Halyk Finance Trading Idea: Credo Technology

Credo Technology creates equipment for ultra-fast data transmission within data centers that serve artificial intelligence. These are the "wires and adapters of the new generation" through which servers exchange data quickly, reliably, and with low power consumption. Historically, the foundation of the business is active electrical cables AEC (copper cables with built-in chips that amplify and clean the signal). The second, rapidly growing segment is optics: data transmission via light through fiber optics. This includes optical DSPs (signal processing chips), silicon photonics PIC (optical microchips), and ZF transceivers (devices that convert electrical signals to light and vice versa).

Growth drivers:

• Rapid growth of optics – optics (data transmission via light) is becoming the second growth engine. In this financial year, optical sales will exceed $600 million – about a quarter of total revenue. The main contribution comes from the ZF line (reliable optical converters) – around $400 million, with optical DSPs (signal processing chips) and silicon photonics PIC (optical microchips) each contributing approximately $100 million. ZF products address a common problem in AI networks – sudden connection failures that cause expensive servers to sit idle. Since the company manufactures all key components itself, it can sell at higher prices and maintain high profitability. Against the backdrop of rapid market growth in optics, this shifts demand in favor of Credo and supports the company’s stock price.
• Leadership in "smart" copper AEC cables – active electrical cables AEC (copper cables with built-in chips) remain the core of the business. Demand for them is growing as AI servers are integrated into increasingly dense and high-speed networks – each new generation requires more connections. Credo effectively created this product category and maintains leadership thanks to deep technical expertise. For short connections, copper remains more advantageous than optics: it is more reliable and consumes less energy. This provides the company with stable base revenue and reduces dependence on a single product.
• New ALC product and market expansion – Credo is launching a new line – Active LED Cables (ALC, active cables with micro-LED emitters). They transmit data over longer distances than standard copper cables (up to 30 meters instead of 7) with the same reliability and require about 75% less cable. The launch is planned for the OCP industry conference (a platform where major players agree on common hardware standards for data centers), followed by customer trials and mass production in the next financial year. ALC opens new niches for the company and strengthens its role as a provider of "turnkey" solutions.
• New customers and reduced dependence – Credo is expanding its customer base by targeting "non-cloud" companies (new firms that rent out computing power specifically for AI tasks). Currently, a few major clients generate most of the revenue, so the addition of new buyers makes sales more stable and predictable. The less dependent the company is on one or two customers, the lower the risk of sharp declines, which typically increases investor confidence and supports the company’s valuation.