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CRDO's New Lark Optical DSP Saves Energy for AI Data Centers, Stock Up
CRDOCredo Technology (CRDO) ZACKS·2025-04-02 12:25

Core Insights - Credo Technology Group (CRDO) has launched its Lark optical Digital Signal Processor (DSP) family, aimed at enhancing 800G optical transceivers [1][2] - The introduction of the Lark DSP family has resulted in a 3.8% increase in CRDO's share price, closing at 41.72onApril1,2025[2]ProductOverview−TheLark800isahigh−performance,low−powerDSPdesignedforfullyretimed800Gtransceivers,cateringtothepowerandcoolingneedsofhyperscaleAIdatacenters[2][6]−TheLark850isanultra−low−power800GLinearReceiveOptics(LRO)DSP,consumingunder10W,makingitsuitableforAI−drivendataenvironments[2]−TheLarkDSPsutilizeafifth−generationarchitecturethatensuresefficientdatatransmissionindemandinghyperscaleenvironments[3]EnergyEfficiencyandAdaptability−TheLark800featuresprogrammablepower−savingmodes,allowingforoptimizedpowerusagebasedonworkloadintensity[4]−Itsupportsbothsingle−modeandmulti−modearchitectures,providingflexibilityforvariousopticaltransceiverapplications[4][5]MarketDemandandClientBase−ThelaunchoftheLarkDSPfamilyaddressesthegrowingneedforhigh−speed,low−latencyconnectivityinevolvinghyperscaledatacenters[6]−Credohasastrongclientbase,includingover20blue−chipclientsandmajorhyperscalers,whichsupportsitsmarketposition[7]FinancialPerformanceandProjections−Forthethirdquarteroffiscal2025,CRDOexpectsrevenuesbetween41.72 on April 1, 2025 [2] Product Overview - The Lark 800 is a high-performance, low-power DSP designed for fully retimed 800G transceivers, catering to the power and cooling needs of hyperscale AI data centers [2][6] - The Lark 850 is an ultra-low-power 800G Linear Receive Optics (LRO) DSP, consuming under 10W, making it suitable for AI-driven data environments [2] - The Lark DSPs utilize a fifth-generation architecture that ensures efficient data transmission in demanding hyperscale environments [3] Energy Efficiency and Adaptability - The Lark 800 features programmable power-saving modes, allowing for optimized power usage based on workload intensity [4] - It supports both single-mode and multi-mode architectures, providing flexibility for various optical transceiver applications [4][5] Market Demand and Client Base - The launch of the Lark DSP family addresses the growing need for high-speed, low-latency connectivity in evolving hyperscale data centers [6] - Credo has a strong client base, including over 20 blue-chip clients and major hyperscalers, which supports its market position [7] Financial Performance and Projections - For the third quarter of fiscal 2025, CRDO expects revenues between 115 million and $125 million, indicating a sequential growth of 67% at the midpoint [8] - The company anticipates double-digit sequential revenue growth from the third to the fourth quarter of fiscal 2025, with overall revenue growth exceeding 100% for fiscal 2025 [8] - Management expects operating expenses to grow at less than half the rate of revenues, leading to margin expansion, with long-term non-GAAP gross margins projected between 63% and 65% [9] Stock Performance - CRDO currently holds a Zacks Rank 1 (Strong Buy) and has seen its shares rally by 85.9% over the past year, contrasting with a 2.2% decline in the Zacks Electronics-Semiconductors industry [10]