Credo Technology stock surges 89% as AI connectivity firm eyes $10 billion optical market

This AI connectivity play nearly doubled in 2026. Evercore ISI says it has more room to run

Credo Technology stock has nearly doubled this year, but it's likely to gain even more ground as the connectivity company lends its copper-based solutions to the infrastructure that undergirds artificial intelligence models, according to Evercore ISI. The investment firm initiated coverage of the connectivity name with an outperform rating. It also put a $325 price target on shares, implying 20% upside from Thursday's close. "Credo is viewed as a copper-based AI-connectivity play, largely because it created the [architecture, engineering and construction] interconnect standard and drove its success by delivering a reliable, systems solution - i.e., whole cable + chips instead of just chips," analyst Mark Lipacis said in a note to clients. "However, we believe it will be increasingly viewed as a broad copper + optical AI-connectivity play as it prosecutes its optical roadmap, which includes optical [digital signal processors], Silicon Photonics [integrated circuits], microLED cables and most importantly its [ZeroFlap Optics] modules, where consistent with its AEC playbook." CRDO YTD mountain CRDY year to date Copper is favored as a material for AI interconnects -- or the networking links that enable processors, memory, and servers to communicate with one another -- because it offers an inexpensive and largely reliable conduit for power at relatively low costs. Evercore ISI said Credo Technology's product roadmap will expand the company's existing total addressable market to between $5 billion and $10 billion. That figure is as much as 20-times larger than the market currently served by the firm. Evercore ISI's call falls in line with consensus on the Street. Of the 21 analysts covering Credo Technology, 20 have a buy or strong buy on the stock, LSEG data shows. Shares have surged 89% in 2026.

Credo Wires Agentic AI With $10 Billion-Plus Market In Sight - Credo Technology Group (NASDAQ:CRDO)

The firm sees Credo's total addressable market swelling above $10 billion as agentic AI drives backend and frontend network builds across hyperscalers and neoclouds. * CRDO stock is moving. See the chart and price action here. BNP Paribas underscores that Credo's push into optics is additive, not a signal that short‑reach copper is fading. The company still expects roughly half of its roughly 80% year‑over‑year fiscal 2027 growth to come from Active Electrical Cables, implying about 47% growth to approximately $1.8 billion of AEC revenue. Credo argues its SerDes-plus system‑level approach yields tighter integration, better reliability, and latency of roughly 6 ns versus peers at around 10 ns, which could matter as AI clusters become more scale‑out and latency-sensitive. Optics Optics is the other major leg of the story. BNP Paribas expects more than $600 million of fiscal 2027 revenue from ZeroFlap (ZF) optical transceivers, optical DSPs and DustPhotonics Ltd photonic integrated circuits, approaching a 25% mix and offering margin accretion versus the corporate average. Credo plans to ship hundreds of thousands of ZF transceiver units per month by late fiscal 2027, with a two to three-times volume ramp over the subsequent years as it broadens beyond its initial two hyperscalers and two neoclouds. The DustPhotonics acquisition is central to Credo's optical differentiation. DustPhotonics' PICs use proprietary Low Loss Laser Coupling technology to cut laser count by about 75%, from eight lasers to two. Branching Out Customer concentration risk appears to be easing with BNP Paribas expecting Credo to have three to four 10% hyperscale customers in fiscal 2027. Evercore ISI initiated coverage on CRDO Monday with an Outperform rating and a $325 price target. The analysts highlighted Credo's systems approach -- design, manufacturing, and end‑to‑end testing -- as a key competitive advantage versus traditional optical module vendors. The firm expects Credo's optical revenue alone to reach more than $600 million by 2028, supported by investments in optical DSPs and differentiated module architectures. The Takeaway Taken together, both firms view Credo as evolving from a pure‑play AEC vendor into a dual copper‑and‑optical AI connectivity platform with hyperscaler‑grade scale, expanding TAM and a roadmap tied directly to the next wave of agentic AI infrastructure build‑outs. CRDO Stock Price Activity: Credo stock was up 7.67% at $292.67 at the time of publication Monday, according to data from Benzinga Pro. Over the past month, CRDO has gained about 27.4% versus a 0.7% decline in the S&P 500 and is up roughly 96% year-to-date compared to the index's 8.6% gain. The stock is trading at new 52-week highs. This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.