Credo’s AI Cables Surge as Demand for Supercomputing Rises

San Jose, California — Credo, a Silicon Valley semiconductor company, is experiencing a rapid surge in stock value and market interest driven by the artificial intelligence boom. Their active electrical cables (AECs) are becoming crucial as major tech companies invest heavily in data centers.

This month, Elon Musk shared images from xAI’s data center, Colossus 2, located in Memphis, Tennessee. Interestingly, his focus was on the company’s purple cables connecting supercomputers, highlighting the work of Credo, which has been less talked about despite its rising profile.

Credo’s stock has surged over 245% in 2024, reaching $143.61, while its market capitalization has soared from $1.4 billion at the time of its IPO in 2022 to nearly $25 billion now. Analysts from an investment firm recently initiated coverage of Credo with a buy recommendation, noting the AEC market is projected to reach $4 billion by 2028 as data center expansions increase.

According to the analysts, the demand is further supported by large companies like Amazon, Microsoft, and Meta. They predict Credo’s revenue will grow at least 50% annually through 2028, driven by the booming need for data processing in AI applications.

Last fiscal year, Credo reported a striking revenue of $436.8 million, more than double the previous amount. The company also achieved net income of $52.2 million, reversing its earlier losses. Predictions indicate revenues may exceed $1 billion in fiscal 2026.

Each of Credo’s AECs, priced between $300 and $500, is engineered to replace traditional fiber optic cables. CEO Bill Brennan stated these cables are increasingly favored by hyperscalers for their reliability. They help avoid costly outages caused by cable failures that can disrupt entire data centers.

Amid rising demand, analysts estimate the AI data center market could generate $1 trillion in spending by 2030. However, any downturn from major cloud providers may impact suppliers like Credo.

Credo has established itself as a leader in AEC technology, with about 88% market share. The company is currently expanding into new sectors, including intra-rack connections, following their recent announcement of new optical products. Brennan expressed optimism about the future, stating, ‘You’ve got this insatiable demand from the AI cluster world.’