Credo: the copper cable inside the AI rack, priced for a fall

Credo makes the active electrical cables and connectivity chips that link GPUs and servers inside AI racks, where short copper links are still cheaper and cooler than optics. The business is growing fast and profitably: revenue in the quarter to 1 August 2026 was $479M, up 115% on the year, ahead of its own guidance, with a non-GAAP gross margin of 68.0% and no debt. It guided the next quarter to $525–535M at a 67–69% margin, and in May it bought DustPhotonics to add silicon photonics for the links where copper runs out. The shares tell a different story: down from a 26-week high above $300 to $124 on 6 November, after an 18% fall in a single day of the AI selloff and reports of competition in cables. The view is that the business, not the price, is the signal: as long as the margin holds near 68% and revenue keeps climbing, the cable is still the cheapest way to connect a rack, and Credo is still the one being paid for it. Conviction is LOW because the customer base is narrow. Four unnamed end customers were 84% of revenue, and one contracting party held 57% of receivables; a single hyperscaler changing its rack design moves the year. GAAP gross margin slipped to 64.5%, and stock compensation was about 18% of revenue. BULLISH, conviction LOW, one year. The entry is the live price on 6 November, not the pre-selloff close.