CRDO251121C147000.US

Mizuho: InP & Memory

Supply Chain & Gating Factors

> InP Laser Supply: Remains tight into 2027E as multiple suppliers work to bring capacity online.

> NPO & CPO Dynamics: NPO continues to act as a near-term bridge for CPO, which is expected to ramp in 2H27/28E.

> CRDO Position: Believed to be the leader in Active Electrical Cables (AEC), with market ramping at a 98% 2024–29E CAGR, driven by additional upside from ZFO, ALC/MicroLED, and SiPho ramps.

> LITE Commentary: 1.6T ramps feature 200G accounting for >25% of revenues, with CPO delayed to 2H27. CRDO benefits from this alongside Neocloud strength for AEC.

Memory & Storage Pricing (NAND/DRAM)

> ASP Spikes: NAND/DRAM Average Selling Prices (ASPs) are projected up 406%/421% y/y in 2026E.

> Growth Moderation: Growth slows down in 2027E, with NAND expected to be flat and DRAM up 52% y/y.

AI DC Short-Reach Copper Cable Split

> Market Expansion: Total units grow steadily from 8M in 2024 to 23M by 2029.

> AEC Adoption: AEC units increase from 0M (2024) to 12M (2027) and 12M (2029), with total AEC penetration (including optical %) scaling to over 40% by 2029.

Estimated Wholesale 1.6T Cable Prices ($)

AEC: $225

ALC: $400

EML-based Transceiver: $700

CPO: $150

$Credo Tech(CRDO.US) $Lumentum(LITE.US) $Coherent Corp.(COHR.US) $Micron Tech(MU.US) $DDRAM $Sandisk(SNDK.US) $EWY

📢 𝗝𝗨𝗦𝗧 𝗜𝗡: $Credo Tech(CRDO.US) Credo Launches OCP Initiative to Reduce AI Memory Bottlenecks Beyond HBM - $Micron Tech(MU.US) $Sandisk(SNDK.US) $SK Hynix(SKHY.US)

👉 𝗞𝗲𝘆 𝗛𝗶𝗴𝗵𝗹𝗶𝗴𝗵𝘁𝘀:

➤ 𝗖𝗿𝗲𝗱𝗼 plans to standardize an AI interconnect within the 𝗢𝗽𝗲𝗻 𝗖𝗼𝗺𝗽𝘂𝘁𝗲 𝗣𝗿𝗼𝗷𝗲𝗰𝘁.

➤ Company formed the 𝗢𝗖𝗣 𝗢𝗽𝗲𝗻 𝗖𝗵𝗶𝗽𝗹𝗲𝘁 𝗘𝗰𝗼𝗻𝗼𝗺𝘆 𝗟𝗦𝗜 Workstream.

➤ Credo will contribute its 𝗢𝗺𝗻𝗶𝗖𝗼𝗻𝗻𝗲𝗰𝘁 lightweight 𝗔𝗫𝗜 framer specification to OCP.

➤ Initiative targets AI's growing 𝗺𝗲𝗺𝗼𝗿𝘆 𝘄𝗮𝗹𝗹 bottleneck.

➤ Open ecosystem aims to enable 𝗺𝗲𝗺𝗼𝗿𝘆 𝗱𝗶𝘀𝗮𝗴𝗴𝗿𝗲𝗴𝗮𝘁𝗶𝗼𝗻 and chip-to-chip communications.

➤ Architecture is designed to reduce reliance on costly 𝗛𝗕𝗠 memory.

➤ Technology targets up to 𝟮𝟱𝘅 higher memory density than 𝗛𝗕𝗠𝟰.

➤ Solution also targets up to 𝟱% higher bandwidth than 𝗛𝗕𝗠𝟰.

➤ Initiative supports composable AI infrastructure for next-generation AI systems.

👉 𝗪𝗵𝘆 𝗧𝗵𝗶𝘀 𝗠𝗮𝘁𝘁𝗲𝗿𝘀:

➤ Could reduce AI infrastructure dependence on expensive, supply-constrained 𝗛𝗕𝗠.

➤ Promotes an open, interoperable ecosystem for AI memory and chiplet connectivity.

➤ Addresses one of AI's biggest scaling challenges: 𝗺𝗲𝗺𝗼𝗿𝘆 𝗯𝗮𝗻𝗱𝘄𝗶𝗱𝘁𝗵 and capacity.

➤ May improve AI system performance while lowering infrastructure costs.

👉 𝗘𝘅𝗽𝗲𝗿𝘁 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁𝘀:

𝗩𝗶𝘀𝗵𝗮𝗹 𝗦𝗵𝗮𝗵, Vice President of Product, Credo:

“We formed the OCP LSI Workstream to address a clear industry need for innovative interconnect solutions that address the memory wall problem while also enabling a new generation of high-bandwidth and power-optimized modular architectures for AI systems. Advancing an open approach to lightweight framing and serial interconnect is critical to enabling flexible chiplet integration, including near-package pluggable configurations, for the next wave of AI inference.”

𝗔𝗻𝘂 𝗥𝗮𝗺𝗮𝗺𝘂𝗿𝘁𝗵𝘆, Co-Lead, OCP Open Chiplet Economy Subproject:

“We welcome Credo’s leadership in helping to define open frameworks and standards that can accelerate innovation and scalability across the ecosystem with the OCP LSI Workstream. Credo’s intended contribution of the lightweight AXI framer specification to OCP is an important step toward aligning the industry around AI interconnect architectures that enable interoperability, reduce complexity and support the high-performance requirements of next-generation AI infrastructure.”

According to a senior engineer at Inphi:

> Hyperscalers prefer to stay on 800G as long as possible to maximize existing infrastructure investments unless specific inference workloads (like long-context or domain-specific enterprise models) necessitate a faster migration to 1.6T.

>While some anticipate 3.2T deployment by late 2028, a true majority market field deployment is more realistically expected closer to 2030.

> Regarding Credo, the expert notes that the company operates in a similar space to Marvell's scale-up segment and achieved major success by dominating the active copper cable market with a well-timed solution after nearly failing in the past. Many of Credo's engineers previously worked within the expert's group at Marvell, and they are recognized as having strong engineering capabilities. Credo initially capitalized because Marvell's product management and roadmap focus were directed toward optical connectivity rather than that specific copper segment. However, the expert believes that Marvell's next-generation offerings position them on par or ahead in the ongoing race, even though Credo will not easily relinquish its dominant position.

$Marvell Tech(MRVL.US) $Credo Tech(CRDO.US)

Mizuho Securities: Optics

Market Trends & Technologies

> Optical Circuit Switches (OCS): OCS is gaining traction among hyperscalers, with Google (GOOGL) leading adoption in its Jupiter Network and other hyperscalers like Amazon (AMZN) and Microsoft (MSFT) exploring its use. Lumentum (LITE) and Huber+Suhner (HUBN) are identified as key partners in this space.

> Co-Packaged Optics (CPO) vs. Near-Packaged Optics (NPO): While interest in CPO continues to grow (with potential deliveries in 2028/29E), industry focus is shifting toward NPO in the near-term because it is easier to deploy and requires less co-integration than CPO, despite being less power-efficient.

> Silicon Photonics (SiPho) & InP: The supply chain for SiPho remains constrained, with demand potentially outpacing foundry capacities at GFS and TSEM. A transition to 6-inch wafers is underway to help alleviate supply tightness by providing ~130% higher wafer area.

> Micro-LED (uLED) Potential: uLED/ALC is emerging as a potential disruptor for networking, offering 20-30m reach at approximately 1/5th the cost of optical pluggables, with no InP supply constraints. Credo (CRDO) is noted as a key player in this space, targeting deliveries starting in 2027-28E.

Company-Specific Updates (Lumentum & Credo)

Lumentum (LITE):

> Growth Drivers: Lumentum management noted that the "best is yet to come" as several major growth drivers—optical scale-up, optical scale-out, and optical circuit switches (OCS)—are just beginning to ramp up and are not yet fully reflected in their numbers.

> 1.6T Transition: The company is seeing a significant tailwind from the transition to 1.6T transceivers, led by NVIDIA and Google, with 200-gig EMLs providing roughly double the average selling price (ASP) of previous generations.

> Scale-Out Business: The partnership with NVIDIA for high-powered lasers in CPO switch platforms is a major focus, with expected incremental revenue of $50 million to $100 million in the fourth quarter of fiscal 2026 alone.

Credo Technology (CRDO):

> Market Outperformance: Credo has significantly outperformed larger rivals like NVIDIA and Broadcom in share price gains during 2026, largely due to its specialized role in high-speed, energy-efficient connectivity.

> Optical Portfolio: Following its acquisition of DustPhotonics, Credo has strengthened its silicon photonics capabilities. The company expects its optical connectivity business to generate over $600 million in revenue in fiscal 2027, supported by a 1.6T networking transition.

$Lumentum(LITE.US) $Credo Tech(CRDO.US) $Broadcom(AVGO.US) $NVIDIA(NVDA.US) $STMicroelectronics NV(STM.US) $Alphabet(GOOGL.US) $Meta Platforms(META.US) $Tower Semicon(TSEM.US) $Marvell Tech(MRVL.US) $Taiwan Semiconductor(TSM.US) $Microsoft(MSFT.US) $Amazon(AMZN.US)

$Credo Tech(CRDO.US) | Evercore ISI 𝐢𝐧𝐢𝐭𝐢𝐚𝐭𝐞𝐬 𝐂𝐫𝐞𝐝𝐨 𝐓𝐞𝐜𝐡 with an 𝐎𝐮𝐭𝐩𝐞𝐫𝐟𝐨𝐫𝐦 rating, sets 𝐏𝐓 𝐚𝐭 $𝟑𝟐𝟓

Analyst sees Credo's evolution into a broad copper + optical AI-connectivity play expanding its TAM by 10x-20x and driving a 70%+ 3yr earnings CAGR.

TLDR of my “recovery” trades:

Including some new trades from last week, if anyone was interested.

In order of concentration:

1. $Credo Tech(CRDO.US) ($190) - that 18% dip after earnings was such an obvious buy-point.

2. $Nokia Oyj(NOK.US) ($14) - started a sizeable position on Thursday's market close. Not sure why they're down 20%?

3. $Reddit(RDDT.US) ($150) - will add more soon.

4. $Qualcomm(QCOM.US) ($148) - pre-earnings trade from April that I still hold.

5. $Ciena(CIEN.US) ($488) - opened a position on the dip after their earnings report a couple weeks ago. Keeps dipping though lol.

6. $ServiceNow(NOW.US) ($102) - what on earth was that SaaS fake pump at the end of May? Down around 7% and plan to DCA in pre-specified tranches if it keeps dipping. Long-term hold for me for when quality SaaS makes a resurgence one day.

7. $Fabrinet(FN.US) ($570) - started a position last week, 20% dip seems aggressive on quite impressive earnings + outlook.

8. $Netflix(NFLX.US) ($77) - started the position on Thursday market close. A 40% dip in the past year is mental.

9. $Grayscale Bitcoin Mini Trust ETF(BTC.US) ($63k) - not a crypto bull/expert at all, it's just a fun trade to see what happens. Will be the first to go if I need to raise cash.

As of right now, most could easily turn into longer-term holds.

Today's top gainers: $Aevex(AVEX.US)* $Credo Tech(CRDO.US) $Crocs(CROX.US) $Legend Biotech(LEGN.US) $Rocket Lab(RKLB.US) $Arm(ARM.US) $Kyverna Therapeutics(KYTX.US) $Apollo Global(APO.US) $Hims & Hers Health(HIMS.US)*

* = trim

Source: Minerva Capital