Damnang
· Damnang’s Substack
· June 09, 2026 at 23:25
· ⏱ 11 min read
| Read on Substack ↗
Summary
The article argues that Astera Labs (ALAB) and Credo Technology (CRDO), while often grouped together as 'connectivity' plays, occupy distinct positions in the AI data center interconnect stack—ALAB in scale-up switching and CRDO in scale-out copper cables. It analyzes their revenue drivers, product roadmaps, and the coming copper-to-optics transition, providing a framework to evaluate each company's growth potential and the point at which their market multiples diverge.
•ALAB's Scorpio X-Series switch supports 320 lanes at 20 Tbps, binding up to 80 accelerators directly, up from 32 in the prior generation.
•CRDO's fiscal 2026 revenue reached $1.3 billion, up 206% year-over-year, driven by its active electrical cable (AEC) products.
•ALAB's Q1 2026 revenue was $308 million with a gross margin of ~76%; Q2 guidance of $355-365 million beat expectations.
•CRDO's most recent quarterly revenue was $437 million, growth of 157% year-over-year, with gross margin ~68%.
•Both companies are expanding into each other's turf: CRDO is entering the PCIe Gen 6 retimer market, directly competing with ALAB's core Aries product.
•CRDO's CEO was granted performance-based stock awards tied to revenue milestones from $2.5 billion to $7.5 billion, signaling internal growth expectations.
The article details ALAB's transition from a retimer company to a fabric platform with the Scorpio switch, strong gross margins (~76%), and revenue growth. It positions ALAB as the first serious alter
The article details ALAB's transition from a retimer company to a fabric platform with the Scorpio switch, strong gross margins (~76%), and revenue growth. It positions ALAB as the first serious alternative to NVIDIA's NVLink in scale-up, with software (COSMOS) creating a platform moat.
Risk: Competition from CRDO in retimers and potential slowdown in hyperscaler capex.
CRDO's AEC business has grown revenue sixfold in two years to $1.3B, and the company is expanding into optical DSP, silicon photonics, and retimers. The CEO's performance awards up to $7.5B revenue im
CRDO's AEC business has grown revenue sixfold in two years to $1.3B, and the company is expanding into optical DSP, silicon photonics, and retimers. The CEO's performance awards up to $7.5B revenue imply high internal growth targets.
Risk: Gross margin (68%) is lower than ALAB's, and the copper-to-optics transition could challenge its core AEC franchise if optical costs drop faster than expected.