Credo slides 7.5% as competition, slower 1.6T rollout weigh

Investing.com — Credo Technology Group shares fell 7.5% on Friday as comments from MaxLinear management highlighted potential competition in the active electrical cable (AEC) market, while third-party data pointed to limited near-term adoption of next-generation 1.6-terabit cables. Insider selling also weighed on sentiment.

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MaxLinear CEO Kishore Seendripu said on the company’s analyst call that Credo accounts for an estimated 93% to 99% of the AEC cable market, but argued that the industry is beginning to diversify as the technology becomes more complex.

MaxLinear plans to sell silicon components to cable manufacturers and other suppliers rather than compete directly by producing complete cables. Seendripu said the company is targeting one or two large U.S. data centers and expects to capture 20% to 30% of the 1.6T AEC market over the next couple of years. He cautioned that the company does not expect to expand its efforts across multiple data centers.

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Separately, Edgewater Research said it sees limited evidence of meaningful near-term 1.6T AEC deployments among the largest AI programs, potentially delaying the revenue opportunity investors expect from the transition to faster connectivity.

Edgewater also highlighted a sizable proprietary 1.6T AEC program at Cisco Systems, which is seeking quotes for 100,000 cables per month, potentially bundled with its switching silicon. The research firm said Cisco could source the digital signal processors from Broadcom (AVGO) or MaxLinear, with Amphenol (APH) and TE Connectivity (TEL) manufacturing the cable assemblies.

The findings point to a more complex competitive landscape for Credo, with established chipmakers potentially supplying components for large-scale deployments and cable manufacturers handling assembly. Separately, Credo faces potential competition from Astera Labs (ALAB) in future custom AI-chip platforms, including Amazon’s next-generation Trainium3, although that opportunity depends on Astera resolving performance issues at scale, according to the third-party analysis.

Insider selling added to the pressure on the stock, alongside concerns that the adoption of 1.6T cables may take longer to ramp than investors had anticipated.

Original Article

Credo slides 7.5% as competition, slower 1.6T rollout weigh

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