Investors naturally gravitate toward the chips powering artificial intelligence (AI), but a quiet shift is underway beneath the surface. While markets obsess over the peak of the hardware cycle, the bottleneck for scaling AI has shifted to physical data transit and memory capacity.
Credo and Coherent are riding the AI connectivity boom, but differing growth prospects, valuations and risks raise questions about which stock is the better buy.
Credo Technology just posted triple-digit revenue growth for the eighth quarter in a row, yet the stock sits more than 30% below its 52-week high.
CRDO's surging AI connectivity demand, record revenues and expanding optical business fuel growth, with fiscal 2027 revenues projected to rise more than 85%.
CRDO is helping shape next-generation AI data center connectivity through an OCP workstream targeting 2027 approval for micro-emitter optics specifications.
Credo Technology is growing faster than Marvell and Astera Labs yet trades at a fraction of their valuations, which raises a question every AI investor should sit with before the next earnings report.
Credo Technology is rated a cautious Buy with a FY2029 target of $274, implying 26% upside. CRDO's core AI connectivity business is delivering triple-digit revenue growth, with Q1 FY2027 revenue up 115% year-over-year. OmniConnect, CRDO's new memory-connectivity platform, presents significant optional upside but is not yet included in valuation due to limited deployment visibility.
Credo Technology's retimer portfolio is emerging as a key growth engine as AI infrastructure demand drives record revenue and new product gains.
Credo Technology is evolving from a single-product AEC provider to a diversified AI connectivity platform, addressing both AEC and optical markets. CRDO delivered 114.7% YoY revenue growth in Q1'27, with strong AEC sales and ramping optical revenues expected to reach $600M in FY27. Despite margin compression and customer concentration, CRDO maintains robust financial strength and is positioned for continued growth in both scale-out (AEC) and scale-up (optical) AI infrastructure.
While GPU stocks grab the spotlight, the real money in AI infrastructure may flow through a layer most investors never think about.
Credo Technology (NASDAQ:CRDO | CRDO Price Prediction) sells the wiring that keeps AI clusters talking. Its Active Electrical Cables (AECs) connect GPUs to switches across one to seven meters.
CRDO's AI-driven growth, expanding optics portfolio and strong margins support its outlook, but premium valuation and execution risks warrant caution.