Credo Technology Group (CRDO) Goldman Sachs Communacopia + Technology Conference summary

Business performance and outlook

• October revenue is guided up 11% at the midpoint, driven by strong product ramp and execution.

• Strength is seen across all product areas, with the largest customer ramping strongly and expected to continue throughout the year.

• AI-driven demand is a key growth driver, with market pull for higher speed and more connectivity expected to persist for several quarters.

• Product revenue was up 32% sequentially, with gross margin expanding by over 900 basis points due to scale, mix, and manufacturing variances.

• Gross margin is expected to remain stable, with long-term targets of 63%-65% in sight.

Market trends and technology

• The shift toward AI has accelerated demand for high-speed connectivity, especially in AI clusters where back-end network performance is critical.

• Active Electrical Cables (AEC) are becoming the de facto standard for in-rack and increasingly rack-to-rack connections as speeds reach 100 gig per lane.

• AECs offer reliability advantages over optical solutions, reducing failures and improving cluster efficiency.

• The market for AECs is in early stages but projected to be multi-billion-dollar long term, with near-total current market share.

• Optical DSPs are gaining traction, targeting 10%+ of fiscal 2025 revenue, with disruptive cost and power advantages as the market moves to higher speeds.

Customer and product diversification

• Customer concentration remains high, but diversification is expected as new hyperscalers and emerging customers ramp up, especially into fiscal 2026.

• A new 10% customer is expected this quarter, reflecting broader adoption among emerging hyperscalers.

• PCIe Gen 6 solutions and expanded AEC and optical offerings are planned, supporting further diversification.

• The company is positioned to benefit from both expanding its customer base and deepening product penetration.