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Credo Technology (CRDO +18%) is surging today following its Q4 (Apr) earnings report last night. This supplier of interconnection gear (both copper and optical) in the data center wrapped up FY25 on a high note and sounds bullish on FY26 as well. It beat on EPS while revenue jumped 179% yr/yr and 26% sequentially to $170 mln, also nicely above expectations.

• Probably even more impressive was its huge Q1 (Jul) revenue guidance of $185-195 mln, which was much better than expected. On the call, Credo said it expects FY26 revs to exceed $800 mln vs $437 mln in FY25. Credo sees growing demand for high-speed connectivity products across its hyperscaler customers to power advanced AI services, a trend it expects will continue for the foreseeable future.
• Credo described FY25 as a pivotal year, achieving record revenue, profit, and market adoption of its connectivity products hitting an inflection point. Credo says it pioneered a market that transformed how hyperscalers connect switches and servers, which has positioned it to capture significant opportunities in the global AI infrastructure wave.
• Drilling down a bit, Credo is enthusiastic about the ongoing expansion of the AEC market. Credo has said it believes AEC technology is still in the early stages of widespread adoption and that Credo is well-positioned as the market leader. The company explains that AECs outperform laser-based optics, offering lower power, reduced cost, and maybe most importantly, greater reliability. Credo says its growing traction with hyperscalers is evident with strong customer forecasts and new design wins.
• On the optical side, Credo described FY25 as a standout year. It closed the year with strong momentum, expanding customer diversity across lane rates, port speeds and applications. In Q4, it secured a significant DSP win for an 800-gig transceiver with initial deployments expected on a US hyperscaler in FY26.

Overall, this was an impressive quarter for Credo, especially the Q1 and FY26 guidance. Credo is not one of the first names investors think about as a play on the buildout of AI infrastructure at data centers. However, it is clearly benefitting, especially its AEC segment. While not directly involved in the AI servers, having reliable connectivity gear between the servers is extremely important for them to work at their best.