Credo soars on record Q2 results fueled by hyperscaler demand
Credo Technology Group surged more than 18% in premarket trading on Tuesday after the cable solutions provider, which makes many products used in AI data centers, delivered Q2 results that blew past Wall Street’s expectations.
Revenue jumped 272.1% year over year to $268 million, topping the ~$235 million estimate, while adjusted earnings per share of $0.67 easily beat the $0.49 forecast compiled by Bloomberg. Credo’s outlook was also strong, with the company expecting Q3 revenue to come in between $335 million and $345 million, implying 27% quarter-on-quarter growth at the midpoint. Analysts expected Q3 sales of $247.5 million.
CEO Bill Brennan called it the strongest quarterly results in Credo’s history, which “reflect the continued build-out of the world’s largest AI training and inference clusters.”
The results are so strong that they’re not only buoying shares of Credo, but also fueling a rally in Astera Labs, which also provides high-speed connectivity solutions, as well as POET Technologies ahead of the open.
Credo’s blowout quarter was driven by surging hyperscaler demand for its core products, including its connectivity chips, integrated circuits, and active electrical cables — the purple smart cables famously seen in Elon Musk’s photos of xAI’s Colossus supercomputer, and now the company's fastest-growing segment, per the CEO.
“Revenue stands to be well above management’s 120% growth target from 2Q as active-copper-cable adoption proliferates across AI training and inferencing infrastructure,” wrote Bloomberg Intelligence technology analyst Jake Silverman. “Upcoming ramp-ups of optical digital-signal processors for transceivers and PCIe retimers can offer upside given robust growth in end markets and a low share base.”
During the earnings call, management said that four hyperscalers each contributed more than 10% of total revenue in Q2, with a fifth beginning to contribute initial revenue.
The company also announced plans to add three new product categories — noting that its five high-growth pillars together could represent a $10 billion market opportunity in the coming years.
Wall Street is responding favorably to these stellar results, with Credo’s price target being raised to $230 from $175 by Susquehanna, to $225 from $165 by Mizuho, and to $220 from $190 by Needham.
With this morning’s jump, Credo’s shares are up 194% year to date.
Credo’s blowout quarter was driven by surging hyperscaler demand for its core products, including its connectivity chips, integrated circuits, and active electrical cables — the purple smart cables famously seen in Elon Musk’s photos of xAI’s Colossus supercomputer, and now the company's fastest-growing segment, per the CEO.
“Revenue stands to be well above management’s 120% growth target from 2Q as active-copper-cable adoption proliferates across AI training and inferencing infrastructure,” wrote Bloomberg Intelligence technology analyst Jake Silverman. “Upcoming ramp-ups of optical digital-signal processors for transceivers and PCIe retimers can offer upside given robust growth in end markets and a low share base.”
During the earnings call, management said that four hyperscalers each contributed more than 10% of total revenue in Q2, with a fifth beginning to contribute initial revenue.
The company also announced plans to add three new product categories — noting that its five high-growth pillars together could represent a $10 billion market opportunity in the coming years.
Wall Street is responding favorably to these stellar results, with Credo’s price target being raised to $230 from $175 by Susquehanna, to $225 from $165 by Mizuho, and to $220 from $190 by Needham.
With this morning’s jump, Credo’s shares are up 194% year to date.
