Core Viewpoint - Credo Technology Group (CRDO) has experienced significant stock performance, gaining 284.1% over the past year, driven by increasing demand for bandwidth due to AI infrastructure deployment [1][5]. Company Performance - CRDO's stock performance has outpaced the broader Zacks Computer & Technology sector, which returned 33.5%, and the Zacks Electronics Semiconductors industry, which appreciated 67.4% [1]. - The company has a strong portfolio that addresses the growing need for rack scale interconnectivity in AI and machine learning infrastructure [6][19]. Clientele and Market Position - Credo's solutions are utilized by major hyperscalers and include over 20 blue-chip clients, such as original equipment manufacturers and optical module manufacturers [2]. Product Offerings - CRDO's Ethernet solutions support port speeds ranging from 100 G to 1.6 T (terabits) per second, including active electrical cables, optical Digital Signal Processors, line card retimers, and SerDes chiplets [7][10]. - Active Electrical Cables (AECs) have shown record revenues due to strong demand, outperforming laser-based optics in terms of power efficiency and reliability [8][9]. Financial Outlook - For the third quarter of fiscal 2025, CRDO expects revenues between $115 million and $125 million, indicating a sequential growth of 67% at the midpoint [11]. - The company anticipates over 100% revenue growth for fiscal 2025, with operating expenses expected to grow at less than half the rate of revenues, leading to margin expansion [11][12]. Earnings Estimates - The Zacks Consensus Estimate for third-quarter fiscal 2025 revenues is $120 million, reflecting a year-over-year growth of 126.16% [13]. - The consensus for fiscal 2025 revenues is projected at $386.95 million, indicating a year-over-year growth of 100.52% [13]. Valuation and Investment Recommendation - Credo is currently trading at a premium with a forward Price/Sales ratio of 23.24X, significantly higher than the sector's 6.98X [16]. - The company holds a Zacks Rank 2 (Buy), suggesting that investors should consider accumulating the stock [19].

Disclosure and Author Information - The author has no stock, option, or derivative positions in any mentioned companies and no plans to initiate such positions within the next 72 hours [1] - The article expresses the author's own opinions and is not receiving compensation other than from Seeking Alpha [1] - The author has no business relationship with any company whose stock is mentioned in the article [1] - Seeking Alpha's disclosure states that past performance is no guarantee of future results and no investment recommendations are provided [2] - Seeking Alpha is not a licensed securities dealer, broker, or US investment adviser, and its analysts may not be licensed or certified by any regulatory body [2]

Analyst Background - Uttam is a growth-oriented investment analyst with a primary focus on the technology sector, including semiconductors, artificial intelligence, and cloud software [1] - His research also covers MedTech, Defense Tech, and Renewable Energy sectors [1] - Uttam has prior experience leading teams at major technology firms such as Apple and Google in Silicon Valley [1] - He co-authors The Pragmatic Optimist Newsletter with his wife, Amrita Roy, which is regularly cited by leading publications like the Wall Street Journal and Forbes [1] Disclosure Information - The analyst has no current stock, option, or derivative positions in the mentioned companies but may initiate a long position in CRDO within the next 72 hours [2] - The article expresses the analyst's own opinions and is not influenced by compensation or business relationships with the mentioned companies [2] - Seeking Alpha's disclosure emphasizes that past performance does not guarantee future results and that their analysts are third-party authors, including both professional and individual investors [3]

Investment Rating - The report maintains a "Buy" rating for Credo Technology Group Holding Ltd [2] Core Views - Credo Technology Group Holding Ltd achieved record revenue of $72.034 million in FY25Q2, representing a YoY increase of 63.6% and a QoQ increase of 20.6% [1] - The company expects FY25Q3 revenue to be between $115 million and $125 million, with a midpoint QoQ growth of 67% [1] - The company anticipates double-digit QoQ growth in FY25Q4 and approximately 50% YoY revenue growth in FY26 [1] - The company's AEC products are entering a volume production phase, with cloud vendor ASIC and AI Ethernet trends expected to drive high-speed growth [2] Financial Performance - FY25Q2 GAAP gross margin was 63.2%, while Non-GAAP gross margin was 63.6% [1] - FY25Q2 GAAP net loss was $4.225 million, while Non-GAAP net profit was $12.255 million [1] - The company expects FY25Q3 GAAP gross margin to be between 60.6% and 62.6%, and Non-GAAP gross margin between 61.0% and 63.0% [1] - Revenue is projected to grow from $393 million in FY25 to $765 million in FY27, with GAAP net profit expected to turn positive at $22 million in FY26 and reach $30.37 million in FY27 [2][6] Business Analysis - FY25Q2 revenue breakdown: product sales $64.443 million, product engineering services $4.632 million, IP revenue $2.959 million [2] - Three customers accounted for over 10% of revenue, with Microsoft at 11%, a second AEC large customer at 33%, and a new large customer at 14% [2] - The company has completed tape-out for its single-channel 200G 3nm optical module DSP and released a demo for PCIe GEN6/7 retimer, with sampling expected in CY25 and revenue generation in CY26 [2] Valuation - Current stock price implies FY25-FY27 PS ratios of 20x, 14x, and 10x respectively [2] - FY25-FY27 revenue estimates are $393 million, $586 million, and $765 million respectively [2]

Revenue Performance - For the three months ended November 2, 2024, total revenue was $72.0 million, a 63.6% increase from $44.0 million for the same period in 2023[106]. - The company generated $131.7 million in total revenue for the six months ended November 2, 2024, a 66.5% increase from $79.1 million for the same period in 2023[107]. - Product sales revenue for the six months ended November 2, 2024, increased by $30.2 million, primarily due to a significant increase in unit shipments of AEC and Optical products, contributing over 95% of the revenue increase[111]. - Total revenue for the six months ended November 2, 2024, increased by $28.0 million compared to the same period in fiscal year 2024, despite a $4.4 million decrease in IP license revenue[111]. Profitability and Margins - The company reported a net loss of $4.2 million for the three months ended November 2, 2024, compared to a net loss of $18.3 million for the same period in 2023[106]. - Gross profit for the three months ended November 2, 2024, was $45.5 million, representing a 74.3% increase compared to $26.1 million in the same period last year[116]. - The gross margin improved to 63.2% for the three months ended November 2, 2024, up from 59.3% in the same period of 2023[106]. - Gross margin for the three months ended November 2, 2024, increased by 3.9 percentage points to 63.2%, driven by improved economies of scale and higher gross margin AEC products[116]. Expenses - Research and development expenses were 44.1% of total revenue for the three months ended November 2, 2024, compared to 49.4% in the same period of 2023[106]. - Research and development expenses for the six months ended November 2, 2024, increased by $17.8 million, primarily due to an $8.2 million increase in share-based compensation and a $5.7 million increase in personnel costs[120]. - Selling, general and administrative expenses for the six months ended November 2, 2024, increased by $17.7 million, mainly due to an $8.9 million increase in share-based compensation and a $4.0 million increase in personnel expenses[122]. Cash Flow and Liquidity - Cash and cash equivalents as of November 2, 2024, were $239.2 million, up from $66.9 million as of April 27, 2024[126]. - Net cash provided by operating activities for the six months ended November 2, 2024, was $3.0 million, with cash outflows for working capital primarily driven by a $22.1 million increase in accounts receivable[130]. - The company believes its existing cash and cash equivalents will be sufficient to meet its needs for at least the next 12 months[127]. - Net cash provided by operating activities was $29.6 million for the six months ended October 28, 2023, primarily due to $23.7 million of cash inflows for working capital purposes[131]. Investing and Financing Activities - Net cash used in investing activities was $9.7 million for the six months ended October 28, 2023, primarily due to purchases of property and equipment of $7.4 million[135]. - Net cash provided by financing activities was $0.7 million for the six months ended October 28, 2023, attributed to $3.7 million in proceeds from exercises of employee share options[137]. - Cash inflows from investing activities for the six months ended November 2, 2024, were $171.5 million, primarily from maturities of certificates of deposit[134]. Market and Operational Insights - The company expects to derive a significant portion of its revenue from a limited number of customers for the foreseeable future[100]. - The company operates a fabless business model, focusing on engineering and design while outsourcing manufacturing[102]. - The company continues to monitor and assess its critical accounting estimates in light of the current macroeconomic environment, which may lead to material changes in future periods[138]. - There were no material changes in market risk assessment during the three and six months ended November 2, 2024, compared to the previous assessment[139].

Shares of data center cable company Credo Technology (CRDO 45.10%) rocketed on Tuesday, with shares up 47.3% as of 1:11 p.m. ET.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.An inflection point in AI interconnectCredo makes a unique cable product called an active electrical cable (AEC), which connects data center servers to networking switches. The company claims its ...

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 Cre ...

Group 1 - Credo Technology Group Holding Ltd (CRDO) shares surged nearly 40% in early trading, reflecting improved visibility into the company's growth in the latter half of the year [1] - Analyst Vivek Arya upgraded Credo Technology's rating from Underperform to Buy and raised the price target from $27 to $80, citing a "solid beat and material raise" in the recent quarter [1] - The outlook for Credo Technology indicates the beginning of a multi-year adoption cycle for its Active Electrical Cable (AEC) product, which supports power-efficient AI clusters [2] Group 2 - The earnings call addressed market concerns for AEC, highlighting key customers such as Microsoft Corp, Amazon.com Inc, and Tesla Inc, along with growing momentum in adjacent areas like optical DSP and retimer [2] - Credo Technology is expected to deliver strong results in the latter half of fiscal 2025, driven by significant AI growth at Amazon Web Services, a key customer and investor [3] - At the time of publication, shares of Credo Technology had increased by 49.24% to $71.34 [3]

Key TakeawaysCredo Technology Group Holding beat second-quarter profit and sales estimates as the boom in artificial intelligence boosted demand for its connectivity solutions for data centers.The company also predicted better-than-expected current-quarter revenue.Shares of Credo traded at an all-time high Tuesday. 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 ...

More than 15 years of professional investment experience in global equities across all sectors. My investment style is fundamental, bottom-up, long-term, and quality growth-oriented. I am seeking companies specializing in niche markets, with strong growth potential, a solid management team, a sound capital allocation policy, and, most importantly, reasonable valuation. I do not chase quarterly results, nor do I follow the herd mentality. I do not use short-term stock performance as the measure of a company' ...