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A demo setup of racks of AI servers connected with Credo cables, displayed at the Open Compute Summit in San Jose, California. Credo
In July, Elon Musk posted photos from inside an xAI data center called Colossus 2, which the artificial intelligence startup aims to turn into a massive supercomputing facility in Memphis, Tennessee. Musk's pictures, posted to his X feed, didn't show off the pricey Nvidia racks that are filled with powerful graphics processing units. Rather, he focused on the wires behind the servers, including one image with thousands of neatly organized purple cables connecting the computers together. Those purple cables are the signature offering of Credo , a 17-year-old Silicon Valley-based semiconductor company whose name rarely gets mentioned alongside the leaders of the AI boom. But Wall Street has taken notice. Credo shares have more than doubled this year to $143.61 after soaring 245% in 2024. The company's market cap, which was about $1.4 billion at the time of its IPO in 2022, now sits at close to $25 billion. Credo is angling to position itself as a key supplier in the trillion-dollar AI infrastructure expansion, and is benefiting as the money flows downstream. The stock jumped 5% on Friday after analysts at JPMorgan Chase initiated coverage with the equivalent of a buy rating and a $165 stock price. They said the active electrical cable (AEC) market, which Credo pioneered, is on pace to hit $4 billion by 2028, as all the major hyperscalers invest in data center buildouts. "The industry outlook is supported by increasing deployments from major companies such as Amazon, Microsoft, and xAI as well as broadening adoption, including Meta and more," the analysts wrote. They predict annualized revenue growth for Credo of at least 50% through 2028.
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Revenue in fiscal 2025, which ended in early May, more than doubled to $436.8 million. The company also turned profitable, recording net income of $52.2 million after losing $28.4 million the prior year. Analysts are expecting sales to more than double again in fiscal 2026 to almost $1 billion, according to LSEG. Credo's purple AECs cost between $300 and $500 each, depending on bulk discounts and other negotiations, according to an estimate from the 650 Group, an industry researcher. They are sturdy, moderately thick copper cables wrapped in a braided covering with big connectors containing chips on each side. Much of the excitement around Credo is driven by the AI boom, which to this point has been driven by a handful of hyperscalers that are rapidly building data centers for future expected workloads. Analysts expect $1 trillion in spending on AI data centers by 2030, but any pullback from the major cloud providers or scaling back in OpenAI's plans could hurt many suppliers, including Credo. For now, projections are way up and to the right.
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