Tech & AI
Credo hits a six-month low after MaxLinear targets 20% to 30% of the next-generation AI cable market it dominates
MaxLinear's chief executive estimated Credo's share of active electrical cables at 93% to 99%, while a research firm flagged a slower start for 1.6-terabit links.
HedgeWeekly Tech & AI Desk ·
Shares of Credo Technology fell as much as about 10% on Friday, October 23, to their lowest level since April, before trimming losses, Yahoo Finance reported. The stock was heading for a third straight weekly decline. The selling followed comments from rival chipmaker MaxLinear about entering the market for active electrical cables (AECs), copper cables with built-in chips that clean up and boost signals over the short links between servers and switches inside AI data centres.
On MaxLinear's third-quarter earnings call, chief executive Kishore Seendripu estimated that Credo holds 93% to 99% of the AEC market, but said buyers are starting to diversify as the technology becomes more complex. He said MaxLinear aims to win 20% to 30% of the market for 1.6-terabit-per-second AECs over the next couple of years. Rather than build finished cables, it plans to sell chips to cable makers and other suppliers, starting with one or two large US data-centre customers, Investing.com reported.
Investing.com also cited Edgewater Research, which said it saw little evidence of meaningful near-term 1.6-terabit AEC deployments in the largest AI programmes, which could push back the expected revenue ramp. Edgewater pointed to a proprietary 1.6-terabit cable programme at Cisco seeking quotes for 100,000 cables a month, which could draw signal-processing chips from Broadcom or MaxLinear and cable assemblies from Amphenol and TE Connectivity. Insider selling was also cited. Separately, Susquehanna cut its MaxLinear price target to $70 from $80 and kept a Neutral rating.
Why it matters: Credo has traded as a near-monopoly supplier of a key piece of AI rack wiring, and its valuation reflects that. The prospect of large chipmakers supplying components to cable assemblers, combined with signs that the move to faster 1.6-terabit links may arrive later than hoped, challenges both its pricing power and its growth timeline. Watch Credo's next results and guidance for comments on customer concentration and 1.6-terabit orders, and any confirmation of Cisco's programme and its chosen suppliers.