ] is an initial adopter of the solution, which is projected to double GPU-to-GPU communication speed.

InfiniBand revenue nearly doubled sequentially, fueled by the adoption of XDR technology, which provides double the bandwidth improvement over its predecessor, especially valuable for the model builders. The world’s fastest switch, NVLink, with 14x the bandwidth of PCIe Gen 5 delivered strong growth as customers deployed Grace Blackwell NVLink rack scale systems.

Colette Kress, CFO , Nvidia, Q2 2025, 27 August 2025

Nvidia’s latest report highlighted the explosive growth of networking and its key role in the AI revolution. I am on a learning curve here, so I don’t know exactly how what Nvidia is doing relates to Credo Technology’s business. The exciting fact is that Credo specialises entirely in the explosively growing networking area, and in Q4 2025, for the quarter and year to 3 May 2025, published on 2 June 2025, the growth from Q4 2024 to Q4 2025 was an incredible 180%.

Growth at this speed is a game-changer for a company, as it makes many things possible, such as a near doubling of research and development spending to $48 million. Credo has been talking of its business reaching an inflexion point in 2025. The numbers support that contention. Product sales, the overwhelming bulk of the business, quadrupled from $41m for Q4 2024 to $164.5m for Q4 2025.

I listened to an interview with Bill Brennan, the CEO of Credo, but it was too technical for me, although he was excited by what is happening to his company and the outlook for continued strong growth over the coming years. At a superficial level, I know what networking is; we live in a networked world, but in relation to AI factories, it is all a bit of a mystery.

Below is what AI says that Credo does.

Credo Technology provides high-speed, power-efficient connectivity solutions, including Active Electrical Cables (AECs) and Digital Signal Processors (DSPs), that power AI applications, hyperscale data centers, and cloud computing by enabling faster, more reliable data infrastructure. Their products are built on Serializer/Deserializer (SerDes) and DSP technology, addressing emerging high-speed Ethernet and PCIe port markets up to 1.6 terabits per second (T). Credo also offers SerDes IP licensing and PCIe retimer solutions.
 

Key Offerings

High-Speed Connectivity Solutions:These are designed for optical and electrical Ethernet and PCIe applications. 

Active Electrical Cables (AECs):A key product family that uses half the power and costs less than optical solutions, connecting components within servers and racks. 

Optical Digital Signal Processors (DSPs):Optimized for high-speed optical networks, including 100G, 200G, 400G, 800G, and 1.6T ports. 

SerDes Chiplets:Integrated circuits using Credo’s SerDes technology to enable high-speed data transfer. 

SerDes IP Licensing:Intellectual property solutions for other companies to integrate into their own designs. 

PCIe Retimers:Solutions that boost and extend PCIe signals, crucial for scaling AI accelerators and other high-performance applications. 

What They Enable

AI-Driven Applications:Faster, more reliable, and more energy-efficient connectivity for the intense demands of artificial intelligence. 

Cloud Computing & Hyperscale Networks:Providing the essential high-bandwidth backbone required for massive data centers. 

Scale-Out AI Architectures:Linking many servers and accelerators within a single rack to create larger, unified processing units. 

Scale-Up AI Architectures:Enabling communication between multiple processors within a single server for increased power. 

Core Technologies 

Serializer/Deserializer (SerDes): A fundamental technology for high-speed data transmission.

Digital Signal Processor (DSP): Used in their PAM4 optical DSPs to improve signal integrity and power efficiency in high-speed links.

What stands out is that Credo Technology is focused even more intensely on AI than Nvidia. All its business is AI-related, which explains the incredible growth since the AI boom took off in late 2022. In broad numbers, since Q4 2021, roughly when AI began to become a serious factor, Credo’s revenue has grown almost 10-fold.

This is enabling Credo to step up the pace of innovation.

Our innovation spans three tiers: advanced service technology, cutting-edge integrated circuit design, and comprehensive system-level solutions. These innovations are seamlessly integrated with our PILOT software platform. PILOT is an acronym for Predictive Integrity, Link Optimization, Telemetry. PILOT offers an industry-leading user interface, robust debugging tools, and advanced telemetry tailored for large-scale deployments. This holistic innovation strategy enables Credo Technology Group Holding Ltd to deliver copper and optical connectivity solutions that surpass industry standards, providing unmatched functionality, reliability, and energy efficiency. While achieving a remarkable revenue ramp in fiscal 2025, we continue to build the foundation for sustained growth.

Looking ahead, we anticipate increasing customer diversification across copper and optical connectivity for Ethernet, PCIe, UA link, and other emerging applications in both scale-out and scale-up AI networks. Following this significant revenue inflection in fiscal 2025, we’re energized by the expanding opportunities and total addressable market that lie ahead.

Bill Brennan, CEO, Credo Technology, Q4 2025, 2 June 2025

Part of what is happening is that the demands of AI data centres favour Credo’s solution, especially in terms of reliability.

When we pioneered the AEC market years ago, we recognized the compelling advantages over both traditional direct-attached cables or DACs and laser-based optical solutions, especially at data rates of 50 gig per lane or higher. AECs have extended the viability of copper connectivity, becoming the de facto standard for inter-rack applications. Compared to DACs, AECs deliver superior signal integrity, advanced features, and a more versatile form factor. Now, AECs are gaining traction as a robust rack-to-rack solution for distances up to seven meters, offering over 100 times greater reliability than laser-based optical modules, virtually eliminating link flaps and significantly improving energy efficiency, which were both key enablers for best-in-class AI deployments.

[A link flap is a network condition where a physical interface, like a network port, repeatedly and frequently alternates between its “Up” (connected) and “Down” (disconnected) states. This causes disruption to network traffic and topology changes. Common causes include faulty cables or hardware, incorrect duplex settings, signal integrity issues, or power-saving features. Network devices can detect link flapping and automatically disable the port to prevent further disruption, though this requires administrator intervention to reactivate.]

Bill Brennan, CEO, Credo Technology, Q4 2025, 2 June 2025

But that is not the whole story.

Credo Technology Group Holding Ltd’s system-level approach has driven substantial competitive advantages by owning the entire solution stack, including SERDES IP, retimer ICs, system-level design, qualification, and production. Our approach positions Credo Technology Group Holding Ltd for significant innovation and time-to-market advantages. As data center architectures evolve rapidly, we foresee a continued shift towards curated system-level solutions. We’re enthusiastic about the ongoing expansion of the AEC market. For instance, our recently demonstrated PCIe Gen 6 AECs at GTC promise the same compelling benefits for AI scale networks as deployments transition to rack-scale architectures. Our growing traction with hyperscalers is evident, with strong customer forecasts and new design wins and qualifications. We’re confident in sustained AEC revenue growth.

Bill Brennan, CEO, Credo Technology, Q4 2025, 2 June 2025

But where the market does favour optical solutions, Credo is covered there as well.

Fiscal 2025 was a standout year for Credo Technology Group Holding Ltd’s optical business. We closed the year with strong momentum, expanding customer diversity across lane rates, port speeds, and applications. We achieved our revenue growth targets, delivering 50 gig and 100 gig per lane optical DSPs to a broad base of optical module customers. In Q4, we secured a significant DSP win for an 800 gig transceiver, with initial deployments expected at a US hyperscaler in fiscal 2026. At the OSC conference in San Francisco last month, Credo Technology Group Holding Ltd’s latest optical innovations drew widespread attention from industry leaders.

We unveiled our ultra-low-power 100 gig per lane optical DSPs built on five-nanometer technology. This family, including full DSP and linear receive optic or LRO variants, sets new industry benchmarks for power efficiency. In collaboration with an optical module partner, Credo Technology Group Holding Ltd demonstrated an industry-first 800-gig optical module with total power consumption of roughly nine watts. Powered by our LARC LRO DSP and single-mode optics, we achieved error rates comparable to full DSP solutions, earning significant interest from hyperscalers prioritizing power efficiency for AI deployments. We also showcased our three-nanometer, 200 gig per lane optical DSP supporting port speeds up to 1.6 terabits per second.

With leading signal integrity and power efficiency, this solution positions Credo Technology Group Holding Ltd to drive the industry’s transition to 200-gig lane speeds in the coming years. Looking ahead, we see a dynamic and growing market for optical connectivity, where reliability and energy efficiency are increasingly critical. Credo Technology Group Holding Ltd is poised to deliver system-level innovations that provide substantial advantages to our partners. Credo Technology Group Holding Ltd’s optical business demonstrated robust execution in fiscal 2025. With our growing differentiation and an expanding system-level market opportunity, we anticipate accelerated revenue growth in the years ahead.

Bill Brennan, CEO, Credo Technology, Q4 2025, 2 June 2025

In his presentation to analysts, Bill Brennan talks a great deal about products. This is a company stuffed with engineers for whom it is all about the product. It is a class act.

In summary, fiscal 2025 marked a pivotal year for Credo Technology Group Holding Ltd, achieving record revenue, profit, and market adoption of our innovative connectivity solutions, hitting the inflection point we anticipated. Our operational and customer-facing teams executed flawlessly to deliver these results. Credo Technology Group Holding Ltd pioneered a market that transformed how hyperscalers connect switches and servers. We continue to innovate with recent product announcements reflecting customer-driven solutions. These advancements position us to capture significant opportunities in the global AI infrastructure investment wave, fueling our next phase of growth. Reflecting on our journey, Credo Technology Group Holding Ltd has navigated successes and challenges with relentless focus on delivering world-class products.

Bill Brennan, CEO, Credo Technology, Q4 2025, 2 June 2025

Bill looks, sounds and is a level-headed guy, but even he admits.

I’m excited for what lies ahead. We see growing demand for high-speed connectivity solutions across our hyperscaler customers to power advanced AI services, a trend we anticipate continuing for the foreseeable future. Customers require reliable, power-efficient, high-performance, and tailored solutions to support their diverse architectures. Credo Technology Group Holding Ltd meets this demand with a differentiated portfolio of copper and optical connectivity solutions customized for customers, built on our core service IP, peer-to-peer innovation strategy, and system-level approach.

Bill Brennan, CEO, Credo Technology, Q4 2025, 2 June 2025

Subscribers may remember that not long ago, the shares plummeted from $86 to $29 before rallying even more strongly. Credo is massively dependent on a handful of hyperscaler customers. At one stage, Amazon’s AWS was something like 80pc of the business. This makes investors cautious, although the company now has five customers accounting for more than 10pc of sales.

Despite a market value of over $20bn, so, by this measure, bigger than most constituents of the FTSE 100, IG does not allow leveraged trading in Credo. In some ways, it is a tiny company with just 622 employees, and it is up against some mighty rivals in Broadcom, with 37,000 employees, and Marvell Technology, with over 7,000 employees. But all companies that become big start small, and AI has created an incredible opportunity for Credo to grow rapidly from small to large.

The vibe at Credo must be amazing. What a place to be working at this moment of explosive growth and massive opportunity. Like being a soldier in Alexander the Great’s army, just as he was beginning to conquer a large chunk of the Mediterranean world.

Share Recommendations

Credo Technology. CRDO

Strategy – Keep Buying Credo Shares

Credo Technology is due to report Q1 2026 on Wednesday Below is an excellent report from Zachs ahead of the figures.

Amid exponential data growth and rapid AI proliferation, market demand for faster and energy-efficient connectivity solutions continues to increase. This bodes well for Credo. Strong portfolio consisting of active electrical cables (AECs), optical DSPs and retimers is likely to witness strong gains as hyperscalers scale up production of their AI platforms.

Expansion beyond intra-rack into rack-to-rack use cases is driving AEC momentum further. The demand for AECs is increasing as ZeroFlap AECs offer more than 100 times improved reliability than laser-based optical solutions. This made AECs an increasingly attractive option for data center applications, contributing to the new expansion of AEC usage and further solidifying Credo Technology’s position in the market.

Another bright spot is Credo’s Optical DSP business. CRDO anticipates expansion of customer diversity across lane rates, port speeds and applications to accelerate revenue growth going ahead for this segment. In the last reported quarter, CRDO had launched ultra-low-power 100-gig per lane optical DSPs built on 5-nanometer technology. CRDO highlighted that this particular suite, including full DSP and linear receive optics or LRO variants, sets “new industry benchmarks for power efficiency”. Increasing adoption of PCIe Retimers is likely to have acted as a tailwind. 

Operating leverage from rapid top-line growth is likely to cushion margin performance. In the last reported quarter, non-GAAP gross margin reached 67.4%, exceeding the high end of guidance, while operating income surged to $62.5 million, up from $42.4 million in the prior quarter. For the current quarter, CRDO expects non-GAAP gross margin to be between 64% and 66%. 

Nonetheless, increasing market competition and macroeconomic uncertainties remain concerns. Credo competes with semiconductor giants like Broadcom Inc. AVGO and Marvell Technology, Inc. MRVL. R&D spend is likely to ramp up as CRDO focuses on product innovation. Increasing costs can become a problem if the revenue growth does not keep pace. Credo’s non-GAAP operating expenses in the fiscal fourth quarter surged 19% sequentially to $52 million, primarily due to higher headcount. It expects non-GAAP operating expenses to be between $54 million and $56 million in the to-be-reported quarter.

Overreliance on a few clients for revenue growth is an additional headwind. In the last reported quarter, three hyperscalers each contributed more than 10% of total revenues. This intense customer concentration risk can impact revenues as the company becomes highly vulnerable to the loss of business from those clients.

CRDO Stock Skyrockets

CRDO shares have surged 116.2% in the past three months, significantly outperforming its Electronics – Semiconductors industry, Zacks Computer and Technology sector and S&P 500 composite’s gains of 19.9%, 15.5% and 10.1%, respectively.

Price Performance

The company has outperformed its peers, like Broadcom, Marvell and Astera Labs ALAB, which have gained 27.2%, 17.8% and 108.5%, respectively.

Is CRDO’s Lofty Valuation a Concern?

Credo Technology stock is also not so cheap, as its Value Style Score of F suggests a stretched valuation at this moment. In terms of the forward 12-month Price/Sales ratio, CRDO is trading at 26.02, higher than the Electronic-Semiconductors sector’s multiple of 8.83.

In comparison, Broadcom trades at a forward 12-month P/S multiple of 19.85, while Astera Labs and Marvell Technology are trading at a multiple of 34.65 and 7.34, respectively.

CRDO Stock: Hold Before Q1

CRDO is witnessing strong momentum, owing to a differentiated portfolio, spanning active AECs, optical DSPs, and PCIe retimers, which places it at the center of the AI infrastructure buildout.

That said, investors should weigh several risks before chasing the stock further. Risks like customer concentration, elevated expenses, and competitive pressures from larger players, such as Broadcom and Marvell, present meaningful execution risks.

CRDO’s stretched valuation as evidenced by a high forward P/S ratio of 26.02, is another concern. Consequently, investors should wait for a better entry point. However, existing investors can hold the stock as its long-term growth prospects remain intact. 

Zachs, 29 August 2025

There are always risks when buying shares and volatility is no surprise, before and after figures, for a share with strong momentum like Credo. Nevertheless the fundamentals are oustanding and competition is nothing new and has not stopped the company. from delivering blistering growth. I think Credo is the most exciting networking technology business in a world of accelerating technological change and massive investment.

Both the figures and commentary on the outlook are likely to be strongly positive. Marvell disappointed with recent figures but Nvidia didn’t and I don’t suppose Credo will. Anything may happen to the share price but the longer term trend to higher prices should remain intact.