Credo Technology Soars on Strong AI-Driven Demand and Analyst Upgrades

Credo Technology Analyst Double Upgrades AI Play, Raises Forecast By Almost 200% - Credo Technology Group (NASDAQ:CRDO)

The company's results would be driven by the adoption of its AEC product that enables power efficient AI clusters. Credo Technology Group Holding Ltd CRDO shares jumped almost 40% in early trading on Tuesday. The visibility into the company's growth inflection in the back half of the year improved significantly, according to BofA Securities. Analyst Vivek Arya upgraded the rating for Credo Technology from Underperform to Buy while raising the price target from $27 to $80. The Credo Technology Thesis: The company delivered a "solid beat and material raise" quarter, Arya said in the upgrade note. Check out other analyst stock ratings. Credo Technology's outlook suggests "the start of a multi-year adoption cycle for its Active Electrical Cable (AEC) product that enables power-efficient AI clusters," he added. The company's earnings call addressed the concerns around the market for AEC, "with 3x 10% customers," including Microsoft Corp MSFT, Amazon.com Inc AMZN and Tesla Inc TSLA as well as "growing momentum in other adjacent areas (optical DSP, line card PHY, retimer)," the analyst stated. Credo Technology is likely to generate robust results in the back half of fiscal 2025, "driven by strong AI growth at Amazon Web Services, a key customer (and investor)," he further wrote. CRDO Price Action: Shares of Credo Technology had risen by 49.24% to $71.34 at the time of publication on Tuesday. Read More: * Why Credo Technology Group Shares Are Trading Higher By 40%; Here Are 20 Stocks Moving Premarket Photo: Courtesy Credo Market News and Data brought to you by Benzinga APIs

BofA double upgrades Credo stock after strong Q3 print By Investing.com

Investing.com -- BofA Securities analysts double upgraded Credo Technology Group Holding Ltd (NASDAQ:CRDO) stock from Underperform to Buy on Tuesday, following the company's strong earnings report that sent its shares rocketing over 30% in premarket trading Tuesday. The bank also raised its price objective for Credo shares to $80, up from the previous target of $27. Credo exceeded expectations for its fiscal third quarter and provided an optimistic outlook, prompting BofA to raise its fiscal year 2026/27 earnings per share (EPS) estimates by 65% and 88%, respectively, to $1.01 and $1.51. The new price target is rooted in a 60 times calendar year 2026 earnings per share (PE) multiple, aligning with the higher end of comparable companies. Analysts said this change reflects Credo's transition towards a more profitable earnings growth model, particularly as it enters a multi-year adoption cycle for its Active Electrical Cable (AEC) product, which is instrumental for power-efficient AI clusters. For the near term, BofA anticipates a strong second half for fiscal year 2025, driven by robust AI growth at Amazon Web Services, a key customer and investor in Credo. "Our prior cautious view was based on limited TAM assumptions for AEC, but CRDO's earnings call addressed those concerns nicely, with 3x 10% customers, and growing momentum in other adjacent areas," analysts led by Vivek Arya wrote. According to BofA's note, Credo is expected to maintain operational expenditure growth at less than half of its sales growth over the next few years, with gross margins remaining resilient. This suggests significant operational leverage and a compound annual growth rate (CAGR) of 74% in earnings per share between calendar years 2024-2027, compared to a 45% CAGR in sales. Furthermore, the company now boasts seven customers that each contribute more than 5% to sales, up from two in the previous quarter. BofA also highlights Credo's broadening product exposure and growing exposure to coveted NVIDIA Corporation (NASDAQ:NVDA) GPUs and Amazon.com Inc (NASDAQ:AMZN)'s AI chip Trainium2. Despite the positive outlook, BofA notes potential risks associated with Credo's premium valuation, sensitivity to shifts in AI deployment sentiment, and intensifying competition in the AEC market from companies like Marvell (NASDAQ:MRVL) Technology and Broadcom (NASDAQ:AVGO). Also, gross margins are expected to remain flat in fiscal year 2025, while competitive pressures persist in AECs and other AI-related products. Additionally, sales concentration remains high, with three large hyperscale AEC customers comprising 58% of total sales.

Credo Technology Group Stock Hits All-Time High on Soaring AI Products Demand

The company also predicted better-than-expected current-quarter revenue. Shares of Credo Technology Group Holding (CRDO) soared 40% to an all-time high Tuesday, a day after the provider of high-speed connectivity solutions for data centers posted better-than-expected results and guidance on strong demand for products that support artificial intelligence (AI). The company reported second-quarter fiscal 2025 adjusted earnings per share (EPS) of $0.07, with revenue surging 64% year-over-year to $72.0 million. Both exceeded expectations of analysts polled by Visible Alpha. Product sales soared 88% to $64.4 million, and product engineering services sales jumped 90% to $4.6 million. However, IP licensing revenue tumbled 60% to just under $3.0 million. Chief Executive Officer (CEO) Bill Brennan explained that over the past few quarters, "we have anticipated an inflection point in our revenues during the second half of fiscal 2025. I am pleased to share that this turning point has arrived." Brennan added that Credo is "experiencing even greater demand than initially projected, driven by AI deployments and deepening customer relationships." The company anticipates current-quarter revenue in a range of $115 million to $125 million, above expectation. Credo Technology Group Holding shares have soared nearly 250% in 2024.

Bank of America double upgrades AI derivative play, sees shares jumping 60%

Credo Technology , a maker of high-speed connectivity cables used in data infrastructure, can continue to capitalize on a growing business opportunity in the market for artificial intelligence equipment, Bank of America says . The investment bank double upgraded Credo to buy from underperform on Tuesday, and raised its price target to $80 per share from $27. BofA's forecast implied more than 67% upside from Monday's $47.80 close, and the stock has already soared more than 45% in early trading Tuesday to a high of $69.46. Late Monday, Credo posted fiscal second quarter results showing sales and earnings above analysts' consensus estimates, and forward revenue guidance for its third quarter that also surpassed estimates from analysts polled by FactSet. CRDO YTD mountain Credo Technology shares in 2024. The growth of artificial intelligence programs and products are likely to prove a boon for Credo's high-speed cable business, BofA analyst Vivek Arya says. "CRDO is the leader in the active electrical cable market where a multi-year adoption cycle is now ahead of us driven by demand for power-efficient AI clusters," the analyst wrote in a 14-page report. Credo is now estimated to see revenue of $387.5 million in 2025, up from a prior target of $320.2 million, and earnings of 50 cents per share rather than the 34 cents seen earlier, the BofA report said. "[S]ignificant operating leverage could drive earnings growth much faster than sales for the next few years," Arya said. Credo shares have now surged 250% in 2024.

These Analysts Boost Their Forecasts On Credo Technology Group After Upbeat Results - Credo Technology Group (NASDAQ:CRDO)

Credo Technology Group Holding Ltd CRDO reported better-than-expected second-quarter financial results and issued strong guidance on Monday. Credo Technology reported quarterly earnings of 7 cents per share which beat the analyst consensus estimate of 5 cents per share. The company reported quarterly sales of $72.000 million which beat the analyst consensus estimate of $66.789 million. Bill Brennan, Credo's President and Chief Executive Officer, stated, "In the fiscal second quarter ended November 2, 2024 Credo generated record revenue of $72.0 million, up 21% sequentially and 64% year over year. The second quarter was our most successful to date across our three main product lines and Credo delivered total product revenue of $69.1 million. For the past few quarters, we have anticipated an inflection point in our revenues during the second half of fiscal 2025. I am pleased to share that this turning point has arrived, and we are experiencing even greater demand than initially projected, driven by AI deployments and deepening customer relationships." Credo Technology Group said it sees third-quarter revenue of $115 million to $125 million, versus market estimates of $86.042 million. Credo Technology Group shares gained 46.1% to trade at $69.82 on Tuesday. These analysts made changes to their price targets on Credo Technology Group following earnings announcement. Needham analyst Quinn Bolton maintained Credo Technology with a Buy and raised the price target from $43 to $70. B of A Securities analyst Vivek Arya upgraded the stock from Underperform to Buy and boosted the price target from $27 to $80. Barclays analyst Thomas O'Malley maintained Credo Technology with an Overweight rating and raised the price target from $32 to $80. Stifel analyst Tore Svanberg reiterated Credo Technology with a Buy and increased the price target from $50 to $75. Craig-Hallum analyst Richard Shannon maintained the stock with a Buy and raised the price target from $38 to $75. Considering buying CRDO stock? Here's what analysts think: Read This Next: Jim Cramer Prefers FedEx Over This Delivery Giant That 'Screwed Up A Lot Of Holiday Seasons' CRDOCredo Technology Group Holding Ltd$70.1546.8%WatchlistOverviewMarket News and Data brought to you by Benzinga APIs

Why Credo Technology Group Rocketed Nearly 50% Today | The Motley Fool

The company reported earnings last night that not only beat analyst estimates but also delivered blowout guidance, suggesting Credo has emerged as a new artificial intelligence (AI) winner. Credo makes a unique cable product called an active electrical cable (AEC), which connects data center servers to networking switches. The company claims its AECs take up 75% less space than Direct Attach Copper (DAC) cables and offer 50% more power efficiency versus active optical cable (AOC) alternatives. As power and space are becoming scarce commodities in power-hungry AI data centers, Credo's proprietary technology seems to be finding favor with large AI customers. In its fiscal third quarter, Credo delivered 63.6% revenue growth to $72.0 million, beating estimates by $5.2 million, while adjusted (non-GAAP) earnings per share came in at $0.07, beating estimates by $0.02. But the biggest story with Credo was its third quarter revenue guidance for between $115.0 million and $125.0 million. That's obviously a massive 67% quarter-over-quarter jump, suggesting perhaps a tipping point in demand for the technology. CEO Bill Brennan confirmed, "For the past few quarters, we have anticipated an inflection point in our revenues during the second half of fiscal 2025. I am pleased to share that this turning point has arrived, and we are experiencing even greater demand than initially projected, driven by AI deployments and deepening customer relationships." Investors have been clamoring for new artificial intelligence winners to buy, and it appears Credo just emerged as that today in a big way. However, Credo's $11.8 billion market cap does look rather high after the surge, given its mere $500 million revenue run rate based on the third quarter outlook.