Tying it all together: Credo’s purple cables power the $4B AI data center boom

Credo, a Silicon Valley semiconductor company specializing in data center cables and chips, has seen its stock price more than double this year to $143.61, following a 245% surge in 2024. The company’s signature purple cables, which cost between $300-$500 each, have become essential infrastructure for AI data centers, positioning Credo to capitalize on the trillion-dollar AI infrastructure expansion as hyperscalers like Amazon, Microsoft, and Elon Musk’s xAI rapidly build out massive computing facilities.

What you should know: Credo’s active electrical cables (AECs) are becoming indispensable for connecting the massive GPU clusters required for AI training and inference.

• The company pioneered the AEC market, which analysts predict will reach $4 billion by 2028, with Credo holding an estimated 88% market share.
• Revenue more than doubled in fiscal 2025 to $436.8 million, and the company turned profitable with $52.2 million in net income after losing $28.4 million the prior year.
• Analysts expect sales to more than double again in fiscal 2026 to almost $1 billion, with projected annualized revenue growth of at least 50% through 2028.

The big picture: The AI boom has dramatically increased demand for high-performance data center connectivity as computing requirements have exploded exponentially.

• Previous servers typically had one or two processors, but individual servers today can have up to eight GPUs, with the most powerful AI models requiring millions of GPUs working together.
• Nvidia’s latest products combine several boards to create systems with 72 GPUs, with next year’s fastest racks doubling that number and future Kyber racks containing 572 GPUs.
• “In the past, Credo’s opportunity was one cable per server, but now Credo’s opportunity is nine cables per server,” said Alan Weckel, an analyst at 650 Group, a data center research firm.

How it works: Credo’s AECs offer a more reliable alternative to fiber optic cables for connecting AI infrastructure.

• The cables feature digital signal processors on both sides that use sophisticated algorithms to extract data, enabling much longer lengths than traditional copper cables.
• Credo’s longest AEC extends seven meters and provides better reliability than fiber optic alternatives, helping prevent “link flaps” that can shut down entire data centers.
• The cables are sturdy, moderately thick copper wrapped in braided covering with large connectors containing chips on each end.

Who else is involved: Major hyperscalers have become Credo’s primary customers, though the company doesn’t publicly name them.

• Analysts have identified Amazon and Microsoft as customers, with Amazon Web Services CEO Matt Garman recently posting images showing Credo’s purple cables in Trainium AI chip racks.
• Elon Musk featured Credo’s cables in photos from xAI’s Colossus 2 data center in Memphis, highlighting thousands of neatly organized purple cables.
• Credo expects three or four customers to represent more than 10% of revenue each in coming quarters, including two new hyperscale customers added this year.

What they’re saying: Company leadership emphasizes the unprecedented demand driving their growth trajectory.

• “You’ve got this insatiable demand from the AI cluster world,” CEO Bill Brennan said, adding that if they could deliver the next generation immediately, “it would be consumed.”
• “Every time you see a new announcement of a gigawatt data center, you can rest assured that we view that as an opportunity,” Brennan told investors.
• “It can literally shut down an entire data center,” Brennan explained regarding the reliability advantages of AECs over fiber optic cables.

Market context: Credo’s success reflects the broader AI networking infrastructure boom, with analysts estimating the AI networking chip market could reach $75 billion annually by 2030.

• The company was founded in 2008 by ex-Marvell engineers developing SerDes technology for high-speed chip connections, but the AEC business only took off during the AI boom in the early 2020s.
• Credo raised its first venture funding in 2015 from investors including Walden International, led by current Intel CEO Lip-Bu Tan.
• The company’s market cap has grown from $1.4 billion at its 2022 IPO to nearly $25 billion today, with JPMorgan analysts recently initiating coverage with a buy rating and $165 price target.