Why are Analysts So Bullish on This AI Data Center Play?

This company’s products help hyperscalers, including Amazon and Microsoft, to scale up their data center networks.

Key Takeaways

• Credo provides data center operators with connectivity solutions that support high-data data transmission, which is critical in the AI revolution.

• The company’s largest hyperscaler customer is currently Amazon, having previously been Microsoft.

• Demand for its products is expected to accelerate as AI moves from training to inference.

1. A Little-Known Stock in the Data Center Infrastructure Space

Credo Technology [CRDO] is a Cayman Islands-headquartered provider of connectivity solutions.

Credo has three key products: active electrical cables (AECs), integrated circuits (ICs) and SerDes (short for ‘Serializer/Deserializer’) chiplets.

This deep dive will focus on AECs and how these critical components in high-speed data transmission have helped Credo to capitalize on the artificial intelligence (AI) revolution’s demand for data center power.

While CRDO stock is up 94.03% in the past 12 months through April 16 to $37.72, the share price is down 43.88% since January 1. It has also more than halved since peaking at an all-time high of $86.69 on January 22.

The bearish movement in the Credo share price is a result of two factors: first, the AI stock selloff sparked by DeepSeek AI at the end of January; and second, US President Donald Trump’s tariff war, which has spooked investors and caused a major rethink of valuations.

For comparison, the Defiance Connective Technologies ETF [SIXG] is down 17.15% since the start of the year, though up 7.21% in the past 12 months. As of April 16, the fund has allocated 1.45% of its portfolio to Credo. Its top holdings include big AI chip names like Apple [AAPL], Nvidia [NVDA] and Qualcomm [QCOM].[1]

Here, we take a closer look at Credo’s role in helping hyperscalers to scale their data center infrastructure.