NVIDIA Rubin Wreckage: Modine and Credo

I was really looking forward to this week's annual CES shindig. I knew Jensen Huang of NVIDIA (NVDA) would have lots of goodies in his keynote address on Monday.

And he did not disappoint as he waxed philosophic about the changes being wrought by Agentic AI and Physical AI. "It felt like everything happened everywhere all at once in 2025. Artificial intelligence is changing the world and proliferating at a rapid speed... we are proud to continue pushing that change forward.”

One of his most exciting reveals was Alpamayo “the worlds first thinking, reasoning model for autonomous vehicles.” It packs a 10B-parameter vision-language-action (VLA) model that maps camera + telemetry to driving trajectories.

Alpamayo is an open-source end-to-end autonomous driving stack and the first full stack autonomous vehicle from NVIDIA will be on the road in Q1 2026 in the United States. Jensen said “there is no doubt in my mind this will be one of the biggest robotics industries.”

And there was plenty of other robotics reveals too, including the largest on the planet from Caterpillar. It felt like Skynet was suddenly here.

Now Comes Rubin: Bigger, Faster, Cheaper

But what few of us NVIDIA watchers were expecting was what happened next. Jensen was talking about the "insane demand" for AI computing and how model sizes were growing by 10X parameters per year, reasoning was generating 5X more tokens per year, all while token cost was becoming 10X cheaper. 

Then he explained how NVIDIA was meeting this insane demand with a yearly cadence of innovation, including the latest system in full production, the GB300. But he offered this conjecture...

"If Vera Rubin is going to be in time for this year, it must be in production by now."

Like a proud papa showing off his new twins, Jensen introduced the latest and greatest NVIDIA GPU system with a nearly 3-minute video.

With six new co-designed chip architectures sporting tens of trillions of transistors and 100 petaflops of processing capability, the power, speed, and precision of the newest rack-scale system will likely remain unmatched for some time -- until Jensen rolls out Feynman in 2027, that is. 

If I had to guess, I would say that each "supercomputer" rack-scale system will cost about $5 million.

Look Ma! No Cables, No Hoses, No Fans

But the video and Jensen's description had some other surprises that caused big stock volatility on Tuesday and Wednesday for two companies in particular: Modine Manufacturing (MOD) and Credo Technology Group (CRDO).

The new Vera Rubin systems have been stripped internally of cables, hoses, and fans. And they will use 45°C (113°F) "hot-water" liquid cooling.

Huang noted that by maintaining these higher liquid temperatures, AI factories can bypass mechanical water chillers entirely, relying instead on simpler dry coolers or liquid-to-liquid heat exchangers.

Modine, via its Airedale brand, is a major player in the data center chiller market. Investors interpreted this disruptive innovation as a direct signal that the "next-gen" AI infrastructure will require significantly fewer of the high-margin chillers that Modine has been aggressively expanding its capacity to build.

Modine shares dropped over 20% on Tuesday before bouncing hard off of the November gap fill at $113 to close down only 7.5%. But they continued lower Wednesday as the full weight of the possibilities sunk in.

Two other potential headwinds for Modine are (1) Vertiv (VRT) has a key spot in NVIDIA "co-design" for rack-scale cooling, and (2) Modine recently invested over $100 million of capex in their datacenter offerings. Some investors may be concerned about whether this will become "yesterday's technology."

I sold my Modine position in TAZR Trader yesterday in sympathy with these views and the price action, as the stock slipped below the 200-day moving average.

The Purple Copper Cable Connection

The other company that had a rough Jensen keynote aftermath was Credo Technology (CRDO), maker of active electrical cables (AECs) which use copper for network connectivity and have a trademark purple sheath. CRDO shares fell 5% Tuesday and another 6% on the open Wednesday as worries mounted that the Vera Rubin systems would not use copper cabling any longer and were being quickly replaced by optical interconnect solutions.

But the CRDO drop to $125 was bought quickly on Wednesday, marking a higher low versus November 21, and shares made a big reversal to close at $141, higher than Monday.

Why the reversal of fortune? It looks like cooler heads prevailed as several facts became apparent, among them the main idea that Jensen still like copper cabling to "scale up" within racks for the fastest connectivity between GPUs.

And while it's true that NVIDIA is moving toward more optical interconnect solutions with technologies from Coherent (COHR) to scale-out and scale-across the datacenter environment, Credo is also actively building its own optical and photonic solutions.

That was the primary reason I bought the dip in CRDO last month after I watched a presentation on their "ZeroFlap" optical transceiver innovations.

Coherent vs. Credo

I like Coherent, especially with their NVIDIA co-design partnership, but I liked the valuation pullback in Credo better. I wrote about Coherent here on December 10.

And here was how I described the Credo innovation line-up in my December 26 article...

While continuing to lead in copper-based Active Electrical Cables (AECs), Credo is diversifying its business significantly into optical interconnects.

Optical DSPs: Credo offers a complete suite of Optical Digital Signal Processors (DSPs) that support a wide range of speeds from 50G up to the emerging 1.6T (Terabits per second) PAM4 optical transceivers and Active Optical Cables (AOCs).

New Product Lines: The company has launched new optical products, such as its ZeroFlap optical transceivers and the Bluebird DSP for 1.6T optical transceivers, demonstrating a commitment to advanced optical solutions.

Strategic Acquisition: A clear sign of diversification is Credo's recent acquisition of Hyperlume, Inc., a developer of MicroLED-based optical interconnects for chip-to-chip communication. This move strategically enhances Credo's ability to offer next-generation optical connectivity solutions.

Dual Focus: While Credo pioneered the AEC market, they view the Total Addressable Market (TAM) as expanding for both copper (AECs) and optical connectivity solutions, and they are strategically prioritizing optical solutions as a cornerstone of their product roadmap, alongside their AEC leadership.

See my Credo article for more details, like the 2025 Open Compute Project (OCP) event in October with Oracle on ZeroFlap.

I recommend starting or adding to CRDO positions under $140. And to keep watching NVIDIA innovations to see where the puck is going!

Disclosure: I own NVDA and CRDO shares for the Zacks TAZR Trader and I'm looking to buy more.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research