SAN JOSE, Calif., March 6, 2026, 06:06 PST
Credo Technology Group Holding Ltd shares jumped nearly 12% on Thursday after Broadcom said its AI-chip customers would likely “stay on direct attached copper” inside racks as data rates rise, lending support to the copper-link market at the heart of Credo’s growth story. The shares were last quoted at $114.74, up 11.9% from the previous close, according to LSEG data. 1
The move lands in the middle of a live fight over how AI clusters will be wired. Nvidia on Monday agreed to invest $2 billion each in optical suppliers Lumentum and Coherent, while Broadcom Chief Executive Hock Tan said customers would likely stay on direct-attached copper, keeping the debate alive over co-packaged optics, or CPO, a design that moves optical links closer to chips. 2
Broadcom was speaking about copper links broadly. Credo’s main bet is active electrical cables, or AECs, copper interconnects used to connect servers and switches in AI data centers. On the company’s earnings call this week, Chief Executive Bill Brennan said AECs were “becoming de facto” in inter-rack connections because of “network reliability and power efficiency.” 3
Credo said on Monday that fiscal third-quarter revenue rose 201.5% from a year earlier to $407 million. It forecast current-quarter revenue of $425 million to $435 million, and Brennan said the company remained confident it could “innovate and grow” as AI infrastructure demand expands. 4
The comments rippled through peers. Lumentum shares were last quoted down 4.5% and Coherent down 7.6%, while Broadcom was up 4.8%, according to LSEG data. That unwound part of the enthusiasm that had lifted the optical names earlier this week after Nvidia’s investment. 2
The bigger backdrop is still spending. Broadcom said it now sees a line of sight to more than $100 billion in AI chip revenue in 2027, and Big Tech companies including Alphabet, Microsoft, Amazon and Meta are expected to spend at least $630 billion on AI infrastructure this year. D.A. Davidson analyst Gil Luria said that kind of visibility pointed to “significant growth in demand.” 5
Credo is not staying on one side of the argument. Brennan told analysts the company expects AEC and integrated-circuit sales to keep growing in fiscal 2027, while ZeroFlap optics begins to ramp; active LED cables and the first OmniConnect gearbox products are slated to layer in during fiscal 2028. That gives Credo exposure to both copper and optical builds as customers shift designs. 6
But the setup can still turn fast. Credo forecast fourth-quarter GAAP gross margin of 63.9% to 65.9%, down from 68.5% in the latest quarter, and management said fiscal 2027 would bring a different mix between copper and optical as new products ramp. If optics move faster than Credo expects, or if the new mix weighs on margins for longer, the stock could come under pressure again. 4
