The AI data center darling tripled revenue to $1.34 billion in fiscal 2026, but concerns about copper-to-optical migration sent shares lower amid broader market jitters.
Credo Technology Group, the company that sells the high-speed copper cables connecting AI servers across the world’s largest data centers, had a rough day on June 23. Shares closed at $272.01 as investors digested a growing worry: what happens when the industry decides copper isn’t fast enough anymore?
The concern centers on a technology called Co-Packaged Optics, or CPO, which could eventually replace Credo’s bread-and-butter Active Electrical Cables as data center port speeds push toward 1.6 terabits per second.
A record year meets an uncomfortable question #
Total revenue for fiscal 2026 hit $1.34 billion, roughly triple what the company pulled in previously. Fourth-quarter revenue alone reached $437 million, reported on June 1.
On May 28, Credo completed its acquisition of DustPhotonics, a move designed to bolster its optical technology capabilities and hedge against the very transition investors are now worried about.
A partnership with AI chip startup Rebellions, announced on May 20, further expanded Credo’s reach into the AI factory efficiency space.
The copper-to-optical transition risk, explained #
Credo’s core product line, its Active Electrical Cables, uses copper to transmit data between servers and switches inside hyperscale data centers. As port speeds climb toward 1.6 terabits per second, copper cables face increasing signal degradation over distance. CPO takes this a step further by integrating optical components directly into the chip package, potentially eliminating the need for separate cable assemblies altogether.
Customer concentration adds another layer of risk #
Historically, approximately 80% of Credo’s revenues were tied to just two hyperscaler customers. The company has reportedly diversified that base since then. If one of them decides to shift to an optical solution from a competitor, the revenue impact wouldn’t be gradual. It would look more like a cliff.
What this means for investors watching AI infrastructure #
The key metric to watch in coming quarters is Credo’s optical revenue as a percentage of total sales. If the DustPhotonics acquisition starts contributing meaningful revenue and the company demonstrates it can compete in both copper and optical markets, the replacement risk narrative weakens considerably.
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