I think the market is seriously underestimating $CRDO's lead in AECs. People seem to think that just because $MXL or $MRVL can develop a 1.6T AEC chip, they can easily take market share from Credo. I don't think it's that simple. Here's why. Credo doesn't just sell chips. It owns the entire solution, from SerDes and cable design to firmware, system testing, qualification and delivery. Bill Brennan once talked about Credo's testing facility in Taiwan. They have over 20 thermal chambers running real customer switches and NICs under heavy traffic. And the goal isn't just to pass the tests. It's to deliberately break the links, find every weakness, and fix it before the customer ever sees the product. He said this process has improved bit error rates by 100–1,000x. Frankly, I'd love to see another AEC competitor put its entire solution through the same kind of torture test. So far, I haven't seen anyone else publicly talk about testing their links this aggressively. And Credo has the track record to back it up. According to the company, its AECs have accumulated over 6 billion hours of real-world operation without a reported link flap. That's not something a competitor can replicate overnight. Just look at Meta's recent Prometheus report. It took extensive engineering work to reduce cluster interruptions by 99%. Not all those issues were related to cables, of course, but it shows how important reliability has become. When you're running tens of thousands of expensive GPUs, saving a few dollars on a cable means nothing if an unstable link costs you hours of compute time. That's why I think ZeroFlap is such a big deal. Even $MXL's own CEO admitted that Credo controls roughly 93–99% of the AEC cable market. I'm not saying competitors won't win orders. I'm sure some will, especially as the industry moves to 1.6T. But winning a design is one thing. Getting qualified, proving reliability and delivering at scale is something else entirely. Credo has already demonstrated its 1.6T AECs in Rubin rack configurations, while new entrants still have a lot to prove. And let's not forget, $MRVL and others have been working on AECs for years. None of them has meaningfully challenged Credo's dominance so far. I think competition will eventually come, but the market is underestimating how hard it is to catch up. ZeroFlap isn't just a product feature. It's the result of years of engineering, testing and real-world deployment.

$CRDO’s premarket selloff may partly be driven by $MXL’s comments last night about entering the 1.6T AEC market. Investors may be worried about the impact of new competition. But here’s what’s interesting: MXL’s own CEO estimated that Credo controls roughly 93–99% of the AEC cable market. Credo has a mature, proven end-to-end solution, from silicon and cable design to qualification and delivery. MXL, meanwhile, plans to sell chips rather than complete cables. And competition isn’t new. $MRVL has been developing AEC silicon for some time, yet it hasn’t visibly dented Credo’s market dominance. Of course, more competitors will eventually enter this market. But I think investors may be overestimating the near-term threat from MXL. There’s a big difference between developing an AEC chip and taking meaningful share from Credo.

$NOK $CIEN $MRVL This news is a great example of what this upgrade cycle could look like. I think the market may still be underestimating the second leg of the coherent optics cycle. Most of the attention today is on new Scale-Across builds from hyperscalers and neoclouds. But there is also a large installed base of existing cloud and carrier infrastructure that is entering a major upgrade cycle. We are already seeing this inside data centers. 800G is going through a broad deployment cycle, and this is not only about newly built AI data centers. Hyperscalers are also upgrading older cloud infrastructure from 400G to 800G, with 1.6T coming next. The same logic should eventually play out in DCI, metro and backbone networks. Carriers already have a huge installed base of 100G/200G/400G coherent systems that will need to migrate toward 800G and 1.6T over time. The fiber is already in the ground. The next capex cycle is increasingly about upgrading the active layer coherent optics, transponders, router line cards, ROADMs and optical line systems. Very rough math suggests the existing DCI installed base could represent $15–25B of historical equipment value, with refresh alone potentially supporting a $3–5B annual market over time. Then you layer new AI Scale across demand on top. That starts to look less like a 1–2 year AI DCI cycle and more like a broader generational upgrade of the global optical transport network. Telxius deploying Nokia 800G ZR/ZR+ across Europe, the US and LatAm is a good example of that trend starting to move into traditional carrier networks as well.