Group 1: AI Market Growth - The artificial intelligence (AI) market has experienced rapid growth over the past decade, driven by advancements in cloud computing, large language models, and generative AI applications [1][2] - Major winners in the AI sector include Nvidia and Microsoft, but there are also under-the-radar companies like Credo Technology and Arm Holdings that present significant growth potential [2] Group 2: Credo Technology - Credo Technology, which went public in 2022, offers high-speed connectivity solutions for data centers, cloud, and AI markets, with a revenue growth of 60% CAGR from fiscal 2022 to fiscal 2025 [4][5] - The company turned profitable for the first time in fiscal 2025, with its largest customer, believed to be Microsoft, accounting for 39% of its revenue in fiscal 2024 [5] - Analysts project Credo's revenue to grow at a CAGR of 47% from fiscal 2025 to fiscal 2027, with EPS expected to increase at a CAGR of 113% [6] - The growth is attributed to the expansion of the AI market and a shift towards higher-speed ethernet connections, alongside rising demand for its modular "chiplet" designs [6][7] Group 3: Arm Holdings - Arm Holdings, a UK chip designer, specializes in power-efficient CPUs and has a significant presence in the smartphone market, with its designs in approximately 99% of the world's smartphones [8][9] - The company reported a 24% revenue increase in fiscal 2025, with expectations for a CAGR of 21% over the next three years, and EPS surged by 159% in fiscal 2025 [10] - Arm is transitioning from a licensing model to developing its own chips, which could increase operating expenses but also eliminate royalty costs, potentially making its chips more appealing to OEMs [11] - Despite a high valuation at 113 times this year's earnings, Arm is positioned as a long-term play in the growing demand for power-efficient AI chips [12]

Core Viewpoint - The data center market is experiencing rapid growth driven by digital transformation and the increasing demand for AI and ML technologies, benefiting companies like Credo Technology Group and Marvell Technology [2][3]. Group 1: Company Overview - Credo Technology Group specializes in high-speed connectivity solutions, particularly in Ethernet and Active Electrical Cables (AECs), which are gaining traction in data centers [4][5]. - Marvell Technology is a major player in the data center market, providing essential solutions such as PAM chips and digital signal processors that support AI infrastructure [9][10]. Group 2: Market Trends and Growth - The global data center market is projected to grow at a CAGR of 11.2% from 2025 to 2030, indicating strong demand for innovative data processing and storage solutions [2]. - Credo's AEC products have seen triple-digit sequential growth, highlighting their increasing adoption in data centers [4]. - Marvell's data center revenues reached $1.37 billion, marking a 78% year-over-year increase, with the segment accounting for 75% of total revenues [10]. Group 3: Product Innovations - Credo is expanding its product portfolio to include PCIe solutions, which are expected to significantly increase its total addressable market [5]. - Marvell's advanced optical interconnects and Co-Packaged Optics technology are enhancing data center efficiency and scalability [12]. Group 4: Financial Performance - For the third quarter of fiscal 2025, Credo reported a 154% year-over-year revenue growth, driven by demand from its largest hyperscale customer [8]. - Marvell's Electro-Optics products and Teralynx Ethernet switches have shown double-digit sequential growth, indicating strong market demand [11]. Group 5: Valuation and Estimates - CRDO is trading at a forward Price/Sales ratio of 10.30X, while MRVL is at 5.39X, suggesting a higher valuation for Credo [15]. - Analysts have significantly revised earnings estimates upwards for Credo, while Marvell's revisions have been more subdued [18][20]. Group 6: Investment Outlook - Both companies are well-positioned to benefit from the growing data center market, with Credo currently holding a Zacks Rank 1 (Strong Buy) and Marvell a Zacks Rank 2 (Buy) [21].