Credo Technology Group Holding Ltd (NASDAQ:CRDO) is emerging as one of the most levered ways to play the AI data-center interconnect cycle, with BNP Paribas framing the story as both an AEC (Active Electrical Cables) upgrade and a rapidly expanding optical growth opportunity.
The firm sees Credo’s total addressable market swelling above $10 billion as agentic AI drives backend and frontend network builds across hyperscalers and neoclouds.
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BNP Paribas underscores that Credo’s push into optics is additive, not a signal that short‑reach copper is fading.
The company still expects roughly half of its roughly 80% year‑over‑year fiscal 2027 growth to come from Active Electrical Cables, implying about 47% growth to approximately $1.8 billion of AEC revenue.
Credo argues its SerDes-plus system‑level approach yields tighter integration, better reliability, and latency of roughly 6 ns versus peers at around 10 ns, which could matter as AI clusters become more scale‑out and latency-sensitive.
Optics
Optics is the other major leg of the story. BNP Paribas expects more than $600 million of fiscal 2027 revenue from ZeroFlap (ZF) optical transceivers, optical DSPs and DustPhotonics Ltd photonic integrated circuits, approaching a 25% mix and offering margin accretion versus the corporate average.
Credo plans to ship hundreds of thousands of ZF transceiver units per month by late fiscal 2027, with a two to three-times volume ramp over the subsequent years as it broadens beyond its initial two hyperscalers and two neoclouds.
The DustPhotonics acquisition is central to Credo’s optical differentiation. DustPhotonics’ PICs use proprietary Low Loss Laser Coupling technology to cut laser count by about 75%, from eight lasers to two.
Branching Out
Customer concentration risk appears to be easing with BNP Paribas expecting Credo to have three to four 10% hyperscale customers in fiscal 2027.
Specifically, the firm believes Credo is engaged with five of six leading hyperscalers, likely including Amazon.com Inc. (NASDAQ:AMZN), Meta Platforms Inc. (NASDAQ:META), Microsoft Corp. (NASDAQ:MSFT), xAI, and Oracle Corp. (NYSE:ORCL), with neoclouds potentially approaching 20% of revenue over time.
Evercore ISI initiated coverage on CRDO Monday with an Outperform rating and a $325 price target. The analysts highlighted Credo’s systems approach—design, manufacturing, and end‑to‑end testing—as a key competitive advantage versus traditional optical module vendors.
The firm expects Credo’s optical revenue alone to reach more than $600 million by 2028, supported by investments in optical DSPs and differentiated module architectures.
The Takeaway
Taken together, both firms view Credo as evolving from a pure‑play AEC vendor into a dual copper‑and‑optical AI connectivity platform with hyperscaler‑grade scale, expanding TAM and a roadmap tied directly to the next wave of agentic AI infrastructure build‑outs.
CRDO Stock Price Activity: Credo stock was up 7.67% at $292.67 at the time of publication Monday, according to data from Benzinga Pro.
Over the past month, CRDO has gained about 27.4% versus a 0.7% decline in the S&P 500 and is up roughly 96% year-to-date compared to the index’s 8.6% gain. The stock is trading at new 52-week highs.
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