The explosive AI-infrastructure buildout has put the spotlight on semiconductor companies as the reshaping of the data center connectivity landscape is creating massive demand for high-speed interconnect and optical solutions.
Both Credo Technology Group Holding Ltd CRDO and Marvell Technology MRVL are beneficiaries of this cycle. While both companies operate in the same space, their positioning, scale and strategies differ significantly.
So, the question now arises: Which stock is a better investment pick at present? Let us dive into the fundamentals, valuations, growth outlook and risks for each company.
The Case for CRDO
Credo is a leading provider of high-speed connectivity solutions for AI infrastructure. At the core of Credo’s business is its Serializer/Deserializer (SerDes) and Digital Signal Processor (“DSP”) technology stack. Leveraging this foundation, Credo offers a diversified suite of solutions, including integrated circuits (ICs), retimers, optical DSPs, Active Electrical Cables (AECs), SerDes chiplets and SerDes IP licensing.
CRDO’s focus on high-performance, energy-efficient connectivity solutions gives it strategic relevance as hyperscalers and cloud service providers overhaul their network architectures.
Fiscal 2026 was a breakout year, with revenues surpassing $1.3 billion, more than tripling year over year. Non-GAAP net income increased more than fivefold.
Credo Technology Group Holding Ltd. Revenue (Quarterly)
Credo Technology Group Holding Ltd. revenue-quarterly | Credo Technology Group Holding Ltd. Quote
AECs are the primary growth engine for CRDO as they now play an increasingly critical role in AI-driven networking deployments. According to Credo, the adoption of zero-flap AECs is accelerating because they deliver up to 1,000x higher reliability while consuming roughly 50% less power compared with optical alternatives. These advantages are particularly valuable in large XPU clusters, where network failures can disrupt operations and lead to high costs. Beyond the traditional hyperscalers, Credo is also seeing increasing demand from emerging Neocloud providers.
In addition to AEC, CRDO is now focusing on the IC portfolio (retimers and DSPs). The company expects mid-single-digit sequential growth in the first half of fiscal 2027, followed by a stronger second-half acceleration buoyed by its optical portfolio. Management projects more than $600 million in optical revenues, with ZeroFlap optics, silicon photonics PICs and optical DSPs each contributing more than $100 million. This is expected to support more than 80% year-over-year revenue growth for the full year.
The acquisition of Dust Photonics strengthens Credo’s high-speed optical connectivity portfolio with silicon photonics PIC technology. The deal adds advanced technology, including 800G and 1.6T solutions, and would aid in developing upcoming 3.2T solutions.
As revenue scales, Credo is beginning to show signs of operating leverage. For fiscal 2027, gross margins are projected to stay in line with fiscal 2026 levels, while non-GAAP net margins are expected to remain around 50%, even as the company continues to invest in R&D.
However, no investment case is without risks. Macroeconomic uncertainties and exposure to the AI investment cycle amid increasing market competition remain concerns. On the last earnings call, Credo noted ongoing tightness in the supply chain. While the company has taken steps to secure capacity, disruptions could still affect its ability to meet demand.
The Case for MRVL
Marvell Technology has been in the spotlight for some time now, especially after NVIDIA's chief publicly called it the next trillion-dollar company earlier this year. The company is now a component of the S&P 500 index. MRVL’s strategic pivot to prioritize the data center market is proving to be a successful catalyst amid surging AI-infrastructure spending.
The data center business accounted for 76% of total revenues in the first quarter of fiscal 2027. The company has raised its fiscal 2027 revenue forecast to $11.5 billion, with the upside coming from this business. Data center revenues increased 46% in fiscal 2026. Management expects growth to accelerate to approximately 50% in fiscal 2027 and 55% in fiscal 2028.
Interconnect remains a standout performer within the data center business. Demand for the company’s high-speed connectivity solutions remains strong, prompting management to raise its fiscal 2027 interconnect revenue growth forecast to more than 70% year over year. Demand remains strong for 800G products, while 1.6T solutions based on 200-gig-per-lane technology are ramping following their production launch in the second half of fiscal 2026. Marvell expects 1.6T revenues to increase substantially again in fiscal 2028.
Rapid growth in broadband analog products, including TIAs and drivers, bode well. Management projects revenues from TIAs and drivers to top a $1 billion annualized run rate over the next few quarters. Data center interconnect, or DCI, business represents another important growth opportunity. On the last earnings call, management highlighted that it now ships DCI solutions to all five major U.S. hyperscalers. It expects to gain from rising demand, driven by large-scale AI clusters that increasingly span several data centers.
Marvell Technology, Inc. Revenue (Quarterly)
Marvell Technology, Inc. revenue-quarterly | Marvell Technology, Inc. Quote
Marvell has introduced secure 1.6T ZR and ZR+ DCI modules powered by its 2-nanometer coherent DSP, with sampling expected to begin this year. Management sees the DCI module business reaching a $1 billion annualized revenue run rate during fiscal 2028, nearly double the approximately $500 million generated in fiscal 2026.
MRVL is supplementing its organic growth with strategic acquisitions like Celestial AI and Xconn Technologies. Celestial AI specializes in the Photonic Fabric technology, or PF platform, while XConn Technologies will aid in expanding its footprint across PCIe and CXL switch opportunities.
However, Marvell Technology’s growth story comes with risks. Increasing reliance on the data center market makes it vulnerable to any changes in hyperscaler AI capital spending. Stiff competition in the semiconductor space and global trade tensions remain a matter of concern. Marvell expects to make $1 billion in supplier prepayments during fiscal 2027 to capture manufacturing capacity. Although these prepayments are intended to support future material purchases, these could impact cash generation if demand or production fall short of expectations. Apart from significant upfront investments, acquisitions bring along execution and integration risks.
Price Performance & Valuations of CRDO & MRVL
Year to date, both CRDO and MRVL are up 55.6% and 144.7%, respectively.
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In terms of the forward 12-month price/sales multiple, Credo is trading at 16.06X, higher than MRVL’s 13.05X.
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How Do the Consensus Estimates Compare for CRDO & MRVL?
Analysts have significantly revised their earnings estimates upwards for CRDO for the current fiscal year in the past 60 days.
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Estimates have been revised 6% upwards for MRVL’s bottom line.
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CRDO or MRVL: Which Is a Better Pick?
CRDO currently flaunts a Zacks Rank #1 (Strong Buy) and MRVL carries a Zacks Rank #3 (Hold).
In terms of the Zacks Rank, CRDO appears to be a better pick at the moment.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).