The AI industry chain is booming! "Internet leader" Credo Tech's performance exceeded expectations, and its stock price surged 13% after hours

As a key component of artificial intelligence infrastructure, data center interconnect solutions leader Credo has delivered an impressive performance report, further confirming the sustained high investment in the AI sector.

On September 3rd, local time, Credo released its first-quarter results for fiscal year 2026, which far exceeded expectations, with revenue soaring 274% year-on-year to $223.1 million and adjusted earnings per share of $0.52 significantly surpassing market expectations.

Driven by the impressive financial report and strong guidance, the company's stock price surged nearly 13% in after-hours trading. So far this year, Credo's stock has performed outstandingly, with a cumulative increase of about 85%, far exceeding the Nasdaq Composite Index's 11% rise during the same period.

Performance Exceeds Expectations: Revenue Soars 274%

According to FactSet data, Credo's revenue and profits significantly exceeded Wall Street expectations. Its adjusted earnings per share were 52 cents, well above analysts' forecast of 36 cents; revenue reached $223.1 million, a staggering 274% year-on-year increase, also surpassing the general expectation of $190.6 million.

The strong growth momentum is expected to continue. Credo's sales guidance midpoint for the current quarter is $235 million, significantly higher than analysts' consensus expectation of $201.9 million.

Credo CEO Bill Brennan stated, "The company's growth is attributed to the deep strategic partnerships established with hyperscale data center operators and key customers. Given the growing market demand for reliable and high-performance connectivity solutions, we expect revenue to continue to grow and diversify in terms of customers, agreements, and applications."

Brennan revealed to Barron's that the company is developing system-level optical connectivity solutions focused on providing customers with higher reliability and energy efficiency. He also believes there is a "huge opportunity" in winning future business from the six major hyperscale data center customers in the U.S.

AI Data Center Interconnect: Credo's Core Competitiveness

Credo Technology plays a critical role in high-speed data connectivity for artificial intelligence data centers. The company offers a variety of products, including optical devices and data network chips, but its Active Electrical Cables (AECs) business is currently the most notable segment.

Credo's success largely stems from its absolute leadership position in the AEC market. AEC is a copper-based connectivity technology invented by Credo, used to connect AI servers to network switches, and is a key component for high-speed data transmission within AI data centers. Compared to traditional optical cables, AEC is considered more reliable and has lower power consumption; compared to traditional passive copper cables, it supports longer-distance transmission.

According to research firm 650 Group, as of the last reporting quarter, Credo held a 73% share of the AEC market. As the market shifts towards rack servers with higher GPU density, such as NVIDIA's GB200 NVL72, the demand for AECs needed to connect large AI server clusters will significantly increase Credo's solutions have been favored by many industry giants. According to Needham, Amazon, Microsoft, and Elon Musk's xAI are all major clients of Credo. The significant investments these tech giants are making in AI infrastructure are directly translating into strong demand for Credo's products