Will Credo’s (CRDO) new AI-focused optical DSP reshape data center connectivity ambitions?

• In early March 2026, Credo Technology Group Holding launched Cardinal 1.6T 3nm optical DSP, Robin 800G/400G DSP family, and 800G ZeroFlap transceiver. All of this is aimed at reducing power usage, latency, and link instability in AI data center networks.
• By combining a low-power 1.6T DSP with telemetry-rich ZeroFlap optics, Credo positions its connectivity portfolio around the reliability and efficiency bottlenecks of hyperscale AI clusters.
• Here we consider how Credo’s AI-focused launches of Cardinal and ZeroFlap interact with existing investment stories around data center connectivity.

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Credo Technology Group Investment Narrative Summary

To own Credo, you have to truly believe that building AI data centers will continue to reward vendors who solve bandwidth, power, and reliability constraints across racks and optics. In the near term, the key will be whether hyperscalers continue to deploy Credo’s AEC and optical DSPs at their current pace, but the biggest risk is that a few large customers will still drive the majority of their revenue. The latest Cardinal, Robin, and ZeroFlap launches support that story, but concentration risk has not been eliminated.

Among recent news, the launch of the Cardinal 1.6T 3 nm optical DSP family seems to be the most significant to the existing story. Cardinal is directly targeting its upcoming 1.6T AI fabric with low power and sub-40 ns latency, in line with expectations that future protocol upgrades and faster lane speeds could be key growth drivers. Large-scale adoption of Cardinal by AI customers could strengthen Credo’s role in the next upgrade cycle, while also testing how durable its margins really are.

But for all these strengths, investors still need to consider the extent to which Credo will continue to rely on a small number of very large buyers…

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The Credo Technology Group Holding story projects revenues of $1 billion and profits of $314.5 million by 2028.

We reveal how Credo Technology Group Holding’s projections give it a fair value of $191.75, an 85% increase over the current price.

explore other perspectives

The most optimistic analysts were already modeling revenues of US$1.7 billion and revenues of US$514.5 million by 2028, so this AI DSP and ZeroFlap news could either strengthen that upside story or challenge it, depending on how you view the added geopolitical and regulatory risks.

Check out 21 other fair value estimates for Credo Technology Group Holding – find out why the stock is worth more than twice its current price.

The verdict is yours

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This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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