The AI Boom Is Industrializing, Not Peaking

Last night we heard from Dell (DELL) and Credo (CRDO) — two important AI supply chain players — and while their stocks took different paths today, both reports provided a ton of evidence supporting the idea that the AI Boom remains extraordinarily strong.

Dell provides the clearest evidence that aggregate demand is still accelerating. It booked $60.9 billion of AI-server orders in one quarter, exited with a $95 billion backlog, and still saw its pipeline grow sequentially to several times that backlog. Customers are ordering further in advance because demand exceeds available supply, while Dell raised its annual AI-server forecast to $74 billion — triple last year’s revenue. That is not what a peak looks like. It suggests the principal constraint on AI infrastructure remains the industry’s ability to manufacture and deploy capacity, not customers’ willingness to spend.

Credo confirms what happens inside those rapidly expanding clusters: connectivity requirements are becoming exponentially more demanding. Larger clusters require more links, faster 1.6T data rates, more retimers, and a heterogeneous mixture of copper and optics. Credo’s revenue grew 115%, AECs continued expanding, optical DSP and retimer revenue reached records, and management maintained its forecast for more than $600 million of optical revenue and greater than 85% total growth this year. Dell shows us that more AI systems are being built. Credo shows us that every new generation of those systems requires more sophisticated — and potentially more valuable — connectivity.

The reports also demonstrate the Boom is broadening. Dell is seeing AI spill over into traditional CPU servers, networking, and storage as enterprises deploy agentic workloads and manage rapidly expanding datasets. Credo is expanding from AECs into optical DSPs, silicon photonics, full transceivers, near-package optics, and scale-up connectivity. This is increasingly less about selling one expensive GPU and more about rebuilding the entire data center around AI — compute, networking, storage, power, cooling, and software included.

The big-picture conclusion: the AI Boom is advancing from its first phase — buying GPUs — to its second phase — industrializing AI at massive scale. Dell confirms compute deployments are accelerating and spreading into the enterprise. Credo confirms networking complexity and content per cluster are rising alongside them. Peak AI infrastructure spending remains ahead of us, not behind us.