What's Driving Credo's Explosive Revenue Growth in FY26?

Core Insights - Credo Technology Group Holding Ltd. (CRDO) is experiencing explosive revenue growth driven by record execution in core businesses and rapid expansion of connectivity solutions, with Q2 fiscal 2026 revenue reaching $268 million, a 20% sequential growth and a 272% year-over-year increase [1][8] Group 1: Revenue Growth and Business Performance - The active electrical cable (AEC) business is the largest contributor to growth, with strong revenue performance in Q2, supported by increased customer adoption in hyperscale data centers [2] - Four hyperscalers contributed over 10% of total revenue in Q2, indicating deepening market penetration [2] - The integrated circuit business, including retimers and optical DSPs, is also performing well and is expected to drive significant growth throughout fiscal 2026 [3] Group 2: Future Outlook - Management anticipates continued momentum in AEC and integrated circuit businesses, with Q3 revenue guidance of $335–$345 million, implying a 27% sequential growth at the midpoint [4] - For fiscal 2026, Credo expects over 170% year-over-year revenue growth [4] Group 3: Competitive Landscape - Astera Labs, Inc. is expected to see accelerated shipments of its products, contributing to top-line growth, with revenues projected between $245 million and $253 million for Q4 2025 [5] - Broadcom Inc. is experiencing strong momentum in AI semiconductors, with expected revenues of $19.1 billion for Q1 fiscal 2026 and AI revenues projected to double year-over-year to $8.2 billion [6] Group 4: Stock Performance and Valuation - CRDO shares have surged 85.1% over the past year, outperforming the Electronics-Semiconductors industry's growth of 37.5% [9] - The forward 12-month Price/Sales ratio for CRDO is 17.92, significantly higher than the sector's multiple of 8.53 [10]