Shares of data center cable company Credo technology (NASDAQ: CRDO) skyrocketed on Tuesday, with shares up 47.3% as of 1:11 PM ET.
The company last night reported earnings that not only beat analyst estimates but also delivered a huge earnings forecast, indicating that Credo has emerged as a new artificial intelligence (AI) winner.
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Credo makes a unique cable product, an active electrical cable (AEC), that connects data center servers to network switches. The company claims its AECs take up 75% less space than Direct Attach Copper (DAC) cables and offer 50% more energy efficiency compared to active optical cable (AOC) alternatives.
As power and space become scarce commodities in energy-hungry AI data centers, Credo’s proprietary technology appears to be finding favor with major AI customers. In the third fiscal quarter, Credo delivered 63.6% revenue growth to $72.0 million, beating estimates by $5.2 million, while adjusted (non-GAAP) earnings per share came in at $0.07, an improvement of estimates by $0.02.
But the biggest story with Credo was its third-quarter revenue guidance of between $115.0 million and $125.0 million. That’s clearly a huge jump of 67% quarter-over-quarter, perhaps suggesting an inflection point in demand for the technology.
CEO Bill Brennan confirmed: “Over the past several quarters, we have anticipated an inflection point in our revenue in the second half of fiscal 2025. I am pleased to report that this inflection point has arrived and we are experiencing even greater demand than initially. projected, powered by AI implementations and deepening customer relationships.”
Investors are clamoring for new artificial intelligence winners, and it looks like Credo has emerged in a big way today. However, Credo’s market cap of $11.8 billion looks quite high after the surge, considering only $500 million in revenue based on third-quarter guidance.
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