Credo Technology Group (CRDO) 28th Annual Needham Growth Conference Virtual summary

Market trends and outlook

• Strong demand for AI and data center connectivity is expected to continue, with no signs of a slowdown in customer investment or a circular investment risk in the ecosystem.

• Industry adoption of active electrical cables (AECs) is still in the early stages, with significant growth potential across hyperscalers and emerging customers.

• Transition to higher speeds (800 Gbps and beyond) is well underway, with half or more current AEC connections already at 800 Gbps.

• The shift to 200 Gbps per lane and 1.6T ports is anticipated to accelerate around 2028, with hyperscalers transitioning at different rates.

• Customers provide 12- to 24-month forecasts, improving supply chain planning and visibility.

Product innovation and roadmap

• Reliability is a core focus, driving the development of ZeroFlap clusters and real-time telemetry for network health.

• Three major new products: active microLED cables (ALCs) for longer, thinner, reliable connections; ZeroFlap Optical Transceivers for high-reliability optical links; and OmniConnect/Weaver chiplets for flexible, high-bandwidth memory and system interconnects.

• ALCs, enabled by the Hyperlume acquisition, are expected to double the total addressable market (TAM) compared to AECs, with first volumes projected for fiscal 2028.

• ZeroFlap Optics are positioned as premium, non-commodity products with long-term gross margins of 63%-65% and material revenue expected in fiscal 2027.

• OmniConnect/Weaver chiplets enable future-proof, high-memory inference engines, with first revenue expected in fiscal 2028.

Competitive positioning and customer base

• System-level ownership, from SerDes to software, is a key differentiator, enabling rapid qualification and supply chain management.

• The market is large enough to support multiple players, with no single generation expected to shift competitive dynamics significantly.

• New products are expected to appeal to both existing hyperscaler customers and a broader set of resource-constrained companies globally.

• AECs remain preferred for short connections, while ALCs expand the TAM and may cannibalize some AEC business depending on customer needs.

• Attach rates per GPU are expected to range from 1.5x to over 5x as networks scale.