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Credo Technology Group Holding Ltd (CRDO)
NASDAQ:CRDO
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Credo Technology Group Holding Ltd
(NASDAQ:CRDO)
Rating:75Outperform
Price Target:
$133.00
▲(10.74% Upside)
Positive Factors
Financial Performance
Credo's revenue increased significantly due to strong performance in the AEC sector, with sales growing by 26% quarter-on-quarter and 180% year-on-year.
Market Opportunity
CRDO's management sees a significant growth opportunity with the AEC Total Addressable Market potentially reaching $5 billion to $10 billion, indicating a large room for increased adoption.
Product Development
Secured a major 800G DSP transceiver win for a U.S. hyperscaler, with initial deployments expected in F2026.
Negative Factors
Competition
There is increasing competition from MRVL and AVGO targeting similar market segments, which could lead to price erosion and potential loss of market share.
Market Risks
CRDO remains exposed to AEC adoption risk, with unit ramp dependent on hyperscalers continuing strong in-rack upgrade pace.
Credo Technology Group Holding Ltd (CRDO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$20.61B
Dividend YieldN/A
Average Volume (3M)4.15M
Price to Earnings (P/E)430.9
Beta (1Y)2.95
Revenue Growth126.34%
EPS GrowthN/A
CountryUS
Employees500
SectorTechnology
Sector Strength83
IndustryCommunication Equipment
Share Statistics
EPS (TTM)0.35
Shares Outstanding171,641,830
10 Day Avg. Volume3,958,007
30 Day Avg. Volume4,146,840
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap0.41
Enterprise Value/Revenue19.17
Enterprise Value/Gross Profit29.60
Enterprise Value/Ebitda133.16
Forecast
1Y Price Target
$107.00Price Target Upside-10.91% Downside
Rating ConsensusStrong Buy
Number of Analyst Covering11
Credo Technology Group Holding Ltd Business Overview & Revenue Model
Company DescriptionCredo Technology Group Holding Ltd provides various high-speed connectivity solutions for optical and electrical Ethernet applications in the United States, Mexico, Mainland China, Hong Kong, and internationally. Its products include integrated circuits, active electrical cables, and SerDes chiplets that are based on its serializer/deserializer and digital signal processor technologies. The company also offers intellectual property solutions consist of SerDes IP licensing. The company was founded in 2008 and is headquartered in San Jose, California.
How the Company Makes MoneyCredo Technology Group Holding Ltd generates revenue primarily through the sale of its semiconductor products and solutions. The company designs and markets integrated circuits and components that facilitate high-speed data transmission across various networking environments. Revenue streams include product sales to data center operators, original equipment manufacturers (OEMs), and networking companies that require advanced connectivity solutions to support growing data traffic and bandwidth needs. Key partnerships with industry leaders in telecommunications and data infrastructure sectors also play a crucial role in driving Credo's earnings by expanding its market reach and adoption of its technologies.
Credo Technology Group Holding Ltd Earnings Call Summary
Earnings Call Date:Jun 02, 2025
(Q4-2025)
| % Change Since: |
Next Earnings Date:Sep 03, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant revenue growth and profitability improvements for fiscal 2025, driven by strong performance in the AEC and optical product lines. The company has set a positive outlook for fiscal 2026, expecting substantial revenue growth and further customer diversification. However, there are concerns about tariff risks and inventory increases, and the long-term adoption of higher-speed optical DSPs may be slower than anticipated.Q4-2025 Updates
Positive Updates
Record-Breaking Revenue and Growth
Credo achieved fiscal year 2025 revenue of $437 million, marking a growth of 126% year-over-year. The fourth quarter alone saw revenue of $170 million, a 26% sequential increase and up 180% year-over-year.
Strong Performance in AEC Product Line
The Active Electrical Cable (AEC) product line maintained a steep growth trajectory, with three hyperscalers each contributing over 10% of total revenue.
Optical Market Success
Credo secured a significant DSP win for an 800 gig transceiver, with initial deployments expected at the U.S. hyperscaler in fiscal '26, and demonstrated ultra-low power 100 gig per lane optical DSPs.
Improved Margins and Profitability
Non-GAAP gross margin for fiscal '25 was 65%, with an operating margin improvement of 2,500 basis points. Earnings per share for the year was $0.70, a $0.62 improvement over the prior year.
Positive Outlook for Fiscal 2026
Credo expects fiscal year 2026 revenue to exceed $800 million, representing year-over-year growth in excess of 85%.
Diversification of Customer Base
Credo anticipates adding two new hyperscalers in the second half of fiscal year 2026, further diversifying its customer base.
Negative Updates
Tariff Risks
There are ongoing concerns regarding tariff risks impacting gross margins, although these are not expected to significantly impact the near-term gross margin.
Inventory Increase
Ending inventory for the fourth quarter was $90 million, up $36.8 million sequentially.
Long-Term Optical DSP Adoption
The transition to 200 gig per lane optical DSP solutions is expected to be slower than anticipated, delaying significant revenue impact.
Company Guidance
During the earnings call for the fourth quarter of fiscal 2025, Credo provided substantial guidance on its financial performance and future outlook. The company reported a significant revenue increase to $170 million for Q4, marking a 26% sequential rise and a 180% year-over-year growth, with a non-GAAP gross margin of 67.4%. For the full fiscal year, Credo achieved record revenue of $437 million, up 126% year-over-year, and a non-GAAP gross margin of 65%. The company anticipates further growth, projecting Q1 fiscal 2026 revenue between $185 million and $195 million, with a gross margin range of 64% to 66%. Additionally, Credo expects its fiscal 2026 revenue to exceed $800 million, indicating a year-over-year growth of over 85%. The company is also focusing on customer diversification, with three existing hyperscalers each contributing over 10% of Q4 revenue and plans to ramp two new hyperscalers in the second half of fiscal 2026. With a strong emphasis on sustaining growth through innovative connectivity solutions, Credo is well-positioned to capitalize on expanding opportunities in the AI infrastructure market.Credo Technology Group Holding Ltd Financial Statement Overview
Summary
Credo Technology Group has demonstrated impressive financial performance over the past year, with strong revenue growth and profitability enhancement. The company maintains a strong financial position with low leverage and substantial equity. While cash flow metrics show positive trends, continued focus on free cash flow improvement will be beneficial.Income Statement
Credo Technology Group has shown a strong improvement in its income statement metrics. The latest annual report indicates a substantial revenue growth rate of over 126% from the previous year, driven by strong sales performance. Gross profit margin is robust at approximately 64.8%, suggesting efficient production and sales processes. Net profit margin has turned positive to 11.9%, a significant turnaround from previous losses. The company has also transitioned to positive EBIT and EBITDA margins of 8.5% and 17.6% respectively, marking improved operational efficiency.75
Positive
Balance Sheet
The balance sheet is strong, with a low debt-to-equity ratio of 0.019, indicating minimal leverage and a solid equity position. The company has a very healthy equity ratio of 84.2%, reflecting substantial shareholder equity relative to total assets. Return on equity stands at 7.7%, demonstrating effective use of equity to generate profits. The company's financial stability is further underscored by significant cash reserves and a high level of total assets.80
Positive
Cash Flow
The cash flow statement shows a positive trajectory with an increase in free cash flow to $29 million, up from $17 million in the prior year. The operating cash flow to net income ratio is strong at 1.25, indicating good cash generation relative to net income. However, free cash flow to net income ratio is lower at 0.56, suggesting that a significant portion of earnings is still being reinvested or reserved for future growth. Overall, cash flow sustainability appears solid, although the company should continue focusing on enhancing free cash flow.70
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 436.77M | 436.77M | 192.97M | 184.19M | 106.48M | 58.70M |
| Gross Profit | 282.91M | 282.91M | 119.43M | 106.19M | 64.02M | 38.28M |
| EBITDA | 62.88M | 76.81M | -22.52M | -9.31M | -14.04M | -23.02M |
| Net Income | 52.18M | 52.18M | -28.37M | -16.55M | -22.18M | -27.51M |
Balance Sheet | ||||||
| Total Assets | 809.26M | 809.26M | 601.93M | 397.29M | 375.69M | 155.49M |
| Cash, Cash Equivalents and Short-Term Investments | 431.34M | 431.34M | 410.00M | 217.81M | 259.32M | 103.76M |
| Total Debt | 16.04M | 16.04M | 13.87M | 15.50M | 17.19M | 0.00 |
| Total Liabilities | 127.67M | 127.67M | 61.73M | 49.65M | 41.53M | 210.92M |
| Stockholders Equity | 681.58M | 681.58M | 540.20M | 347.63M | 334.16M | -55.43M |
Cash Flow | ||||||
| Free Cash Flow | 29.02M | 29.02M | 17.09M | -46.33M | -48.41M | -48.42M |
| Operating Cash Flow | 65.08M | 65.08M | 32.74M | -24.61M | -30.83M | -42.36M |
| Investing Cash Flow | 111.99M | 111.99M | -249.49M | -130.94M | -17.58M | -6.06M |
| Financing Cash Flow | -7.73M | -7.73M | 175.28M | 4.88M | 204.18M | 77.89M |
Credo Technology Group Holding Ltd Technical Analysis
Positive
120.10
Price Trends
103.66
Positive
78.76
Positive
69.49
Positive
Market Momentum
4.10
Positive
62.17
Neutral
80.87
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CRDO, the sentiment is Positive. The current price of 120.1 is above the 20-day moving average (MA) of 115.75, above the 50-day MA of 103.66, and above the 200-day MA of 69.49, indicating a bullish trend. The MACD of 4.10 indicates Positive momentum. The RSI at 62.17 is Neutral, neither overbought nor oversold. The STOCH value of 80.87 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CRDO.
Credo Technology Group Holding Ltd Risk Analysis
Credo Technology Group Holding Ltd disclosed 64 risk factors in its most recent earnings report. Credo Technology Group Holding Ltd reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Credo Technology Group Holding Ltd Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $20.61B | 430.93 | 8.54% | ― | 126.34% | ― | |
71 Outperform | $12.93B | 127.44 | 3.71% | ― | 2.86% | -29.92% | |
65 Neutral | $8.71B | 528.50 | 2.48% | ― | 21.03% | ― | |
61 Neutral | $35.62B | 7.50 | -10.94% | 1.87% | 8.86% | -10.27% | |
58 Neutral | $2.50B | 72.85 | 4.76% | ― | 8.39% | ― | |
54 Neutral | $18.08B | ― | -69.70% | ― | 249.43% | -50.21% | |
50 Neutral | $14.64B | ― | -1.60% | ― | -35.86% | 85.81% |
* Technology Sector Average
Performance Comparison
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.