Shares of Credo Technology (NASDAQ: CRDO) jumped 7% after Super Micro filed a business update projecting far stronger revenue than it had previously forecast for its fiscal first quarter.
Super Micro now expects revenue of $18.5 billion to $19.5 billion for the quarter ended September 30, compared to prior guidance of $14.5 billion to $15.5 billion, a midpoint beat of roughly 27%.
The company credited the outperformance to “increased demand for AI platforms,” and also guided gross margin of 12.0% to 12.5%, well above its prior forecast range of 10.4% to 10.8%.
The news lifted the broader AI networking sector, with Lumentum (LITE) rising 5.5%, Coherent (COHR) gaining 4.8%, Semtech (SMTC) adding 5%, and Astera Labs (ALAB) climbing 3.5%.
Jefferies separately raised its price target on Lumentum to $1,250 from $1,200, providing an additional boost to that stock’s morning gains.
Credo itself had no company-specific announcement, but its active electrical cables sit directly in the data path of every AI rack Super Micro ships, connecting servers to switches.
A quarter this strong from one of the largest AI server assemblers in the market is a direct signal of accelerating demand for the connectivity products Credo supplies.
Analysts covering Credo had already penciled in aggressive growth before Super Micro’s update, with revenue expected to reach $2.5 billion in fiscal 2027 and $3.87 billion in fiscal 2028, following a near-tripling to $1.34 billion in fiscal 2026.
If Super Micro’s beat reflects a broader acceleration across the entire AI infrastructure build-out rather than market share gains from rivals, those already-ambitious analyst estimates could still have room to move higher.
Despite the morning’s rally, Credo’s valuation remains far from stretched by its own historical standards, trading at roughly 25x forward earnings after the move, compared to a three-year average of 64x and a peak of 140x in November 2023.
The stock had fallen 22% just last week following the launch of a new optical cable product, meaning even after today’s gains, it sits near the bottom of its three-year valuation range.
Super Micro’s figures remain preliminary and unaudited, and its earnings call scheduled for November 3 is expected to provide greater clarity on how broadly AI demand is distributed across the market.
Whether one strong quarter from a single server maker reflects genuine industry-wide momentum or a more isolated result will determine whether Credo’s current valuation proves to be an opportunity or simply a floor.
