Jose Najarro discusses recent OpenAI updates and their implications for AI stocks, particularly focusing on how these developments affect Nvidia and other companies in the competitive AI market. The article examines the broader impact of OpenAI's strategic moves on semiconductor and AI-related investments.

Three AI-linked companies—Broadcom, Palantir, and Credo Technology—are positioned to report 50%+ growth in earnings and revenue as earnings season approaches. Broadcom expects 62.5% revenue growth and 50.6% EPS jump driven by AI accelerator demand. Palantir forecasts 74%+ Q1 revenue growth and 114% EPS growth, with strong commercial segment expansion. Credo Technology projects 55% revenue growth and 240% EPS improvement, benefiting from AI data center connectivity demand.

Credo Technology Group announced the acquisition of DustPhotonics, a silicon photonics microchip developer, for $750 million in cash and stock plus potential milestone payments. The deal expands Credo's AI connectivity solutions into optical technology, with management projecting over $500 million in optical revenue by fiscal 2027. Credo shares surged 18.73% on the news.

Credo Technology announced it will acquire DustPhotonics for $750 million in cash plus approximately 0.92 million shares, with potential contingent consideration of up to 3.21 million shares. The acquisition brings Silicon Photonics technology in-house to expand Credo's optical connectivity portfolio for AI infrastructure. The combined company expects over $500 million in optical revenue in fiscal 2027, with the deal expected to close in Q2 2026 and be accretive to adjusted EPS in fiscal 2027. CRDO shares rose 6.43% in after-hours trading.

With major tech companies expected to spend $700 billion on AI infrastructure this year, three stocks are positioned to capitalize on this trend: Nvidia, which supplies AI processors and is trading at a discount; Digital Realty, which provides data centers and connectivity services with strong bookings; and Credo Technology, which offers high-speed data connectivity products and is growing faster than Nvidia.

Credo Technology Group is positioned as an overlooked AI infrastructure play that powers GPU connectivity in data centers. Despite a 15% post-earnings drop and 50% pullback from its 52-week high, the company reported strong Q3 fiscal 2026 results with 202% YoY revenue growth and beat analyst estimates. With new product launches targeting the 800GB-to-1.6TB upgrade cycle and strategic acquisitions, the author suggests it could deliver 10-bagger returns for long-term investors, though customer concentration risks remain.

Credo Technology reported strong Q1 FY2026 results with $407M revenue (201% YoY growth) and 68.5% gross margins. While customer concentration remains a risk with two hyperscalers accounting for ~80% of revenue, the company is diversifying its customer base and benefits from a strong competitive moat through its ultra-reliable Active Electrical Cables (AECs) that are 1,000x more reliable than alternatives. With new product lines ramping and guidance for 50%+ YoY growth in FY2027, the author sees the company as a critical AI infrastructure player worth buying despite concentration risks.

The Russell 2000 index of small-cap stocks is outperforming the S&P 500 in 2026, up 4.3% year-to-date versus a modest loss for the S&P 500. The Vanguard Russell 2000 ETF is benefiting from favorable domestic policies, lower interest rates, and strong performance from companies like Bloom Energy and Credo Technology. Small-cap companies with floating-rate debt are particularly advantaged by recent Federal Reserve rate cuts.

Credo Technology has emerged as a critical enabler of AI infrastructure, leading the market in Active Electrical Cables (AECs) for high-speed data center interconnects. The company demonstrated strong Q3 FY2026 results with 201% YoY revenue growth and 68.5% gross margins. However, at a $19 billion valuation (24x EV/TTM Sales and 30.5x forward earnings), the stock has priced in significant growth expectations with little room for error. Key risks include customer concentration (two customers represent 80% of Q2 revenue) and potential competitive threats, though the analyst remains cautiously optimistic on fundamentals while avoiding new positions at current levels.

Credo Technology (CRDO) reported strong Q3 earnings with adjusted EPS of $1.07 (beating $0.95 estimate) and revenue of $407.01M (exceeding $400.23M forecast), along with optimistic Q4 guidance of $425-435M. However, the stock declined 14.15% in premarket trading due to broader market weakness and bearish technical indicators, despite the company's 200% year-over-year revenue growth and strategic acquisition of CoMira Solutions.

As AI data center power demand is projected to grow from 68 gigawatts in 2026 to 327 gigawatts by 2030, investors should consider companies providing power infrastructure and connectivity solutions. NextEra Energy is partnering with major hyperscalers like Google to supply power to AI data centers, while Credo Technology provides high-speed data connectivity solutions critical for efficient GPU communication.

With major hyperscalers planning to spend $650 billion on AI infrastructure this year, the article identifies five AI stocks positioned to benefit from the global AI buildout: Nvidia (GPU chipmaker), TSMC (chip manufacturer), Nebius Group (data center provider), Digital Realty Trust (data center REIT), and Credo Technology Group (interconnect cable manufacturer).