At Nvidia’s (NVDA) 2026 GPU Technology Conference (GTC) in March, CEO Jensen Huang made one thing clear to the data center industry: copper is still going to matter in server racks for a while. His comment that copper remains important rattled optical component companies immediately, with Corning (GLW), Lumentum (LITE), Coherent (COHR), and Applied Optoelectronics (AAOI) all falling more than 3% on the news, while Ciena (CIEN) lost more than 1%. The move showed how much of the AI infrastructure trade had been built on the idea that optics would slowly replace copper, and how quickly that view got harder to hold.
That same day, Credo Technology (CRDO) stood out as one of the names most directly in line with Huang’s comments. Credo makes high-speed copper-based active electrical cables (AECs) and connectivity ICs that go straight into the kind of AI server racks Nvidia is scaling. The company had just reported third-quarter fiscal 2026 results on March 2, with revenue of $407 million, a 201% year-over-year (YOY) jump. The firm also guided Q4 revenue between $425 million and $435 million.
With copper now confirmed as a lasting part of Nvidia’s rack setup, could Credo be the best stock to own as that buildout keeps moving forward? Let’s take a closer look.
Credo makes high-speed connectivity products that help move data efficiently across AI and cloud infrastructure, so its business is closely tied to the buildout of newer network systems. That has helped drive a big move in shares, with CRDO stock up 99% over the past 52 weeks, even though it is down 30% so far this year.
That strong run helps explain the valuation. Credo trades at 43.8 times forward earnings, which is well above the sector average of 21.6 times.
In the Q3 fiscal 2026, revenue rose 51.9% from the prior quarter and 201.5% from a year earlier to $407 million, showing how quickly demand is growing. Gross margin came in at 68.5% on a GAAP basis and 68.6% on a non-GAAP basis, suggesting solid pricing and a favorable mix of products.
Operating expenses were $129.2 million GAAP and $77.4 million non-GAAP, while net income reached $157.1 million GAAP and $208.8 million non-GAAP. That works out to diluted EPS of $0.82 and $1.07, respectively. With $1.3 billion in cash and short-term investments, Credo also has the financial flexibility to keep investing as the AI infrastructure market continues to grow.
Credo’s newly launched Cardinal family is a 3-nanometer low-power 1.6T optical DSP line made for large AI fabrics, and it is built to handle the bandwidth, latency, and reliability needs of modern AI compute networks. Credo says the family supports both retimed 1.6T optics and ultra-efficient linear-receive setups, which matters because AI clusters need connectivity that can scale without driving power use too high.
Alongside that is the Robin optical DSP family, which was built for the next stage of AI applications and targets 800G and 400G devices. The company says Robin uses its sixth-generation DSP architecture, with better signal integrity, lower power use, and flexible deployment options for hyperscale operators and system vendors. Credo also said the compact substrate can save up to 50% PCB space compared with competing devices, which helps make layouts simpler and cuts manufacturing costs in dense data center setups.
Then there is the 800G ZeroFlap transceiver line, which is aimed at fixing link flaps that can slow AI cluster performance. Credo says these transceivers include in-band remote telemetry, automated remediation, and smart ticketing, all meant to improve stability, speed up time to first token, and reduce guesswork in service requests.
For Q4 2026, Credo expects revenue to be between $425 million and $435 million, which keeps the growth story very much in focus. Average earnings estimates are $0.77 for the current quarter and $0.80 for the next quarter, compared with prior-year numbers of $0.20 and $0.34, respectively. That works out to an estimated growth of 285% and 135%, respectively, which is the kind of pace investors are watching closely.
Rosenblatt stayed “Neutral” after the Q3 results and set a $125 price target, taking a more careful view after CRDO stock’s post-earnings move. Needham was more upbeat, keeping its “Buy” rating and $220 target, while also lifting its fiscal 2027 revenue estimate to $2 billion from $1.92 billion on the view that AEC deployment momentum can continue if adoption trends hold.
Across the Street, the tone is still very positive, with 16 analysts surveyed rating the stock as a consensus “Strong Buy.” With a mean price target of $198.85, CRDO stock has implied potential upside of about 98%. That keeps CRDO in a strong spot as Nvidia continues to use copper in several server rack solutions.
Credo still looks like one of the cleaner ways to play Nvidia’s copper-heavy rack buildout, especially with the stock backed by strong revenue growth, new product launches, and analyst support. The near-term setup is still tied to execution, but the broader trend remains constructive, and the current guidance and target prices suggest the market is not done rewarding the story yet. My read is that CRDO stock is more likely to stay biased higher than break down, though the path may remain choppy as investors keep recalibrating valuation around each earnings update and Nvidia-related headline.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com