Key Points
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Nvidia has expanded its focus from GPUs to connectivity and networking.
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Astera Labs grew so much that it became a new member of the Nasdaq-100.
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Credo aims to be a “foundational network architecture partner.”
- 10 stocks we like better than Nvidia ›
There’s been a lot of focus in recent months on the growth of artificial intelligence (AI) and the need for more data centers to power AI workloads. Data center power demands are expected to double from 2025 to 2027, reaching 66 gigawatts, according to Goldman Sachs. And the global data center market size is expected to expand from $425 billion this year to $902.2 billion by 2033.
Computing power gets most of the attention in modern data centers, but networking — often overlooked — plays an equally critical role. Data centers can contain thousands of graphics processing units (GPUs) that are constantly exchanging massive amounts of data to train and run AI models. And as those models become more complex, there’s an increasing need for faster, lower-latency connections.
Networking chip stocks include those that make high-speed chips and switches, as well as technologies that help eliminate bottlenecks and keep AI hardware operating at peak efficiency. Three of the best that are currently riding the AI data center boom are Nvidia (NASDAQ: NVDA), Astera Labs (NASDAQ: ALAB), and Credo Technology Group (NASDAQ: CRDO). Let’s look closer at each one.
1. Nvidia
Nvidia is the poster child for any company riding the AI data center boom, catapulting to a market cap of $4.7 trillion and becoming the world’s largest company by valuation. The semiconductor maker’s stock is up 850% in the last five years, and a $10,000 investment in Nvidia stock made in July 2021 would be worth more than $95,000 today.
Nvidia made its reputation with GPUs, which are considered the gold standard for complex computing tasks, including training and running AI programs. But now it’s also focusing on data center networking with its next-generation Vera Rubin architecture, which uses NVLink chip-to-chip interconnects to enable central processing units (CPUs) and GPUs to share memory and work more efficiently.
“VeraCPU opens a brand new $200 billion (total addressable market) TAM for Nvidia, a market we have never addressed before. And every major hyperscale and system maker is partnering with us to get it deployed. We have visibility to nearly $20 billion in total CPU revenue this year,” chief financial officer Colette Kress said.
And now Nvidia’s giving investors another reason to buy — management raised the paltry $0.01-per-share quarterly dividend payout by 2,400% to $0.25 per share. The company plans to return 50% of its free cash flow this year to shareholders, including more than $100 billion in share repurchases.
2. Astera Labs
Astera Labs is a semiconductor company that makes high-speed connectivity products and AI infrastructure to enable servers across an entire AI rack to function as a unified computing platform. Its products transmit high-speed signals between processors, maximize available bandwidth across AI systems, expand memory capacity, and improve the performance and efficiency of networking infrastructure.
Revenue in the first quarter was $308.4 million, up 93% from a year ago, and net income was $80.3 million, up from $31.8 million the same time last year. Earnings per share were $0.44, an improvement from $0.18 in the same period a year ago.
“We believe the opportunity ahead is significant, and we are investing to be a leader for rack-scale AI technologies in close partnership with our customers,” CEO Jitendra Mohan said.
Astera Labs’ stock is up 144% so far this year — performance that has made the company one of the most recent additions to the Nasdaq-100 index.
3. Credo Technology
Credo Technology has been one of my favorite picks-and-shovels AI infrastructure plays. The company makes digital signal processors and Active Electrical Cables (AECs) that use signal processors to move data between chips and switches.
The company’s earnings report for the fiscal fourth quarter of 2026 (ending May 2) showed sales of $437 million, up a whopping 157% from a year ago, and net income of $226.7 million. Earnings were $1.16 per share.
CEO William Brennan said:
Our strategy is centered on delivering connectivity solutions across the full spectrum of AI infrastructure from die-to-die and chip-to-chip connectivity to multirack-scale copper and to row-scale and facilitywide optical interconnect. By extending both inward toward the silicon and outward across the data center, we have positioned Credo to become a foundational network architecture partner for our customers.
Credo stock is up 68% so far this year.
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Patrick Sanders has positions in Nvidia. The Motley Fool has positions in and recommends Goldman Sachs Group and Nvidia. The Motley Fool recommends Astera Labs. The Motley Fool has a disclosure policy.
