Credo Launches 1.6T ZeroFlap Optical Transceivers, Testing $600 Million Fiscal 2027 Optical Target

Optical connectivity stocks rallied Monday after Lumentum Holdings unveiled plans to demonstrate a high-density die-to-die optical interconnect for AI scale-up architectures at an optical communications conference in Málaga, Spain. The demo combines a die-to-die interface subsystem from Qualcomm Technologies with Lumentum's laser-based optical interconnect platform, and uses multimode fiber connectivity from Corning to supply the high-density glass ferrules the setup runs on. Corning stock rose 6% to $159.12, outpacing demo author Lumentum, which gained 4% to $969.69, a signal that buyers are repricing Corning's broader AI optical fiber exposure beyond the single conference event. Coherent Corp. rose 4% to $329.66 and Applied Optoelectronics rose 4% to $109.05, neither a party to the demonstration, while the Roundhill Photonics & Optics ETF gained 3% to $26.91 against a 1.38% rise for the SPDR S&P 500 ETF Trust at $772.18. Corning's diversified business across optical, display, automotive, solar, semiconductors and life sciences cushions AI optical downside but also dilutes how much any single fiber win moves revenue, and a conference demonstration is not an order.

Credo Technology Group Holding Ltd. expects fiscal 2027 revenues to grow more than 85% year over year, with the Zacks Consensus Estimate calling for revenues of $2.5 billion and earnings of $6.23 per share. Near-term guidance also points higher, with fiscal second-quarter revenues projected at $525 million to $535 million, compared with $479 million in the first quarter, when revenues rose 114.7% year over year. Active Electrical Cables remain Credo's largest business unit, but management projects more than $600 million in fiscal 2027 optical revenues, with ZeroFlap optics, silicon photonics PICs and optical DSPs each expected to contribute more than $100 million. First-quarter fiscal 2027 non-GAAP gross margin was 68%, operating margin reached 48.2% and net margin was 49.3%, while management expects non-GAAP operating expenses to rise about 55% in fiscal 2027. The stock trades at 11.1X forward 12-month sales, compared with 5.0X for the Zacks sub-industry and 6.1X for the Zacks sector, and the four largest end customers generated 33%, 28%, 13% and 10% of first-quarter fiscal 2027 revenues, with the top two accounting for 61%.

Wall Street analysts issued a fresh round of ratings changes, led by an upgrade of Ciena and a downgrade of Flutter Entertainment. Evercore ISI upgraded Ciena to Outperform from In Line with a price target of $550, up from $375, calling the optical networking space a critical bottleneck in the AI buildout. Rothschild & Co Redburn downgraded Flutter Entertainment to Neutral from Buy with a price target of $119, down from $169, citing four consecutive guidance cuts. BNP Paribas upgraded AT&T to Outperform from Neutral with a price target of $30, up from $26, while HSBC double downgraded CCU to Reduce from Buy with a price target of $10, down from $15. In initiations, Rothschild & Co Redburn started CoreWeave at Sell with a $54 price target and Equinix at Buy with a $1,261 price target, and Needham initiated Nano Nuclear Energy at Buy with a $33 price target.