VenkatP
Physician, Growth & Value Stock Investor
Credo is taking share from short-reach optical connectivity and creating a new threat with active LED cables, while also expanding into optics itself through ZeroFlap optics, DSPs, silicon photonics and the DustPhotonics acquisition. That makes it the larger holding, about three times Applied Optoelectronics, whose long-term outcome depends on how much of its AI revenue sits in short-reach links versus higher-speed interconnects where optics remain essential. Owning both while watching price. x.com
Credo's projected EPS surge makes it one of the semiconductor industry's most explosive growth stories. The chart puts EPS at $0.31 in FY25, $9.69 in FY28E and $12.45 in FY29E, nearly 40x over four years. x.com
Celestica's stronger hyperscaler switch and rack outlook points to more demand for Credo's AECs in the same buildout. Celestica beat its Q3 guide, raised FY26 and expects accelerating 2027 growth; that read-through suggests a strong Credo December print, a second-half FY27 inflection and likely a huge guide. x.com
Credo is a trade rather than a long-term hold because co-packaged optics is the technology that closes the copper-to-optics gap its retimers and active electrical cables fill. If CPO ramps faster than expected in the 2027 architecture cycle, those products get designed out. That is not a 2026 problem, but it is why a decelerating hyper-growth chipmaker can't keep a 15x sales multiple forever. Customer concentration, which hit the stock before, adds risk, and Credo fits no AI endgame theme. x.com … Show more
SpaceX's AI buildout could add substantially to Credo's revenue. If SpaceX really spends $400B on capex next year, that could add $2B for Credo. In that scenario, Credo would probably do at least $5B in FY2028 revenue; at roughly 50% net margins, EPS would be about $14 versus the sell side's $9, putting shares near 12x FY2028 EPS with EPS growing at a 130% CAGR across FY2027 and FY2028. x.com x.com
Credo's near-total share of AI data-center cables and unchanged estimates make its lower multiple look like a fear-driven opportunity. Its stock went from 27x to 20x forward earnings while the supply chain building those systems guided 2027 revenue to double. Buyers this week will probably be very happy a year from now. x.com
MaxLinear's 1.6T roadmap threatens Credo's dominant AEC position with a specific share target. MaxLinear targets 20–30% of the 1.6T active electrical cable cycle, where its management estimates Credo has 93–99% share, initially across 1–2 US data centers. MaxLinear also reports 1.6T DSP and TIA design-win commitments, with initial revenue expected in 2027 and a stronger ramp in 2028. That competitive concern is behind Credo's pre-market drop. x.com
MaxLinear's planned 1.6T AEC entry is too distant to justify the scale of Credo's selloff. Credo still has an estimated 90%+ AEC share and relationships with five of six major hyperscalers; MaxLinear expects initial revenue only in 2027 and a more meaningful ramp in 2028. Competition bears watching, but the market looks to be overreacting and Credo is starting to look ridiculously cheap. x.com x.com
Credo is worth buying on its post-earnings dip. x.com
Credo needs a slightly lower price before adding. FY28 EPS of about $10, a 70% growth rate from today, would support a $350 stock at 35x, a 0.5x PEG. x.com
Credo's growth rides surging AI interconnect demand, and management expects revenue to grow more than 85% in FY27. F1Q27 revenue rose 115% to $479 million, EPS of $1.20 slightly beat, and F2Q27 guidance is $525-535 million. Active electrical cables remain the near-term engine as adoption broadens across hyperscalers and neoclouds; FY27 optical revenue is still expected above $600 million, though a higher optical mix dilutes gross margin. The $227 target rests on 20x FY28 EPS of $11.40. x.com