Credo Tech (CRDO +43%) shares soared following its Q2 report. The company, known for its interconnection gear in data centers, announced that the anticipated revenue inflection point has arrived, driven by increased AI deployments and stronger customer ties.
- Credo reported a 63.6% year-over-year revenue increase, reaching $72 million, surpassing its $63-68 million guidance. The standout factor was its Q3 revenue guidance of $115-125 million, significantly exceeding analyst expectations, fueling today's stock surge.
- Q2 marked Credo's most successful quarter, with record revenue across its product lines: AECs (Active Electrical Cables), optical DSPs, and line card re-timers. AI cluster architectures are enhancing the need for high-speed connectivity gear, where Credo’s AECs excel in signal integrity and power efficiency.
- AEC revenue hit a record high in Q2, driven by demand from top customers and a new hyperscaler. Credo believes AEC technology is in the early adoption phase, positioning it as a market leader. AECs offer lower power, reduced cost, and greater reliability compared to laser-based optics.
- Credo anticipates continued revenue growth, led by AECs, beyond FY25 as market adoption expands. The optical DSP segment also saw record revenue, with strong demand for 50-gig and 100-gig per lane offerings. Credo is optimistic about its 200-gig per lane technology.
Overall, Credo delivered an impressive quarter, with its Q3 guidance highlighting the long-awaited revenue inflection point. While not a primary name in AI infrastructure, Credo benefits from its critical connectivity gear, notably in the AEC segment, essential for optimal AI server performance.
