I/O Fund’s Top 10 of 2024

Posted on March 6, 2025June 30, 2026 by io-fund

The world today was engineered to be ephemeral and noisy, with tens of millions of posts, comments, and messages sent across social media and messaging apps every minute of every day.

For an investor, this noise is a terrible combination, and we believe the antidote to noise is quality stock analysis. Due diligence requires dozens of hours per equity, and it takes hundreds to thousands of hours every year to produce free research and a paid platform with institutional quality analysis.

The I/O Fund strives to offer some of the industry’s best analysis for free alongside our premium content, and we believe the consistency and depth of what we provide for investors is hard to replicate in the most challenging sector for investors — tech.

Below are highlights from our free newsletter and premium research site during a strong year for AI and crypto. Although numerous investor favorites rose more than 100% during the year, many other popular tech stocks declined significantly. We offered our readers clues and insights for the leading stocks in AI semiconductors and software, providing unparalleled depth and quality with full transparency into our own trades in real-time.

While calling out Nvidia’s AI thesis at $3.15 in late 2018 for our free readers with gains of over 4,000%* is one of our most notable calls, the I/O Fund strives to offer unparalleled quality in its analysis each week sent straight to your inbox – sign up here.

1) Nvidia to Surpass Apple’s Valuation

Right out the gate in 2024, the I/O Fund’s free newsletter expanded on Lead Tech Analyst Beth Kindig’s highly regarded 2021 prediction that Nvidia would surpass Apple’s valuation within 5 five years; which at the time, this prediction was inconceivable as it would require not only Nvidia to go up more than 350%, but also for the tech leader Apple to plateau. Ultimately, Nvidia went up more than 500% since that call, and is up 900% between Jan 1st 2023 and Jan 1st 2025 while Apple is up 70% in that two-year time frame.

Kindig explained why she would deliver on this prediction a whole 2 years early in the February 2024 analysis, Nvidia Stock Gained $1.5 Trillion To Surpass The FAANGs – Apple Is Next. In the analysis, she pointed out that it was not just the consistency and magnitude of Nvidia’s multi-billion dollar revenue beats, but the expansion of its margins and earnings as revenue grew >200% for multiple quarters as it approached a $90 billion annualized scale.

From Kindig’s August 2021 prediction to the February 2024 update, Nvidia posted some staggering growth numbers, such as 676% growth in data center revenue, 240% growth in total revenue, 400% growth in quarterly EPS, and a 20% expansion in operating margin.

The I/O Fund provided a handful of reasons that would propel Nvidia to quickly become the world’s most valuable company. This included the long runway for AI accelerators, citing forecasts that the market will reach $400 billion by 2027 – with Nvidia taking the lion’s share. An additional reason Kindig provided was Nvidia’s accelerated product roadmap to a one-year release cadence, which let the stock continue to pry away Big Tech capex spending of $200 billion. She also pointed out the software opportunity beckons to extend Nvidia’s runway, already reaching a $1B+ run rate. These tailwinds combined with a valuation that was “eerily low” at the time given the stock’s rapid ascent through 2023.

The I/O Fund’s ongoing consistency and accuracy on this stock dating back to 2018 for up to 4,000% returns with the first entry at $3.15 has been unparalleled – more recently, premium members received nine real-time buy alerts below $20 in 2021 and 2022; learn more here.

2) Pinpoint Accuracy for Risk Managing Bitcoin to $100K+

In 2024, Portfolio Manager Knox Ridley provided two crucial updates on the I/O Fund’s game plan for Bitcoin. His updates are watched with anticipation from our free readers as he previously nailed Bitcoin’s top at $58,000 and then nailed Bitcoin’s subsequent bottom at $16,500.

His first update last year was in April 2024, where he increased his target zones. At the time, Bitcoin was an overlooked asset compared to the over-hyped Mag 7, yet the asset has delivered superior returns compared to all of the great large-cap tech stocks in this bull cycle, minus Nvidia, while having a low inverse correlation to tech.

Utilizing technical analysis and on-chain data in the analysis We Are Raising Our Bitcoin Targets To $106K – $190K, Ridley explained that the I/O Fund was now raising its target zones for Bitcoin to $106,000 to $190,000, up from the previous zone of $75,000 to $130,000. Bitcoin was trading in the mid-$60,000 range at the time, with Ridley saying that “the $42,750 support region holds on any ongoing volatility, then we have no reason to doubt the uptrend in place.”

Ridley provided another update to the Bitcoin thesis at the end of July 2024 in the analysis, Bitcoin Update: Next Stop $100,000; Bitcoin finally surpassed that historic level as 2024 came to a close. He explained that Bitcoin had “a full corrective pattern in place that ended around $54,000 in early July,” which “suggests we are in the early stages of the next rally.”

The I/O Fund had systematically been accumulating since the start of this cycle while raising our critical supports along the way — below is the history of Bitcoin buy alerts that the I/O Fund issued to our subscribers in real-time since early 2023.

Source: I/O Fund

Notably, our firm assisted our readers in capturing immense upside from the two top-performing large-cap tech positions in 2023 and 2024 with Nvidia and Bitcoin; the fact we also provided ongoing entries and risk management for these mega-winners cannot be understated in terms of the value we have delivered. To refer our newsletter to your friends and family, please click here.

3) Top Crypto Company Allocation Increased Ahead of Election to #1 Position

To find out the stock ticker of the “Top Crypto Company,” subscribe to our premium service.To find out the stock ticker of the “Top Crypto Company,” subscribe to our premium service.premium service.

Given the I/O Fund’s strong track record with technical analysis to predict Bitcoin’s moves, the team was able to identify a top crypto stock on the public markets to add to the I/O Fund’s portfolio in September. This was partly due to the stock having a high correlation with Bitcoin.

We first added this stock in September as Bitcoin showed signs of playing into the I/O Fund’s analysis where the leading crypto asset would see a move to $100,000, up from the high $50,000 range at the time.

Following the election, The Top Crypto Company stock became the second highest performer in the exuberant-led rally of early November. It was the I/O Fund’s largest allocation at the time with the team locking in gains of 82% and 111% in a brief few months.

The team highlighted the company’s diversification including a Layer 2 offering and opportunities in derivatives as potential catalysts. The company also has a large cash reserve, which is rare for tech stocks with its market cap.

4) Palantir’s Revenue Acceleration

In December 2023, the I/O Fund outlined four cloud stocks set to see revenue accelerate in 2024, with Palantir one of the four. We had said that Palantir was “exhibiting multiple signs of acceleration heading into 2024 with an improved fundamental backdrop driven by increasing AI demand. Palantir’s Artificial Intelligence Platform (AIP) is driving a significant acceleration in its US commercial business, while underlying metrics and the bottom line are rapidly improving: Palantir posted its first GAAP profitable quarter in February and has since reported four consecutive GAAP profitable quarters.”

We explained that “revenue growth is poised to accelerate in Q4 and through 2024, boosted by AI demand, a reacceleration in Palantir’s US government segment, and continued strength in the US commercial segment stemming from [AIP].”

Sign up for I/O Fund's free newsletter with gains of up to 2,250% because of Nvidia's epic run – Click hereSign up for I/O Fund's free newsletter with gains of up to 2,250% because of Nvidia's epic run – Click hereClick here

Palantir continued to blow past expectations through 2024 — Q4 revenue capped off a strong year as Palantir beat its own guidance by nearly $60 million, with revenue growth accelerating 6 points to 36%, coupled with strong margin expansion, cash flow generation, and large net new customer additions in its key US commercial segment.

Palantir’s shares ended 2024 as the S&P 500’s best performer with a 341% return.

5) Meta to Outperform

In the January 2024 analysis, Social Media Stocks: One Metric Shows Meta’s Clear Leadership, the I/O Fund pointed out what separated Meta as a clear social media leader and why other social media apps would struggle with monetization. Since then, Meta shares have risen 82%, while Snapchat has declined -37%.

We explained that Meta was much more efficient with spending, maintaining R&D spending below 40% of gross profit while significantly improving operating margin and driving ad pricing and impressions growth, whereas Snapchat was “spending around 80% of its gross profit dollars on R&D… while failing to increase ARPU and monetization within its user base.”

We pointed out that what makes Meta a clear leader is that “it can maintain a high level of R&D spend … while remaining a cash cow with strong operating cash flow and free cash flow growth,” with OCF margin nearing 60% in Q3 2023 and OCF tracking for 50% YoY growth to $75 billion in 2023.

In a follow-up analysis in March 2024, Top 3 Ad-Tech Stocks For 2024, we said that Meta’s “key metrics [were] supporting a return to >40% operating margin for the full year and a possible >33% net margin, driven by increasing ad pricing, strong engagement trends and impressions growth, aided by the release of numerous AI features.” Meta ended 2024 with a 42.2% operating margin, a 37.9% net margin, and a 55.5% operating cash flow margin.

Stay on the leading edge of AI with I/O Fund’s high-performing tech portfolio, which had 10 positions outperform the Nasdaq-100 in 2024, many held at high allocations, and we are prepping for a strong 2025. Learn more herehere

6) Key Metric Acceleration in AI Software Stock for 96% Gains

To find out the stock ticker of the “AI Software Stock,” subscribe to our premium service.To find out the stock ticker of the “AI Software Stock,” subscribe to our premium service.our premium service.

The I/O Fund recorded gains up to 96% on this AI-exposed software stock in 2024, with its February 2024 earnings report showing acceleration in a handful of key metrics, supporting our conviction that this stock would capitalize on the opportunities of bringing AI to the edge.

This company’s management team dropped hints that AI would gradually become a more meaningful driver of revenue as workloads shift from training toward inference, supported by strong growth in key metrics and key platforms.

Key metrics and margins continued to improve in the August 2024 earnings report, with some strong growth metrics for its AI platform. The I/O Fund fully closed the position in December 2024 to lock in gains for the year, as a soft guide and valuation concerns rose to the forefront after its November 2024 earnings report.

7) Amazon’s Cloud Acceleration

In the February 2024 analysis AI Driving Acceleration For Big 3 Cloud Stocks, the I/O Fund discussed how AI was impacting cloud growth at Microsoft, Amazon and Alphabet. For Amazon, the I/O Fund explained that in Q4 2023, “AWS finally accelerated in Q4 for the first time in 2 years, with Amazon reporting 13.2% growth in Q4, up just over 1 point from Q3’s 12%.” However, the more important metric was AWS’ operating leverage improving in the second half of 2023, with operating income growth at 3x the rate of revenue in Q4 2023.

At the time, AWS was generating the majority of Amazon’s company-wide operating income (67% of 2023) due to its higher operating margin (27% in Q4 2023), which we had said was “a trend that can strengthen with AI driving accelerated customer and revenue growth and decreased costs.” This has played out, with AWS reporting a 37.8% operating margin in Q3 2024 and 36.9% in Q4 2024.

What the I/O Fund had seen in February 2024 was a combination of increased customer migrations, larger and longer duration contracts, increased incremental revenue QoQ, and opportunities to better monetize the suite via AI. These factors were the necessary ingredients for AWS to show “a sustained AI-driven acceleration,” even though its quarterly growth rates lagged Azure and Google Cloud. AWS growth has now re-accelerated to 19%.

In a follow-up article in May, Amazon Stock: Nearing $2 Trillion Club From AWS Growth & Ads Catalyst, we provided evidence that AWS was a primary contributor to Amazon’s push to the $2 trillion milestone — growth from AI quickly reached a multi-billion dollar run rate, while improvements in operating leverage at AWS aided Amazon’s bottom line.

8) Best-of-Breed Cybersecurity Stock Closed for 93% Gain

The I/O Fund is no stranger to the cloud sector, having selected some of the sector’s top names in 2021 in Asana and DataDog. This best-of-breed cybersecurity stock greatly piqued our interest in late 2023 as the company became GAAP profitable; a rare feat for cloud.

We noticed a few encouraging signs of growth in key metrics in late 2023, and predicted that by late 2024, this stock would have a positive GAAP operating margin, which would be seen as a breakthrough moment. As a result, this stock entered 2024 as one of our larger allocations.

The March 2024 earnings report showed a continued sequential expansion in GAAP operating margin and a strong acceleration in a major key metric. Despite reporting another quarter with positive operating margin and strong growth metrics in June 2024, the I/O Fund saw trouble ahead with the stock’s high valuation, and closed this position in July 2024, recording approximately a 93% gain. The stock later plummeted over 40% in a month due to a high-profile security hack with the I/O Fund able to side-step these losses and lock-in gains before the sudden reversal.

9) Explosive Growth in “AI Server Maker” for Triple-Digit Gains

To find out the stock ticker of the “AI Server Maker,” subscribe to our premium service.To find out the stock ticker of the “AI Server Maker,” subscribe to our premium service.our premium service.

The I/O Fund identified one of the few darlings of the AI trend in 2023, introducing this stock to our premium readers in May 2023 and calling out its growth potential from AI servers. The I/O Fund analyst team was early to identify the tremendous upside in the stock due to a doubling of its AI revenue from about $12B to $25B — and beat the Street to this conclusion.

This stock reported strong sequential and YoY growth in its December 2023 quarter in late January, with the I/O Fund adding for a final time as guidance once again seemed to be conservative. However, some red flags began to appear, and we later closed the position after digging deeper when it became apparent the company would need to continue to raise cash to fund growth. The stock later became the subject of auditing issues, and the team was able to side-step this by risk managing the position.

Starting in February 2024, we issued 7 sell alerts, fully exiting the position by May 2024 to log an average gain of over 275% on this position alone, which we held at a high allocation within our portfolio.

10) I/O Fund Reports 131% Cumulative Returns Through 2023 Due to Leading AI Allocation

In April 2024, the I/O Fund announced returns of 57% in 2023 as seven positions beat the Nasdaq-100, bringing its cumulative returns to 131% since inception. This compares to popular tech ETFs that have cumulative returns of (-10%) in the same time period for an outperformance of 141% in less than four years.

If you had invested $10,000 with the I/O Fund’s picks versus other all-tech portfolios at inception, the difference would be a portfolio value of $23,052 with IOF versus $8,982 with institutional tech-focused portfolio. The difference in value is 157%.

Impeccable timing on Nvidia and other AI stocks led to the I/O Fund having one of the highest allocations to AI on record at 45%, and this high allocation was timely as it allowed us to beat Wall Street to the explosive trend of AI. Previously, our firm was early to cloud in 2019, then rotated into AI in 2022. For more on the I/O Fund’s official 2023 returns announcement, read more here: The I/O Fund Catapults to 131% Cumulative Returns.

For 2025, the I/O Fund has worked to identify key Nvidia suppliers with Blackwell on deck to ramp significantly, sharing our in-depth research on the AI networking stack. Sign up to join our upcoming webinar, held every Thursday at 4:30 pm EST, where we discuss buy zones for the stocks we cover. Learn more here.

*Stock returns are calculated through December 31st, 2024 and are updated annually.

Please note: The I/O Fund conducts research and draws conclusions for the company’s portfolio. We then share that information with our readers and offer real-time trade notifications. This is not a guarantee of a stock’s performance and it is not financial advice. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis. Beth Kindig and the I/O Fund own shares in NVDA and Bitcoin at the time of writing and may own stocks pictured in the charts.

Recommended Reading:

Marvell Q4: Margin Expansion Yet AI Capitulation

Posted on March 6, 2025June 30, 2026 by io-fund

Marvell reported in line results with Q4 revenue that grew by 27.4% YoY and 19.9% QoQ to $1.82 billion, beating estimates by 1.2%. Adjusted EPS grew by 30.4% YoY to $0.60, beating estimates by 1.6%.

Management guided Q1 revenue of $1.875 billion, representing a YoY growth of 61.5% YoY and 3.2% QoQ at the midpoint, beating estimates modestly by 0.3% and expects adjusted EPS to grow 154.2% YoY to $0.61, beating estimates by 1.7%.

The company’s margins have improved from negative GAAP operating margin (often double-digit negative) to 12.9% in the most recent report. The adjusted operating margin of 33.7% was flat but on higher revenue, resulting in adjusted EPS that grew 40% sequentially.

The market is going through a phase of AI capitulation. Our site is particularly helpful here as Knox sets out price targets months in advance on his webinar for AI stocks, offering two scenarios – a pullback scenario and a breakout scenario. The AI selloff is behaving according to the scenarios he set forth months ago.

But for now, it’s retail against the Street. The Street is confusing narratives, lowering price targets despite blowout earnings (those lowered price targets are 100% above the price in some cases), and more specifically to Marvell, stating Amazon Trainium revenue should have been higher. Management stated AI revenue was substantially above the $1.5 billion target for FY2025, and they expect to exceed the $2.5 billion target in FY2026 significantly. The overall revenue growth accelerated in the second half of the year, driven by the custom silicon program ramps along with continued strong growth in Electro-Optics. However, these numbers have not changed for a few quarters now (the above $1.5B and $2.5B) and I’m sure the Street wanted more in terms of a new number given the 5-year deal with Amazon, implying Trainium2.

Although Marvell’s quarter was not a blowout, with some readthroughs being the Amazon deal is not as strong as expected, inventory is up 20% QoQ compared to 3% QoQ revenue guide, and management stated they are in “significant volume production ahead.” Overall, I’ve seen supply taking longer this quarter, thus within the framework of what I’ve seen, Q4 reports and Q1 guides are an air pocket of sorts across the board. Ultimately, there is $300B in capex saying the air pocket will resolve in the (patient) AI investor’s favor.

Hopefully, the multi-dimensional approach we offer by combining fundamentals and technicals – not only for lower entries that are discussed months in advance but also going so far as to hedge up to 100% of our portfolio — has proven its value over the past few months. Marvell is the most over-sold its been in its history – that is what is meant by capitulation. A bounce in price is on the horizon.

Revenue growth Headed to 61.5% Next Quarter

The company’s Q4 revenue grew by 27.4% YoY and 19.9% QoQ to $1.82 billion, driven by strong AI demand, beating estimates by 1.2%.

Management guided Q1 revenue of $1.875 billion, representing a YoY growth of 61.5% YoY and 3.2% QoQ at the midpoint, beating estimates modestly by 0.3%
Analysts expect revenue to grow 55.9% YoY to $1.98 billion in Q2 and 39.1% YoY to $2.11 billion in Q3.

FY2025 revenue grew by 4.7% YoY to $5.77 billion.
Analysts expect FY2026 revenue to grow 42.3% YoY to $8.21 billion and 20.5% YoY to $9.89 billion in FY2027.

Margins – GAAP Profitable

The company exceeded its margin guidance in Q4, driven by operating leverage, and achieved GAAP profitability. Management expects GAAP profitability to continue during FY2026.

Q4 gross margin was 50.5% compared to 46.6% in the same period last year. Gross margin was slightly above the guidance of 50%. Management guide for Q1 is 50.5%.
Adjusted gross margin was 60.1% compared to 63.9% in the same period last year. Management guide for Q1 is 60%.
Q4 operating margin was 12.9% compared to (-2.3%) in the same period last year. It was above the guidance of 10.6%. Management guide for Q1 is 12.5%.
Adjusted operating margin was 33.7% compared to 33.8% in the same period last year. Managment guide for Q1 is 34%. Management expects strong operating leverage to continue in FY2026 and expects to make significant progress towards the long-term non-GAAP operating margin target of 38% to 40%.
Q4 net income was $200.2 million or 11% of revenue compared to a net loss of ($392.7 million) or (-27.5%) of revenue in the same period last year. Adjusted net income was $531.4 million or 29.2% of revenue compared to $401.6 million or 28.2% of revenue in the same period last year.
The difference in the GAAP net income and non-GAAP net income was due to stock-based compensation of $147.6 million or 8.1% of revenue and amortization of acquired intangible assets charge of $169.5 million or 9.3% of revenue.

Adj.EPS grew by 30.4% YoY and 39.5% QoQ

Q4 GAAP EPS was $0.23 compared to (-$0.45) in the same period last year. Q4 adjusted EPS grew by 30.4% YoY and 39.5% QoQ to $0.60 driven by operating leverage, beating estimates by 1.6%.

Management expects Q1 GAAP EPS of $0.19 and adjusted EPS to grow 154.2% YoY to $0.61, beating estimates by 1.7%.
Analysts expect Q2 adjusted EPS to grow 121.6% YoY to $0.66 and 69.5% YoY to $0.73 in Q3.
Analysts expect FY2026 adjusted EPS to grow 77.5% YoY to $2.79 and 31.8% YoY to $3.67 in FY2027.

Cash Flow and Balance Sheet

The company’s cash flow margin was lower due to the increase in inventories to support the strong expected growth.

Q4 operating cash flow margin was 28.3% compared to 38.3% in the same period last year.
Q4 free cash flow margin was 24.4% compared to 32.6% in the same period last year.
Cash was $948.3 million and debt of $4.06 billion compared to $868.1 million and $4.1 billion at the end of Q3.
The company paid $52 million in dividends and repurchased shares worth $200 million in Q4.

Management mentioned that they received an upgrade to investment grade credit rating from Fitch which is positive as it helps the company to refinance its high debt with better terms in the future. The company’s CFO Willem Meintjes said in the earnings call, “We were pleased to receive an upgrade to our investment grade credit rating from Fitch in January, citing their positive outlook on Marvell's strong operating momentum from robust data center demand, structurally improved leverage metrics, strong market position and strengthened cash flow profile.”

Inventories increased to $1.03 billion from $859 million in Q3, up 19.9% sequentially to support the strong expected growth.

Key Segments

Data Center 78% YOY and 24% QOQ

The company achieved record Q4 revenue of $1.37 billion, growing 78% YoY and 24% QoQ. The strong results were driven by the custom AI silicon programs ramping to high volume production. Additionally, the company also benefited from strong shipments of Electro-Optics products and Teralynx Ethernet switches with revenue from both product lines growing double-digits sequentially on a percentage basis. Management pointed toward the 800G PAM4 products as being the workhorse in its electro-optics products. Marvell is also at the leading edge of 1.6T PAM DSPs and will be first to introduce the 3nm 1.6T DSP with 200G per lane.

AI Revenue Commentary

Management mentioned that AI revenue was substantially above the $1.5 billion target for FY2025, and they expect to exceed the $2.5 billion target in fiscal 2026 significantly. The overall revenue growth accelerated in the second half of the year, driven by the custom silicon program ramps along with continued strong growth in Electro-Optics.

Here is what was said in the opening remarks:

“We ended the year with our AI revenue substantially above our $1.5 billion target from April 2024's AI Day and we also expect to very significantly exceed our $2.5 billion target in fiscal 2026.” It was later stated: “Last year, we had talked about $1.5 billion. We blew through that — this year, again, we anticipate being substantially above that. I'm not putting a number on it just yet. I think that there's a lot to go here in terms of the momentum in the business and the opportunity set in front of us. And so we're, right now, we're kind of keying off the last update we did, which was in the AI Day from last year and then we'll find the right appropriate time in the future.”

Carrier Infrastructure

Carrier Infrastructure Q4 revenue was down (-38%) YoY and up 25% QoQ to $105.8 million. Revenue accelerated from the (-73%) YoY decline and 12% sequential growth in Q3.

Enterprise Networking

Enterprise Networking Q4 revenue declined by (-35%) YoY and up 14% QoQ to $171.4 million. Revenue accelerated from a decline of (-44%) YoY and flat QoQ in Q3. The company witnessed continued recovery in both Carrier Infrastructure and Enterprise Networking with revenue collectively growing 18% sequentially. Management expects aggregate revenue from enterprise networking and carrier infrastructure to grow sequentially by approximately 10% in Q1.

Consumer End Market

Q4 Consumer End Market revenue declined by (-38%) YoY and (-8%) QoQ to $88.7 million. For Q1, due to seasonality in gaming demand to expected to drive a sequential decline of (35%) in the consumer end market. Over the next several years, management expects the consumer end market revenue to be approximately $300 million on an annual basis.

Automotive/Industrial

The automotive/industrial revenue grew by 4% YoY and 3% QoQ to $85.7 million in Q4. The management expects continued sequential growth in the automotive end market. However, this growth will be more than offset by a decline in revenue from the industrial end market, where order patterns can be lumpy in any given quarter. As a result, they expect the overall revenue from the auto and industrial end market to decline sequentially in the high-single-digits on a percentage basis for Q1.

China Revenue

Marvell has a high China revenue concentration. It constituted 43% of revenue in Q3 and 45% for the nine months ending Q3. There was no mention of China during the recent earnings call, and we need to wait for the 10-K report to know the latest percentage of revenue from China. The high revenue concentration is a concern, notably since the recent tariffs increased from 10% to 20%.

Earnings Call:

XPU Design Discussions (Likely Amazon)

Regarding the custom design projects, Marvell stated the following in the opening remarks: “Let me now turn to our current custom silicon programs. Marvell has successfully ramped highly complex 100 billion plus transistor XPUs and CPUs from initial samples to high volume production on first pass silicon […] As I mentioned, our two leading AI custom programs are in high volume production, and we expect growth to continue. One of these is a custom ARM CPU, which we expect we'll see expanding adoption in our customers' data centers. The second program is for a custom AI XPU, which is also performing extremely well with significant volume production ahead. In parallel, we are fully engaged with this customer on the follow-on generation of this XPU and planning for a production ramp once it completes its sampling and qualification cycles. As a result, we expect our revenue from custom XPUs for this customer to not only grow this year, fiscal 2026, but continue to grow next year fiscal 2027 and beyond.”

There is a second hyperscaler, perhaps Meta, with potential “to start production in calendar 2026.”

In the call, analysts asked more about the lead customer. From the Q&A discussions below, I did not have a readthrough that Marvell lost Amazon’s Trainium2 business:

Harlan Sur

Hey, good afternoon guys. Thanks for taking my question. Great to see that you captured the follow-on AI XPU program after your current XPU program, which is ramping now with your major cloud and hyperscale customer. Matt, just to clarify. So is the new follow-on XPU program, a training XPU as well? Is that a calendar '26 ramp? And is that at 5-nanometer or 3-nanometer? Any more color there would be helpful. And then for Willem, your inventories were up 20% sequentially, which in a strong demand and product cycle environment like typically implies strong future growth, but you compare that to the 3% sequential total revenue guide for April. There seems to be some disconnect. So the way to interpret this is that the 20% sequential growth in inventories is more reflective of the AI strong growth profile ahead for the team?

Matt Murphy

Yes, I'll start off, Harlan. So, yes, so couple of things. So again given the confidentiality wrapper we've got, here we go. The first is you should assume this is a — it's a very high volume program and it's a continuation of what we're doing. It on the — and you should assume just in general, on every next generation type of device, you're going to see no transitions and technology advancements as you go forward. So you should assume that. And then also on a timing perspective, all I can say there is we'll be ready to ramp when it's time, and we'll manage that transition. We're very confident in our ability to manage that transition successfully with our customer, but that timing is something that we're just going to have to see when that's ready and we'll time it around that. And I can't really comment on what my customer plans are in this kind of detail, they just don't like it, and I don't blame them. And I'll give — I'll let Willem take the inventory question. Thanks.

Note: the answer above is about the next program which management is reluctant to discuss due to confidentiality

While the above quote was clear that another analyst was not expressing concerns about the loss of the lead customer (quite the opposite), it was perhaps even more clear on management’s side in this fairly long exchange:

Ben Reitzes:

Hey, guys. Thanks for the question and thanks for the intermission there in the middle. That was a nice break. The question that I have is with regard to sequential growth, Matt, and then a long-term question. Did you clarify that AI revenue could grow sequentially through the year? And did — when Tim asked his question earlier? And if so what's your confidence? And then if you could just kind of step back also, Matt, a lot of noise due to the speculation around that customer and content there. But when you step back, you have a goal of $15 billion for the data center long-term by calendar year '28 are you seeing the progress in your custom business still to hit that number because nobody on the street is even close to that. Thanks.

Matt Murphy:

Yes, Ben, thanks for the questions. So, yes, on the assumptions through the year, yes, I didn't, I think what I said was in Q1 our data center business ex the on-prem stuff was going to be up double-digits, coming off of overall data center like 25% a quarter sequentially. So I didn't comment throughout the whole year, but you should just you should just assume. It's not a bad assumption, right, or would be a fair assumption to think that it's obviously going to continue given the strength in the business and the momentum that we're seeing and just from what we're looking at from a year-over-year perspective. On the long-term, I think we're tracking extremely well to our 20% market share number. When we look back to kind of calendar '23 and then '24 and '25 and you start bouncing it up against what we said at the AI day. I think it looks very favorable. We're definitely gaining share from '23 to '24 and we'll definitely gain more share from '24 to '25. And so to get to that revenue target, you got to get there both ways. You got to grow the share, right, from kind of 10%, let's call it to 20%. And then the market's got to develop, right, obviously. You got to get to the sort of $75 billion TAM, but both of those are trending in a very positive direction. In fact, certainly in '24 and even in '25 is just kind of big round numbers, it looks like both the market and our growth, if you just bounce it up against sort of what's the compounded growth rate you needed from '23 to '28, it's actually growing above that right now. So now when we're in ramp phase, but that's going to continue. So I think we're in very good shape in terms of where we're tracking from a market share perspective. And certainly, if the market, by the way, is bigger. I mean remember, we gave that point of view in April of last year. And the world has changed then since then in terms of the absolute CapEx that's being deployed, certainly, even in recent months, all of the various programs from all the different key players and the potential of what's out there, sovereign programs, government programs, programs from new entrants. So we just see this — we just see the — quite frankly the TAM and the opportunity for Marvell, if anything, being way larger than it was when we looked at it almost a year ago. So all those make me feel very good about the market size developing and then certainly our progression on the market share. And you're right, that would be, it'd be an absolute home run to get there. And that's what me and my team are absolutely driving in this company day in and day out is drive the market share and help create the market, help make the TAM happen and execute like crazy and do it in a very focused manner, which is also why we reorganized the company with a dedicated data center engineering and business group to drive it. So I think the setup is really good. Thanks.

Networking Opportunity Expands TAM

We’ve covered Marvell’s networking products in great detail for six years now in previous analysis – this one is the most current. It’s a toss up as to whether Marvell’s custom silicon or networking opportunity will end up being the bigger market in a few years' time.

What was most interesting was that management discussed networking being incremental TAM to what was discussed above on custom silicon.

“The key thing I want to stress to you and to the investors on the call is this is incremental TAM the scale-up opportunity. We flagged it a few different times is right for sort of a TAM expansion. And it looks like that's what's going to play out at some point here. So that is all incremental. That's not, hey, if that happens and all of a sudden, Marvell's DSP revenue goes down or something like the scale up and this type of connectivity that is a revenue upside, market upside type of opportunity. So that one, I think, is — we're very excited about.”

Conclusion:

Despite design companies being in Nvidia’s shadow, Marvell put up a decent report. The company started the year at a run rate of $4 billion-ish and is now on a $7.5 billion run rate. They stated 75% of their revenue is from data center (this includes AI and on-prem, etc). Each investor will need to decide for themselves if the commentary or fundamentals reflects a weaker lead customer (Amazon). That’s not my readthrough from this report.

However, Marvell has higher debt and higher China revenue than our other semis, and that’s why we aren’t buying the report. We prefer to build other positions with less risk in these two areas, while acknowledging Marvell remains a strong AI contender – for both custom silicon and networking.

With that said, Marvell has never been more over-sold (technicals-wise) and is due for a bounce. Here is the note I got from Knox this morning, he will elaborate more in today’s webinar:

“Marvell has been trading for over 25 years. In this period, we have only seen the current level of oversold conditions 3 other times – 7/9/02, 10/9/08, 8/2/10. The first 2 were toward the tail end of bear markets: the period in 2022 period was followed by a +50% rally, before turning lower, while the period in 2008 was followed by a +20% rally in a short amount of time before eventually finding a bottom. The third period was not during a bear market and led to a +50% rally over the span of 6 months, before turning lower.”

Royston Roche, Equity Analyst at the I/O Fund, contributed to this article.

Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis.

Recommended Reading:

10 Timeless Free Articles You Won’t Want to Miss

Posted on March 5, 2025June 30, 2026 by io-fund

The world today was engineered to be ephemeral and noisy. This is a terrible combination for an investor. On Twitter alone, 456,000 messages are sent every minute. On Facebook, 510,000 comments are posted every minute, and 293,000 status updates are made. Outside of social media, 16 million text messages are sent every minute, and 156 million emails are sent.

For an investor, the antidote to noise is quality stock analysis. Due diligence requires dozens of hours per company, and it takes hundreds of hours every year to produce a free newsletter with quality analysis. I/O Fund strives to offer some of the team’s best analysis for free, and we believe the consistency and depth of what we provide for free is hard to replicate.

We offer this in the most challenging sector for investors, which is, hands-down, the tech sector. The tech sector is unusually challenging because it involves many different verticals – artificial intelligence, crypto, consumer, media, fintech, ad-tech, semis, cloud, and more. It’s also the highest risk and highest reward sector in the market. Due to sudden price movements in both directions, the stakes are high. Perhaps we are biased, but quality analysis can be hard, particularly in the tech sector.

Below, we present you with 10 Timeless Articles You Won’t Want to Miss.

1) Nvidia’s Cuda Moat and Early-AI Thesis from 2018, for Gains of Over 4,160% on Premium Site

Our firm's AI coverage on Nvidia began with calling Nvidia an AI leader seven years ago! Yes, really.

In the article published in November 2018 when Nvidia was trading at $4.93; Holding Nvidia Stock Will Pay Off Due to Two Impenetrable Moats,Beth said that “Economic indicators and earnings from tech companies have not exactly warranted this reaction from the market… Nvidia’s outlook is quite the opposite in regards to public-company growth trajectory. The market may continue to have volatility, but Nvidia investors who are patient will be rewarded due to competitive advantages in GPU-powered cloud performance and developer adoption of Nvidia’s platform.” but Nvidia investors who are patient will be rewarded due to competitive advantages in GPU-powered cloud performance and developer adoption of Nvidia’s platform.”

Since the free article was published, the stock is up by over 2,600% and our first entry on our premium site is up by over 4,160%* with an entry at $3.15. The stock has now become the Street’s most-followed AI stock.

Nvidia has firmly established itself as the GPU leader in this AI boom, with CUDA (Compute Unified Device Architecture) serving as its primary moat. The A100 and H100 drove the revenue but CUDA’s software moat is why Nvidia has a near-monopoly in the GPU-driven data center with a 98% market share. Ultimately, CUDA is the primary reason that Nvidia is challenging to disrupt, and Beth pointed this would help the company dominate AI development 7 years ago. She then repeated this thesis 25 times before the Street finally caught on in May of 2023.

CUDA is a moat because developers are trained to program GPUs on this platform specifically. For a competitor to take market share, developers would have to be motivated to install new drivers, compilers, and to learn new libraries and tools to switch from CUDA to a new, competing programming platform.

Beth rightly pointed out that Nvidia has established itself as the dominant development platform for AI, a fact that later became increasingly apparent as AI technology matures. In 2018, the Street grew concerned that custom silicon would replace Nvidia’s GPUs, yet Beth pointed out that developers favor Nvidia's GPUs for their ease of use and flexibility compared to custom silicon.

Here is what she stated in this prescient analysis:

“Nvidia is already the universal platform for development, but this won’t become obvious until innovation in artificial intelligence matures. Developers are programming the future of artificial intelligence applications on Nvidia because GPUs are easier and more flexible than customized TPU chips from Google or FGPA chips used by Microsoft. Meanwhile, Intel’s CPU chips will struggle to compete as artificial intelligence applications and machine learning inferencing move to the cloud.”

*Note: Stock gains listed are through Dec 31, 2024 and are updated annually.

2) Nvidia to Surpass Apple’s Valuation from 2021, to Become World's Most Valuable Company

Beth is known as the Queen of Nvidia, not only for predicting Nvidia would become a dominant AI stock when it was priced below $5, but she clearly set herself apart again in 2021 with a prediction that Nvidia would surpass Apple to become the world’s most valuable company when it was priced at $152.51.

At the time, this prediction was inconceivable as it would require not only Nvidia to go up more than 350%, but also for the tech leader Apple to plateau. Ultimately, Nvidia went up more than 500% since that call, and is up 900% between Jan 1st 2023 and Jan 1st 2025 while Apple is up 70% in that two-year time frame.

The I/O Fund took it a step further and bought on the October 13th, 2022 low with a real-time trade alert sent to premium members to buy at $18.51 (corrected to account for stock split). This single buy alert is up an impressive +700%, if held into today’s price . Overall, premium members received nine real-time buy alerts below $20 in 2021 and 2022; learn more about premium here. Notably, this prediction required holding a high conviction through a 60% selloff in 2022.

The 2021 prediction that Nvidia would surpass Apple’s valuation within 5 five years highlighted Nvidia’s niche in the AI economy and also that Nvidia is not standing still with Ampere Architecture. Beth noted, “Nvidia has a market cap of roughly $550 billion compared to Apple’s nearly $2.5 trillion. We believe Nvidia can surpass Apple by capitalizing on the artificial intelligence economy, which will add an estimated $15 trillion to GDP. This is compared to the mobile economy that brought us the majority of the gains in Apple, Google and Facebook, and contributes $4.4 trillion to GDP. For comparison purposes, AI contributes $2 trillion to GDP as of 2018.”We believe Nvidia can surpass Apple by capitalizing on the artificial intelligence economy, which will add an estimated $15 trillion to GDP. This is compared to the mobile economy that brought us the majority of the gains in Apple, Google and Facebook, and contributes $4.4 trillion to GDP. For comparison purposes, AI contributes $2 trillion to GDP as of 2018.”

3) In 2024, Beth Followed Up on Why Nvidia Was Still a Buy

To date, Beth has updated her Nvidia thesis thirty times with original insights. In February of 2024, she explained why Nvidia was still a strong Buy, and how Nvidia would surpass Apple two years earlier than her original 5-year prediction in 2021.

In the analysis, Nvidia Stock Gained $1.5 Trillion To Surpass The FAANGs – Apple Is Next she pointed out that it was not just the consistency and magnitude of Nvidia’s multi-billion-dollar revenue beats, but the expansion of its margins and earnings as revenue grew >200% for multiple quarters as it approached a $90 billion annualized scale. She also highlighted the accelerated product roadmap, which is another reason for the company's stellar returns and futuristic software opportunities.

4) Prediction: Nvidia Bottomed in Late 2022

When the market dumped Nvidia stock, with the price cratering 60% in 2022, Beth aptly pointed to the big picture, i.e., the H100 chip opportunity for readers in her September 2022 analysis, Nvidia Stock Is Ready To Rumble With RTX 40 Series And H100 GPUs, during a time when the mainstream media was focusing on an irrelevant crypto mining miss.

Here is what she said at the height of the selloff:

“Nvidia had a big week with GTC 2022 and management is clearly ready to rumble against any excess inventory from crypto mining. The negative catalyst from crypto mining and Nvidia's price action is eerily similar to Q4 2018/Q1 2019 —- yet the company is not the same company it was four years ago. This is apparent by Nvidia flexing some major product muscle by timing it's best-ever gaming release and it's best-ever AI chip to hit the market in October.” This is apparent by Nvidia flexing some major product muscle by timing it's best-ever gaming release and it's best-ever AI chip to hit the market in October.”

Beth further highlighted that the Hopper architecture represents a significant performance leap over the Ampere architecture. Some of the improvements include Enhanced Algorithm Processing, increased bandwidth and scalability, memory, and performance boost, which all played a key role in capturing the AI demand. For example:

NVLink allows connecting eight H100s into a single, powerful GPU with immense processing power and memory bandwidth.
50% more memory and interface bandwidth than the A100, with support for 80GB of HBM3 memory.
Approximately 3x overall performance increase over the A100, and up to 6x faster in specific workloads.

“Where the H100 really stands apart is the leap in performance with about 3X more performance than the A100 and the H100 is up to 6X faster. The A100 lacked support for FP8 compute at default whereas the H100 will leverage a transformer engine to switch between FP8 and FP16, depending on the workload.”

5) Early Bitcoin Bulls when Bitcoin was trading at $11,156

I/O Fund published the Bitcoin bull thesis to its readers in July 2019; Will Bitcoin Make a Good Investment? Part 1: Institutional Adoption. Beth rightly said “There are key reasons as to why bitcoin will make a solid long-term asset over the next five years and may reach its peak as a new technology with mass adoption in seven to ten years. This 3-part series explores why strategically entering the bitcoin market at a good entry price will make a solid investment for the future.”

The first being institutional adoption, then economic uncertainty, and mobile payments. Since the article was published the shares have risen by over 730% and our first entry, Bitcoin is up by over 1,100%. Interesting enough, it was institutional adoption that became the major catalyst despite famed investor Warren Buffet stating Bitcoin was “probably rat poison squared” around the same time she wrote smart money would become the major, primary catalyst.

I/O Fund Called the 2021 Top in Bitcoin and the 2022 Bottom

I/O Fund Portfolio Manager, Knox Ridley, accurately called the top in June 2021. The uptrend in Bitcoin that continued through April and May topped at $64,895, which was the lower end of the listed range. Our firm took heavy gains by cutting the position in half, as outlined in the video and article: “Why the I/O Fund Cut Bitcoin in Half.”

Nearly 18 months later, in December 2022, Knox provided another prescient update that Bitcoin was bottoming and would rally again when the price was bottoming in the $17,000 range. In the article “Bitcoin is Going to Rally: What You Need to Know” he stated:

“Yet, there is key evidence that shows how Bitcoin is stronger today than it was during the previous three drawdowns. The reason you don’t want to ignore this is because – despite steep +80% selloffs — Bitcoin has reclaimed new highs within 3.5 years, every time. Therefore, it’s not only the size of gains Bitcoin has provided which places it as the #1 asset of all-time yet it’s the speed in which this is accomplished that is also remarkable.”

A year later when Bitcoin was trading at $43,600 Knox provided yet another update stating that Bitcoin price will reach $100,000 due to institutional adoption.

Every Thursday at 4:30 pm Eastern, the I/O Fund team holds a webinar for premium members to discuss how to navigate the broad market, as well as various stock entries and exits. The I/O Fund team is one of the only audited portfolios available to individual investors. Learn more here.here.

6) Bitcoin to $100K+

Portfolio Manager Knox Ridley provided two crucial updates on the I/O Fund’s game plan for Bitcoin, with his first update from April 2024 increasing the portfolio’s target zones. At the time, Bitcoin was an overlooked asset compared to the over-hyped Mag 7, yet the asset delivered superior returns compared to all of the great large-cap tech stocks in this bull cycle, minus Nvidia, while having a low inverse correlation to tech.

Utilizing technical analysis and on-chain data in the analysis We Are Raising Our Bitcoin Targets To $106K – $190K, Knox explained that the I/O Fund was now raising its target zones for Bitcoin to $106,000 to $190,000, up from the previous zone of $75,000 to $130,000. Bitcoin was trading in the mid-$60,000 range at the time, with Knox saying that “the $42,750 support region holds on any ongoing volatility, then we have no reason to doubt the uptrend in place.”

Knox explains why the I/O has been successful in navigating this volatile asset. “Timing is everything. When it comes to timing, our firm has a proven track record of navigating the life-changing bull case that crypto offers while minimizing the volatility associated with different coins – we achieve this via a unique approach combining technical and on-chain analysis to identify major lows and major tops in each cycle.”

Sign up for I/O Fund's free newsletter with gains of up to 2600% because of Nvidia's epic run – Click hereSign up for I/O Fund's free newsletter with gains of up to 2600% because of Nvidia's epic run – Click hereClick here

Knox provided another update to the Bitcoin thesis in August 2024 in the analysis, Bitcoin Update: Next Stop $100,000; Bitcoin finally surpassed that historic level as 2024 came to a close. He explained that Bitcoin had “a full corrective pattern in place that ended around $54,000 in early July,” which “suggests we are in the early stages of the next rally.”

7) Microsoft Stock Outperformance highlighted in 2018

Our bullish thesis on Microsoft was first developed in 2018. Beth highlighted that Azure would gain market share in Cloud Infrastructure in the article; Here’s Why Microsoft Stock Could Overtake Amazon on Cloud Infrastructure. Microsoft’s market share has increased from 13% to the current 21% and the stock has outperformed both Alphabet and Amazon as seen in the chart below.

Beth highlighted Microsoft’s Fortune 500 client base and also Microsoft’s acquisition of GitHub to attract developers who play a crucial role in the selection of cloud providers. She further highlighted Microsoft’s strength in the adoption of its products by most companies, which would make the transition easy for the IT department.

8) Microsoft Azure vs Google Cloud

We highlighted to our readers in December 2020 that Alphabet will lag Microsoft in the cloud market share in the article; Why It's Too Late for Google Cloud to Overtake Microsoft Azure. Currently, Microsoft has a 21% market share compared to Alphabet’s 12% and Amazon’s 30% at the end of December 2024.

Beth pointed out that “In our latest Forbes report, we discuss why Google (Alphabet) may have missed a critical window this year for the infrastructure piece. We also analyze how Microsoft directed all of its efforts to successfully close the wide lead by AWS. Lastly, we look at how all three companies will bring the battle to the edge in an effort to maintain market share in this secular and fiercely competitive category."

9) Netflix: A Hidden Gem

We published a series of articles in 2022 on Netflix during the market sell-off after the company lost subscribers for the first time since 2011 and said that investors need to be patient. During that time, Bill Ackman sold his stake in Netflix for a loss of $450 million within three months of his purchase. Beth highlighted that Netflix is entering the ad-supported market and in July 2022, in another article; Netflix Stock Stronger Than It Seems Following Q2 Earnings, she highlighted the cash flow transformation.

Beth said, “The most important line item for Netflix is the company’s cash flow. Looking back, this has been troublesome for Netflix as the company lost $3.3 billion in cash in 2019 as it built up its original content pipeline. However, the company is on an entirely new trajectory with $1 billion in free cash flow expected this year and “substantial” free cash flow in 2023, per Netflix management.”

We provided another update in May 2023; This Stock Price For Netflix Is A “Buy” For 2023 by highlighting the opportunities in password sharing, ad-tier, free cash flow, and by providing a buy plan to our readers. We closed Netflix in April 2024 for a total gain of 150%.

10) How the I/O Fund Sets a High Bar for Accountability

Don’t miss the article Verified Returns & Risk Management: A Retail Investor's Imperative.This article discusses the overarching thesis around ways retail investors can get ahead of Wall Street in the complex world of stock investing. For starters, having an actively managed portfolio is where you get the best of both world’s – performance that far exceeds the indexes and ETFs by paying close attention to allocation, (quickly) cutting stocks that do not meet specific criteria, and choosing stocks that have strong, fundamental strength. We strongly believe a more active stance is necessary for long-term tech investing, and this article explains why.

Logging trades in real-time also places immense pressure on the analysts at the I/O Fund, who are not allowed to simply choose a stock but must also determine the allocation for the stock. After recommending a stock, the analysts must help the portfolio manager actively manage the position, which can change at any time. There is a reason most services do not provide this level of transparency and activity — as more granularity is offered; more skill is required.

Another reason the I/O Fund is unique is because it is the only firm that provides audited results to its premium members. We use an auditor from a large firm in San Francisco to mathematically review and verify the performance of our I/O Fund portfolio trading account and crypto account.

That’s Not All ….

Our firm has assisted our readers in capturing immense upside from the two top-performing large-cap tech positions in 2023 and 2024 with Nvidia and Bitcoin; the fact we also provided ongoing entries and risk management for these mega-winners cannot be understated in terms of the value we have delivered.

That’s not all … on our premium side, we have garnered returns of 210% in five years, with analysis you must not miss on stocks not mentioned here. We reserve our best work for premium members.

These wins include*

The I/O Fund has cumulative returns of 210% and a lead over institutional technology portfolios of as much as 219% since inception.
In 2024, the I/O Fund returned 35%, outperforming the S&P 500 by 11% and both the Nasdaq-100 and Invesco QQQ ETF by 10%.
We had 10 positions outperforming the NASDAQ-100 in 2024.
We also closed an altcoin for a 99% quick gain and Netflix for a 164% realized gain in 2024.
Our combined realized returns on Super Micro were 243% while utilizing risk management to sidestep volatility.
We opened CrowdStrike in early 2023 and began taking gains in early 2024. We ended up closing the entire position for a realized gain of 87%, just before the vertical drop took CRWD down 41% from our final closing price.
We posted returns of 57% in 2023. If we were an ETF, mutual fund or hedge fund, our ranking would be #4 in the Wall Street Journal’s Winners’ Circle ranking of 1,191 funds.
In 2023, we had five positions with returns over 100% and seven positions beat the Nasdaq. Many were held at high allocations.
The I/O Fund had a 45% allocation to AI going into 2023, one of the highest on record. Today, the AI allocation is higher with many lesser-known names.
Issued 9 trade alerts for Nvidia under $20. Provided over 25 analyses on Nvidia’s AI thesis before the market caught on.
Nearly impeccable record on Bitcoin, buying between $7K to $10K, trimming at $58K, buying again $15K to $16K for the rally to $100K+. All entries and exits are sent as trade alerts.
We were early to the cloud in 2019, then rotated into AI in 2022 with a 45% allocation in 2023.
Released an automated hedge in 2022 to stave off losses during a historic selloff in the tech sector.
Picked the leading sectors in 2021: semiconductors and blockchain.
Picked the two top-performing cloud stocks in 2021 (DDOG and ASAN)
Picked the best-performing asset with a large market cap in 2021 (ETH)
Picked the best stock in the S&P 500 in 2019 (ROKU)
Has beaten other tech-focused funds in every audit since the portfolio’s inception.

*all percentages quoted of the current portfolio stocks are from first entry through 31 December 2024.

Please note: The I/O Fund conducts research and draws conclusions for the company’s portfolio. We then share that information with our readers and offer real-time trade notifications. This is not a guarantee of a stock’s performance and it is not financial advice. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis. Beth Kindig and the I/O Fund own shares in NVDA and AMD at the time of writing and may own stocks pictured in the charts.

Recommended Reading:

Credo Fiscal Q3: Hypergrowth, Strong Margins, and AI Accelerator Agnostic

Posted on March 5, 2025June 30, 2026 by io-fund

Credo reported a large beat and raise in Q3 ending in January, with revenue coming in more than 12% above estimates at $135 million for growth of 154.4% YoY and 87.4% QoQ. This is the most growth I can recall from any AI-related earnings report this quarter with an earnings season that wraps up this evening. Regardless of market volatility, Credo is communicating they are special. We’ve covered the product in the past here. Next quarter points to an acceleration in growth to 163.2% — which is especially impressive when you consider the company is seeing strong growth on the bottom line.

Gross margin exceeded management’s guidance at 63.6% while Credo’s strong operating leverage was visible as operating margin came in nearly 8 points ahead of guidance and improved more than 30 points sequentially.

Inventories and accounts receivable surged sequentially, supporting management’s comments that active electric cables (AECs) experienced the inflection point in growth management had expected in the third quarter. Interestingly, Credo’s margin profile is improving significantly despite it being in a strong ramp phase for its products, with GAAP operating and net margins both in the double-digit positives in Q3, a sharp contrast to double-digit negatives just one quarter prior.

Free cash flow was marginally negative this quarter at ($0.4) million due to the purchase of production equipment, plus the large inventory at $53.2 million. The company has $379 million in cash, and thus this isn’t too big of an issue.

Also, note that Credo had very high customer concentration this quarter with 86% of revenue from one customer (hinted to be Amazon) yet is ramping with other hyperscalers (likely Microsoft, xAI, Oracle). This means the company is agnostic, which is truly the best spot to be given they have both large custom silicon and merchant GPU customers.

Revenue

Credo reported revenue of $135.0 million in Q3, beating analyst estimates of $120.4 million. Revenue grew 154.4% YoY and 87.4% QoQ, driven by the inflection in active electric cables (AECs).

Here is what management stated about this outsized growth: “Regarding our AEC product line, as expected, our revenue surged in the third quarter, driven by our largest hyperscale customer. Compared to alternatives, the benefits of AECs have become clearer. More than ever, data centers are highly focused on back-end network reliability […] Our ZeroFlap AECs deliver more than 100 times better reliability than laser-based optical solutions. And as a result, we're seeing AECs replacing optics for rack-to-rack solutions for lengths up to seven meters. We continue to make significant progress with additional hyperscalers for our Ethernet AEC solutions. We've achieved volume production with three hyperscalers, and we're in qualification with two additional hyperscalers, expecting production in fiscal '26.”

For more information on Zero Flap AECs, read our previous analysis here.previous analysis here.

For Q4, Credo guided for revenue of $155 million to $165 million, or 163.2% YoY growth at midpoint, almost an 8 point sequential acceleration. This blew past estimates for $136.3 million for growth of 124.2% YoY. Analyst estimates for fiscal Q1 and Q2 2026 are likely to move higher following this result given that it came in nearly $25 million higher than estimates at midpoint.

For the full year, Credo is on track to generate $426.7 million, based on the midpoint of Q4, well ahead of estimates for $388.8 million and representing growth of 121.1% YoY.

To put how quickly Credo is ramping in perspective, Q3’s revenue was more than Q1 and Q2 combined. Additionally, at the midpoint of Q4’s guidance, Credo would be generating $295 million in Q3 and Q4 combined, or $50 million more than it generated in the four quarters prior.

Key Segments

Product Revenue rises 224% YoY

Credo’s product revenue accelerated significantly in Q3, rising nearly 224% YoY and more than 100% QoQ to $129.3 million. This is a sharp inflection from the 70% to 90% YoY growth seen in the prior three quarters.

For the nine months ending in January, product revenue was $247.7 million, up nearly 138% YoY. Based on Q4’s guidance and product revenue contribution, Credo is on track to potentially reach $400 million in product revenue for the full year.

As pointed out above, AECs and retimers are driving the revenue, yet there are other products that will contribute to the company’s ongoing growth. The founders come from Marvell, and there is overlap here with SerDes technology solutions, including PCIe5 (now) PCIe6 (next year) products incl retimers, which help to increase bandwidths from 50G per lane to 100G per lane to soon offer 200G per lane, including on active optic cables and transceivers. The goal is to corner both long-scale reach and very short-scale reach as architectures move toward scale up and scale out (this is discussed more below). Credo was also first to release a 800G PAM4 DSP for half-retimed modules with the idea these modules can reduce power by 40% compared to full-DSP modules.

Product Engineering Services: Product engineering services revenue declined nearly (78%) YoY and (42%) QoQ to $2.7 million.
IP Licensing: IP licensing revenue rose nearly 137% YoY and was flat QoQ at $3 million.

Margins Support a Blowout Report

Credo’s margin improvements are arguably more impressive than the large beat and raise on the top-line in Q3, as Credo reported double-digit positive GAAP margins down the line after reporting negative margins last quarter. When asked what was driving the margins, management stated it was due to scale: “Principally driven by scale. It's really as simple as that.”

Q3 GAAP gross margin was 63.6%, one full point above the high-end of guidance for 60.6% to 62.6%.
For Q4, management guided gross margin to be between 62.7% and 64.7%, or a marginal improvement sequentially at midpoint.
Q3 GAAP operating margin was 19.4%, a more than 30 point sequential improvement from (11.7%) in Q2 and well ahead of management’s guidance for an 11.9% margin. Adjusted operating margin was 31.4%, up nearly 20 points sequentially.
For Q4, management’s expense guidance implied GAAP operating margin would dip sequentially to 17.5%. Adjusted operating margin is implied to be 32.1%, a slight sequential improvement.

Q3 GAAP net margin was 21.7%, a more than 27 point sequential improvement from (5.9%) in Q2. Adjusted net margin was 33.6%, up more than 16 points sequentially.

This is a phenomenal improvement in operating and net margins in just one quarter, displaying Credo’s strong operating leverage as it enters its rapid ramp phase. Credo was able to deliver just north of $64 million QoQ growth in product revenue in Q3 while spending less than $6 million more in total operating expenses in the quarter. The strong performance in Q3 was also able to push GAAP operating margin into positive territory for the nine-month period, with GAAP operating income of $3.3 million for a margin of 1.3%.

EPS to See Triple Digit Growth

Credo reported GAAP EPS of $0.18 in Q3, ahead of estimates for $0.11. This was a notable improvement from a GAAP loss of ($0.03) per share last quarter, as net income rose substantially due to Credo’s operating leverage; Q3’s net income was $29.4 million versus a ($4.2 million) loss in Q2.

Adjusted EPS rose 525% YoY to $0.25, beating estimates for $0.18. Analysts are forecasting triple-digit growth in adjusted EPS to continue for the next three quarters.

Balance Sheet and Cash Flows

Credo’s inventories and accounts receivable both surged sequentially, while cash flows were negative as Credo is working to ramp production significantly.

Operating cash flow was $4.2 million, due to “working capital increases driven by the significant sequential product ramp.” Capex was $4.6 million, resulting in free cash flow of ($0.4) million due to purchasing equipment.

Inventories were $53.2 million in Q3, up more than 46% QoQ. Accounts receivable were $157.1 million, up more than 92% QoQ.

Cash and marketable securities totaled $379.2 million, while debt remained at zero.

Earnings Call:

High Customer Concentration (Likely Amazon)

Per our last write-up, Credo’s major customers are Microsoft and Amazon, with the third and fourth perhaps being Oracle or xAI as these two lesser-known names were mentioned in the previous earnings call. This quarter, customer concentration was quite high with one customer at 86%, and this drilled into during the Q&A. Management stated they will have 3-4 customers at 10% or greater revenue and the lead customer will be at 2/3 revenue as soon.

An analyst pointed out that due to the strength of this one customer, the other combined customers would be dropping from $48M in October to $19M in January.

Per the CFO's opening remarks: “As we shared last quarter, we had seven customers that contributed more than 5% of revenue. And going forward, we expect that three to four customers will be greater than 10% of revenue in the coming quarters and fiscal year, as additional hyperscalers ramp to more significant volumes, as Bill described.”

It seems management is implying the customer that surged was Amazon, and not Microsoft. This makes sense given what we know about the Trainium2 ramp. Notably, to be agnostic to both custom silicon and merchant GPUs is the cherry on the cake for a supplier.

Dan Fleming, CFO:

Yes. We've talked in the past about – actually Amazon is a great example. So our largest hyperscaler, if you look at their Q1 revenue, was $30 million. Then it went down a bit in Q2. Now it obviously surged in our Q3. Our internal expectation is probably be in the same ZIP code as to where they were in absolute dollar terms this – in Q3 or where they were in Q3. So if you look at that being what it is and knowing that we guided 19% sequentially up quarter-over-quarter into Q4 at the midpoint. That would imply that maybe they’re two-thirds of our revenue in Q4 would be what that math would apply.

Merchant GPUs (Likely) To be in Volume Production

By now, I hope my readers are well aware that the soft price action in Nvidia has nothing to do with China or DeepSeek. These are shallow narratives the media must quickly conjure up to fill a headline. We offered many before market open earnings reports on “what it could mean” that Nvidia suppliers were offering a muted Q1 starting on Feb 5th, followed by a more long-form analysis on the free side on Feb 25th.

Similar to myself, analysts would love nothing more than to get a green light from a supplier who is downwind from Nvidia. Amazon is a custom silicon project, and thus Credo’s report last night does not provide any evidence that Nvidia’s larger Blackwell systems (expected to drive more than 50% of revenue this year) are ramping in volume. If anything, it suggests the opposite if Amazon is at very high customer concentration while Microsoft, Oracle and/or xAI (the other three customers, presumably) are at a combined 14%.

On one hand, Credo stated the other three hyperscalers are in volume production – which is exactly what we want to hear as it not only verifies the larger Blackwell systems are moving along (since Credo is mainly a back-end networking growth opportunity) but also that Credo is qualified (as of now) to be in this stack in addition to the custom silicon from Amazon.

“Our ZeroFlap AECs deliver more than 100 times better reliability than laser-based optical solutions. And as a result, we're seeing AECs replacing optics for rack-to-rack solutions for lengths up to seven meters. We continue to make significant progress with additional hyperscalers for our Ethernet AEC solutions. We've achieved volume production with three hyperscalers, and we're in qualification with two additional hyperscalers, expecting production in fiscal '26.”

I put the word “likely” in parathesis because merchant GPUs were not specifically mentioned, yet the readthrough is that it’s Nvidia’s GPUs that Credo is providing the AECs to given these specific hyperscaler customers buildouts.

Scale Up, Scale Out Architectures (Total Addressable Market):

Scale up architectures refers to the increasing size of GPUs or AI accelerators per system. Prior to Blackwell, the maximum was eight, whereas the new architecture will be 36 or 72 GPU systems. Each new generation will likely attempt to increase size in which these systems scale up.

As we consider hypergrowth networking stocks like Credo, consider that its revenue today is mainly scale out (which refers to adding more systems, such as the 100,000 GPUs systems being built today). The total addressable market for Credo will expand considerably as we go into years (perhaps up to a decade) of the scale up trend driving forth major advancements in training first and foremost (with inference market too nascent to determine where it will end up in terms of its best and highest use across architectures.

The rack-level architectures that are scale up to 36 GPUs or 72GPUs this year will offer Credo a new opportunity to drive revenue. Per management: “Our Gen6 64 gig PAM4 AECs will deliver the same compelling benefits for AI scale-up networks as deployments move to rack scale architectures. Credo will demonstrate our PCIe AECs at Nvidia's GTC Show later this month.” It was also stated: “Existing customer wins and future opportunities here include 100 gig and 200 gig per lane applications for both traditional switching and increasingly for AI servers requiring retimers for scale-out networks. This year, Credo has entered the market for PCIe retimers used in scale-up networks.”

This was also stated: “We've talked about the volumes being larger than the scale-out network opportunities. So we really see this as a big new TAM. As the market moves from Gen-5 to Gen-6, we're talking about moving from 32 gig NRZ, which is really very old technology, and it is really not competitive if you compare it to the market leader from a bandwidth standpoint per lane.”

Conclusion:

Credo had an excellent earnings report and we are excited to build out this position further over the next few months. Suppliers who participate in both custom silicon and merchant GPUs are in an enviable position as it can remove lumpiness. Regarding lumpiness, Nvidia is not out of the weeds yet as the following analyst discussion foreshadows the delay we reported on is alive and well this quarter: “And the other combined customers would be dropping from $48M in October to $19M in January.” However, Credo’s comments the other hyperscalers are in volume production matches Nvidia’s commentary — and so hopefully we see a clearing of the selling pressure in the next 2-3 months. (And you know the IOF loves to buy low for the next leg up, so we are not stressing it – rather simply making sure our readers are well informed and not relying on the Street’s China tariffs and DeepSeek narratives, which are shallow narratives at best).

Credo's gross margin is one of the strongest I can recollect in the AI hardware space with an operating margin that exceeds many AI suppliers’ gross margin. The fact we are seeing revenue primarily from scale-out, while there is an equal opportunity (if not larger opportunity) for back-end networking with scale up for AI systems – and, the fact Credo plays in both arenas with custom silicon and GPUs — is the cherry on the cake.

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Our Essentials plan offers three stocks that are actively managed. For those who are new to tech investing, this plan offers an introductory level as mastering a few stocks before building a larger portfolio is a productive way to become acquainted with the world's most valuable and rewarding industry. As you know, tech can be volatile, and these stocks help to balance risk/reward in this volatile industry.

What is listed below is the most pertinent analysis for becoming acquainted with these three stocks.

This list will be updated and refreshed when positions are added or removed. Please check back often for updates!

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