Credo: The Vendor AI Giants Can't Replace
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Yiannis Zourmpanos13.45K FollowersFollow5ShareSavePlay(11min)CommentsSummaryCredo shifts from component supplier to reliability architect, with AECs delivering up to 1,000x improved reliability and halving power consumption.AEC revenue grew double digits QoQ and drove a 272% YoY surge, reinforcing Credo’s essential role in hyperscale AI clusters.ZeroFlap optics, ALCs, and SerDes for 200G expand a $10B+ TAM while locking in customers through deep system-level integration.Forward P/S compresses from ~24x in FY26 to ~17x in FY27 as revenue is projected to reach $1.63B.Customer concentration and lumpy hyperscale orders pose valuation risks, with top four clients contributing ~93% of total revenue. alacatr/iStock via Getty Images Investment Thesis Credo Technology’s (CRDO) bull case is rooted in its shift from component vendor to reliability architect for AI clusters. Its AEC (Active Electrical Cable), offering up to 1,000x better reliability and far lower power anchorThis article was written byYiannis Zourmpanos13.45K FollowersFollowHi, I'm Yiannis. Spotting winners before they break out is what I do best.Experience: Previously worked at Deloitte and KPMG in external/internal auditing and consulting. Education: Chartered Certified Accountant, Fellow Member of ACCA Global, with BSc and MSc degrees from U.K. business schools. Investment Style: Spotting high-potential winners before they break out, focusing on asymmetric opportunities (with at least upside potential of 3-5X outweighing the downside risk). By leveraging market inefficiencies and contrarian insights, we seek to maximize long-term compounding while protecting against capital impairment.Risk management is paramount—we seek a strong margin of safety to protect against capital impairment while maximizing long-term compounding. Our 2-3 year investment horizon allows us to ride out volatility, ensuring that patience, discipline, and intelligent capital allocation drive outsized returns over time.Analyst’s Disclosure:I/we have a beneficial long position in the shares of CRDO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Recommended For You