The AEC Market Surge: How Credo Technology Is Capitalizing on Data Center Infrastructure Boom

The artificial intelligence infrastructure revolution is reshaping data center connectivity, and Active Electrical Cables (AECs) have emerged as a critical technology enabler. As hyperscalers race to build massive GPU clusters, the demand for reliable, power-efficient interconnect solutions is creating unprecedented market opportunities. Credo Technology Group Holding Ltd (CRDO) is positioned at the center of this transformation, with AEC technology becoming its primary growth engine.

Why AECs Are Becoming the Industry Standard

Traditional optical connections dominated inter-rack distances for years, but AEC technology is fundamentally changing this calculus. At today’s 100G and next-generation 200G per lane speeds, zero-flap AECs deliver reliability levels up to 1,000 times superior to laser-based optical modules while consuming roughly half the power. In large-scale GPU deployments, this reliability difference is not merely technical—it directly impacts revenue generation and cluster stability.

The performance gap continues widening as data center operators densify their racks. CRDO’s AEC business reflects this shift, with fiscal Q2 results showing four hyperscale customers each representing over 10% of revenue. A fifth customer has begun initial production contributions, while a fourth entered full production ramp-up during the quarter. This diversification across multiple tier-1 customers demonstrates the broad customer validation that the AEC market is experiencing.

Expanding the Total Addressable Market

Beyond traditional AECs, CRDO has expanded its growth opportunities through three new platforms: Zero-Flap optics, Active Link Cables (ALCs), and OmniConnect gearboxes. Combined with its existing retimer and optical DSP portfolio, management projects the company’s total addressable market expanding to over $10 billion within the coming years—more than triple the size from 18 months prior.

Competitive Landscape Intensifies

The success of AEC technology has attracted formidable competitors. Astera Labs (ALAB) has established itself as a comprehensive connectivity player, offering a full-stack portfolio spanning PCIe 6.0, Ultra Accelerator Link, and CXL 3.0 protocols. The company announced plans to launch custom connectivity solutions designed specifically for heterogeneous compute architectures, directly targeting hyperscaler requirements.

Marvell Technology (MRVL) is similarly gaining momentum in the AEC segment. Recent design wins from U.S. tier-1 hyperscalers and emerging hyperscale customers have positioned Marvell for significant AEC and retimer revenue growth. Management guidance suggests year-over-year doubling of combined AEC and retimer revenue, supported by strong fourth-quarter data center revenue guidance of $2.20 billion (±5%).

Market Valuation and Growth Prospects

CRDO shares have appreciated 93.1% over the past 12 months, substantially outpacing the Electronics-Semiconductors industry average of 40.3%. The stock currently trades at a forward 12-month Price/Sales ratio of 16.91, compared to the sector median of 8.63, reflecting market confidence in its growth trajectory.

Consensus earnings estimates for fiscal 2026 have been revised upward over the past 60 days, indicating positive analyst sentiment regarding execution and market expansion. The AEC market opportunity and CRDO’s early leadership position suggest continued relevance within the data center connectivity ecosystem as AI infrastructure builds accelerate globally.