Credo and Marvell Diverge on AI Chip Growth and Valuation Metrics

Credo Technology (CRDO) and Marvell Technology (MRVL) serve distinct roles in the artificial intelligence supply chain, with recent financial results highlighting divergent growth trajectories and valuation metrics. Credo focuses on high-speed connectivity components such as active electrical cables and retimers, while Marvell offers a broader portfolio including custom AI chips and Ethernet switching silicon. Both companies reported strong quarterly performance, but their forward-looking financial estimates reflect different risk and reward profiles for investors seeking exposure to data center infrastructure.

According to Zacks Investment Research, Credo’s fiscal first-quarter revenue reached $479 million, a 115% increase year-over-year, driven by its connectivity portfolio. Adjusted earnings per share rose 131% to $1.20, with adjusted gross margins hitting 68%. In contrast, Marvell’s fiscal second-quarter revenue grew 37% to a record $2.74 billion, with adjusted EPS increasing 40% to $0.94. Marvell’s data center segment accounted for 79% of total sales, generating $2.17 billion in revenue.

Credo Delivers High-Speed Connectivity Growth

Credo’s business model relies on supplying essential technology that enables large AI systems to communicate reliably without directly competing in processor design. This specialization allowed the company to achieve a 68% adjusted gross margin in its latest quarter, reflecting the profitability of its active electrical cables and optical products. The company’s positioning as a connectivity provider has resulted in faster near-term revenue expansion compared to broader infrastructure peers.

Looking ahead, consensus estimates project Credo’s fiscal 2027 revenue to rise 87% to $2.5 billion, with earnings per share jumping 80% to $6.23. For fiscal 2028, revenue is expected to approach $3.74 billion and EPS to reach $9.30. This growth trajectory supports Credo’s current valuation of just under 30 times forward earnings, a significant discount to its peers despite its higher growth rate.

Marvell Expands AI Infrastructure Portfolio

Marvell maintains a five-year collaboration with Amazon’s AWS, spanning custom AI products and multiple networking technologies. This diversified approach provides several avenues to benefit from expanding cloud and AI investment. The company’s broader product mix, including optical-connectivity components and custom-designed chips, resulted in a 58.9% adjusted gross margin in the latest quarter, slightly below Credo’s but supported by higher absolute revenue volume.

Full-year fiscal 2027 estimates for Marvell point to revenue growth of 46% to $12 billion and EPS growth of 47% to $4.19. The following year, revenue is projected to climb another 50% to $18.02 billion, with earnings increasing 58% to $6.62 per share. While Credo offers faster current-year growth, Marvell’s projected earnings growth is stronger in the subsequent fiscal year, indicating a different pace of value realization.

Valuation Metrics Reflect Diverse Risk Profiles

Market performance highlights the divergent paths of the two stocks. Year-to-date, Credo shares have gained 5%, while Marvell stock has surged 160%. Over the past two years, Credo has soared more than 400%, outpacing Marvell’s 200% gain. Both companies have outperformed the broader market and the Zacks Electronics–Semiconductors industry, which returned roughly 100% over the same period.

Valuation comparisons show Credo trading at $150 per share with a forward earnings multiple of under 30 times, compared to Marvell at $221 per share with a 72 times multiple. However, Credo’s lower multiple carries specific business risks, as four customers accounted for approximately 84% of its latest quarterly revenue. This concentration means that a spending slowdown at a major customer or a delayed product deployment could materially affect Credo’s results, whereas Marvell’s broader portfolio offers a different risk mitigation strategy.