[Part I](index=9&type=section&id=Part%20I) - The company's mission is to provide high-speed, energy-efficient connectivity solutions for AI, cloud computing, and hyperscale networks, leveraging its core SerDes and DSP technologies[23](index=23&type=chunk) - Credo's product families include integrated circuits (ICs), Active Electrical Cables (AECs), and SerDes Chiplets, with intellectual property (IP) solutions primarily consisting of SerDes IP licensing[24](index=24&type=chunk) - The company utilizes a fabless business model, contracting with third-party foundries like TSMC for wafer production and other partners for packaging, assembly, and testing[65](index=65&type=chunk)[71](index=71&type=chunk) Fiscal Year Financial Highlights | Fiscal Year | Total Revenue | Product Revenue % | IP License Revenue % | | :--- | :--- | :--- | :--- | | **2025** | $436.8 million | 97% | 3% | | **2024** | $193.0 million | 85% | 15% | [Business Overview](index=9&type=section&id=Item%201.%20Business) Credo Technology provides high-speed connectivity solutions, including ICs, Active Electrical Cables (AECs), and SerDes IP, for the AI, cloud computing, and hyperscale network markets. The company's products are based on its proprietary SerDes and DSP technologies, supporting speeds from 100G to the emerging 1.6T. In fiscal 2025, revenue grew to $436.8 million from $193.0 million in fiscal 2024, driven primarily by product sales which constituted 97% of total revenue. The company operates a fabless model, relying on partners like TSMC for manufacturing, and serves a concentrated base of blue-chip clients, including major hyperscalers [Industry Overview and Growth Strategy](index=10&type=section&id=Industry%20Overview%20and%20Growth%20Strategy) - Market growth is driven by strong secular tailwinds, including the explosion in network traffic from AI/ML, the doubling of hyperscaler general compute traffic every 2-3 years, and the proliferation of 5G and high-speed consumer connectivity standards like PCIe[30](index=30&type=chunk)[32](index=32&type=chunk)[35](index=35&type=chunk) - The company's growth strategy focuses on extending its leadership in SerDes technologies, broadening its product and IP portfolio, acquiring new customers, and deepening relationships with existing ones[41](index=41&type=chunk)[45](index=45&type=chunk) [Products and Solutions](index=12&type=section&id=Our%20Products%20and%20Solutions) - Credo offers a comprehensive suite of connectivity solutions including: - **HiWire AECs®**: Plug-and-play copper interconnects for data centers, offering alternatives to DACs and AOCs - **Optical DSPs**: Key components in optical transceivers for various networks, with families like Seagull (50G/lane), Dove (100G/lane), and the new Lark (800G) - **Line Card PHYs**: Retimers, Gearboxes, and MACsec devices for PAM4/NRZ backplane connectivity - **SerDes Chiplets & IP**: Enabling high-rate data transmission for MCM and SoC integration - **PCIe Retimers**: Toucan family for extending PCIe Gen6.x/CXL 3.x trace lengths - **PILOT Software Platform**: A new platform for predictive link integrity, optimization, and telemetry[43](index=43&type=chunk)[44](index=44&type=chunk)[47](index=47&type=chunk) [Customers, Sales, and Manufacturing](index=14&type=section&id=Customers%2C%20Sales%2C%20and%20Manufacturing) - The company has a high degree of customer concentration. In fiscal 2025, the top 10 customers accounted for approximately **90% of total revenue**, with a single customer representing **67% of total revenue**[60](index=60&type=chunk) - Credo employs a two-pronged sales strategy, targeting both end-users (like hyperscalers) and their suppliers (OEMs, ODMs), which has led to its solutions being specified by end-customers[61](index=61&type=chunk)[62](index=62&type=chunk) - The company operates a fabless model, using TSMC exclusively for semiconductor wafer production in fiscal 2025, and partners like Amkor, ASE, KYEC, and BizLink for assembly, testing, and AEC manufacturing[65](index=65&type=chunk)[71](index=71&type=chunk) [Research & Development and Intellectual Property](index=15&type=section&id=Research%20%26%20Development%20and%20Intellectual%20Property) R&D Expense | Fiscal Year | R&D Expense | | :--- | :--- | | **2025** | $146.0 million | | **2024** | $95.5 million | - As of May 3, 2025, the company employed **507 engineers**, primarily located in San Jose, mainland China, and Taiwan[67](index=67&type=chunk) - As of May 3, 2025, Credo owned **78 issued U.S. patents** and **48 issued patents in mainland China**, with patents expected to expire between 2029 and 2045[69](index=69&type=chunk) [Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks, including heavy dependence on a limited number of customers, with one customer accounting for 67% of fiscal 2025 revenue. Other major risks include the lack of long-term purchase commitments, macroeconomic pressures like inflation and tariffs, intense competition from larger players like Broadcom and Marvell, and reliance on a single source (TSMC) for wafer fabrication. Geopolitical tensions, particularly concerning Taiwan and U.S.-China relations, pose a threat to operations and supply chain. The company also highlights risks related to intellectual property protection, cybersecurity threats, and the legal complexities of its international operations and Cayman Islands incorporation - **Business Risks:** High customer concentration is a primary risk, with one customer accounting for **67% of total revenue** in fiscal 2025. The loss of this or other major customers could significantly harm operating results[91](index=91&type=chunk) - **Manufacturing & Supply Chain Risks:** The company relies on a limited number of third parties, exclusively using TSMC for semiconductor wafer production in fiscal 2025. This creates significant risk related to capacity shortages, price increases, and geopolitical disruptions, particularly in Taiwan[120](index=120&type=chunk)[124](index=124&type=chunk)[194](index=194&type=chunk) - **International & Geopolitical Risks:** Operations are exposed to geopolitical tensions between the U.S. and China, including tariffs and outbound investment restrictions. The company's reliance on Taiwanese suppliers creates vulnerability to political instability between Taiwan and mainland China[98](index=98&type=chunk)[189](index=189&type=chunk)[194](index=194&type=chunk) - **Market & Competition Risks:** The company faces intense competition from larger, more established companies like Broadcom, Marvell, and Astera Labs. The market for high-speed connectivity is rapidly evolving, and failure to anticipate technological shifts could result in loss of market share[107](index=107&type=chunk)[108](index=108&type=chunk)[119](index=119&type=chunk) - **Financial Risks:** The company had an accumulated deficit of **$83.2 million** as of May 3, 2025, despite achieving profitability in fiscal 2025. Future profitability is not guaranteed due to expected increases in operating expenses[102](index=102&type=chunk) [Cybersecurity](index=59&type=section&id=Item%201C.%20Cybersecurity) Credo has established a cybersecurity risk management program that includes periodic risk assessments, employee training, and an incident response process. Board-level oversight is handled by the Nominating and Corporate Governance Committee and the Audit Committee. The day-to-day management is led by the IT management team, including the Director of IT with over 15 years of experience. The company maintains a cybersecurity risk insurance policy and reports no material cybersecurity incidents to date - The Board delegates cybersecurity oversight to the Nominating and Corporate Governance Committee and the Audit Committee, with the full Board receiving at least an annual briefing[275](index=275&type=chunk)[276](index=276&type=chunk) - Day-to-day management of the cybersecurity program is handled by the IT management team, which supervises internal personnel and external consultants[277](index=277&type=chunk)[278](index=278&type=chunk) - As of the report date, the company is not aware of any cybersecurity threats or incidents that have materially affected or are reasonably likely to materially affect its business, operations, or financial condition[274](index=274&type=chunk) [Properties](index=60&type=section&id=Item%202.%20Properties) As of May 3, 2025, Credo leases approximately 250,580 square feet of facility space globally for research, design, sales, and administration. The primary locations are in the United States, mainland China, and Taiwan. Lease terms expire between 2025 and 2030 Leased Facilities by Location (as of May 3, 2025) | Location | Primary Use | Square Feet | | :--- | :--- | :--- | | United States | R&D, Sales, Admin | 88,896 | | Mainland China | R&D, Admin | 85,446 | | Taiwan | R&D, Admin | 69,150 | | Hong Kong | Admin | 7,088 | | **Total** | | **250,580** | [Part II](index=61&type=section&id=Part%20II) [Management's Discussion and Analysis (MD&A)](index=62&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal 2025, Credo's revenue increased 126.3% to $436.8 million, driven by a 184.2% surge in product sales, primarily from AEC products. This growth led to a significant turnaround in profitability, with net income reaching $52.2 million compared to a net loss of $28.4 million in fiscal 2024. Gross margin improved from 61.9% to 64.8% due to operating leverage. Operating expenses rose significantly, with R&D up 52.8% and SG&A up 64.3%, reflecting investments in growth and increased share-based compensation. The company's liquidity remains strong, with cash and cash equivalents of $236.3 million and positive cash flow from operations of $65.1 million - Total revenue for fiscal 2025 increased by **$243.8 million (126.3%)** compared to fiscal 2024, primarily due to a **$267.1 million increase** in product sales revenue from higher AEC shipment volumes[328](index=328&type=chunk)[329](index=329&type=chunk) - The company achieved net income of **$52.2 million** in fiscal 2025, a significant improvement from a net loss of **$28.4 million** in fiscal 2024[300](index=300&type=chunk) - Gross margin expanded to **64.8%** in fiscal 2025 from **61.9%** in fiscal 2024, driven by improved operating leverage as the product sales business gained scale[332](index=332&type=chunk) - End customer concentration remains high, with one end customer (Customer E) accounting for **63% of total revenue** in fiscal 2025, up from 20% in fiscal 2024[302](index=302&type=chunk) [Results of Operations](index=66&type=section&id=Results%20of%20Operations) Comparison of Key Financial Metrics (FY2025 vs. FY2024) | Metric (in thousands) | FY 2025 | FY 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | **$436,775** | **$192,970** | **126.3%** | | Product Sales Revenue | $412,177 | $145,048 | 184.2% | | IP License Revenue | $12,476 | $28,024 | (55.5)% | | **Gross Profit** | **$282,909** | **$119,431** | **136.9%** | | Gross Margin | 64.8% | 61.9% | +2.9 p.p. | | **Operating Expenses** | | | | | R&D | $145,994 | $95,531 | 52.8% | | SG&A | $98,918 | $60,193 | 64.3% | | **Operating Income (Loss)** | **$37,124** | **($37,058)** | **N/A** | | **Net Income (Loss)** | **$52,183** | **($28,369)** | **N/A** | - The increase in R&D expenses was primarily due to higher share-based compensation (**$20.6M**), personnel costs from new hires (**$13.3M**), and increased design and testing activities (**$10.0M**)[333](index=333&type=chunk) - The increase in SG&A expenses was mainly driven by higher share-based compensation (**$17.7M**), increased personnel costs (**$10.3M**), and higher external consultation fees (**$5.6M**)[334](index=334&type=chunk) [Liquidity and Capital Resources](index=69&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and Working Capital (in millions) | Metric | May 3, 2025 | April 27, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $236.3 | $66.9 | | Working capital | $605.8 | $485.6 | Summary of Cash Flows (in thousands) | Cash Flow Activity | FY 2025 | FY 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $65,083 | $32,737 | | Net cash provided by (used in) investing activities | $111,990 | ($249,485) | | Net cash (used in) provided by financing activities | ($7,728) | $175,276 | - Cash from operations in fiscal 2025 was primarily driven by net income of **$52.2 million** and non-cash charges (like **$77.4M** in share-based compensation), partially offset by a **$108.4 million** use of cash for working capital, including a **$102.5 million increase** in accounts receivable and a **$70.5 million increase** in inventory[341](index=341&type=chunk) [Market Risk Disclosures](index=72&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are foreign currency exchange risk and interest rate risk. The majority of sales and expenses are in U.S. dollars, but some operational expenses are in foreign currencies, creating exposure to currency fluctuations. A hypothetical 10% weakening of the U.S. dollar would have increased fiscal 2025 operating expenses by approximately 2%. Interest rate risk stems from investments in money market funds and time deposits, where changes in rates could affect fair value and income - The majority of sales and expenses are denominated in U.S. dollars, mitigating some foreign currency risk. However, a portion of international operating expenses are in foreign currencies[356](index=356&type=chunk) - A sensitivity analysis showed that a hypothetical **10% adverse change** in exchange rates (weakened USD) would have increased fiscal 2025 operating expenses by about **2%**[358](index=358&type=chunk) - Interest rate risk exists for the company's cash equivalents and short-term investments. Rising rates could adversely impact the fair value of fixed-rate securities[359](index=359&type=chunk) [Financial Statements and Supplementary Data](index=73&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The consolidated financial statements, audited by Ernst & Young LLP, present the company's financial position as of May 3, 2025, and its performance for the fiscal year then ended. Key highlights include total assets of $809.3 million, a significant increase in revenue to $436.8 million, and a shift to net income of $52.2 million. The notes detail significant customer concentration, with one customer representing 67% of revenue, and reliance on TSMC for manufacturing. The statements also reflect substantial investments in R&D and a significant increase in share-based compensation - The independent registered public accounting firm, Ernst & Young LLP, issued an unqualified opinion on the consolidated financial statements and on the effectiveness of the company's internal control over financial reporting[364](index=364&type=chunk)[365](index=365&type=chunk)[372](index=372&type=chunk) - A critical audit matter identified was the valuation of inventory, specifically management's estimates for net realizable value of excess and obsolete inventory, which involves subjective judgment regarding future product demand[368](index=368&type=chunk)[369](index=369&type=chunk) [Consolidated Financial Statements](index=79&type=section&id=Consolidated%20Financial%20Statements) Consolidated Balance Sheet Highlights (in thousands) | Account | May 3, 2025 | April 27, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$809,257** | **$601,932** | | Cash and cash equivalents | $236,328 | $66,942 | | Accounts receivable | $162,144 | $59,662 | | Inventories | $90,029 | $25,907 | | **Total Liabilities** | **$127,675** | **$61,734** | | **Total Shareholders' Equity** | **$681,582** | **$540,198** | Consolidated Statement of Operations Highlights (in thousands) | Account | FY 2025 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | | Total Revenue | $436,775 | $192,970 | $184,194 | | Gross Profit | $282,909 | $119,431 | $106,194 | | Operating Income (Loss) | $37,124 | ($37,058) | ($21,235) | | Net Income (Loss) | $52,183 | ($28,369) | ($16,547) | | Diluted EPS | $0.29 | ($0.18) | ($0.11) | [Selected Notes to Financial Statements](index=84&type=section&id=Notes%20to%20Financial%20Statements) - **Customer Concentration:** A single customer (Customer A) accounted for **67% of total revenue** in fiscal 2025 and **86% of accounts receivable** as of May 3, 2025[444](index=444&type=chunk) - **Supplier Concentration:** The company outsources all of its integrated circuit manufacturing to Taiwan Semiconductor Manufacturing Company Limited (TSMC)[448](index=448&type=chunk) - **Customer Warrant:** A warrant issued to an affiliate of Amazon.com has **4.1 million shares vested** as of May 3, 2025. The company recognized **$13.2 million** as a reduction to revenue (contra revenue) in fiscal 2025 related to this warrant, which is now fully amortized[454](index=454&type=chunk)[457](index=457&type=chunk) - **Share-Based Compensation:** Total share-based compensation expense was **$77.4 million** in fiscal 2025, a significant increase from **$39.0 million** in fiscal 2024. As of May 3, 2025, total unrecognized compensation cost for RSUs was **$318.6 million**[490](index=490&type=chunk)[497](index=497&type=chunk) - **Geographic Revenue:** Revenue by destination for fiscal 2025 was primarily Hong Kong (**56%**), United States (**15%**), and Mainland China (**18%**)[517](index=517&type=chunk) [Controls and Procedures](index=105&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of May 3, 2025. Management also concluded that the company's internal control over financial reporting was effective. The independent auditor, Ernst & Young LLP, provided an unqualified opinion on the effectiveness of the internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of May 3, 2025[521](index=521&type=chunk) - Management concluded that internal control over financial reporting was effective as of May 3, 2025, and this assessment was audited by Ernst & Young LLP, which issued an unqualified opinion[523](index=523&type=chunk) - No changes in internal control over financial reporting occurred during the fourth quarter of fiscal 2025 that materially affected, or are reasonably likely to materially affect, internal controls[524](index=524&type=chunk) [Other Information](index=105&type=section&id=Item%209B.%20Other%20Information) This section discloses updates to executive Rule 10b5-1 trading plans, including terminations by two executives and the adoption of a new plan by CEO William J. Brennan. Most notably, on June 30, 2025, the Board approved a special performance-based restricted stock unit (PSU) program for key leadership. This program is designed to incentivize significant long-term shareholder value creation, with vesting tied to achieving a stock price of $116 per share, representing an approximate 100% increase from the price at the time of approval - On June 30, 2025, the Board approved a special PSU award program for key executives to drive long-term shareholder value and ensure leadership continuity[529](index=529&type=chunk) - The special PSUs are earned if the company's average stock price over 60 trading days reaches or exceeds **$116** on the first, second, or third anniversaries of the grant date[530](index=530&type=chunk) - CEO William Brennan was granted **200,000 Special PSUs**, and CFO Dan Fleming was granted **100,000 Special PSUs** under this new program[534](index=534&type=chunk) [Part III](index=108&type=section&id=Part%20III) Items 10 through 14, covering Directors, Executive Compensation, Security Ownership, Related Transactions, and Principal Accounting Fees, are incorporated by reference from the company's definitive proxy statement for its 2025 annual meeting of shareholders, which will be filed within 120 days after the fiscal year-end - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the forthcoming 2025 Proxy Statement[538](index=538&type=chunk)[539](index=539&type=chunk)[540](index=540&type=chunk) [Part IV](index=109&type=section&id=Part%20IV) This section contains the list of financial statements, financial statement schedules, and exhibits filed with the Form 10-K. All required financial statements are included in Part II, Item 8, and all schedules have been omitted as they are not applicable or the required information is included elsewhere - This part lists all exhibits filed with the annual report, including governance documents, material contracts, and certifications[546](index=546&type=chunk)[547](index=547&type=chunk)

Group 1: Market Trends - Stocks near all-time or 52-week highs indicate strong bullish sentiment, with buyers in control [1] - Stocks making new highs are likely to continue rising, especially with positive earnings estimate revisions [8] Group 2: Credo Technology Group (CRDO) - Credo Technology, rated Zacks Rank 1 (Strong Buy), offers innovative high-speed connectivity solutions, benefiting from the AI surge [3][4] - The company reported a remarkable 180% year-over-year increase in sales, significantly exceeding consensus expectations [5] - The outlook for Credo remains bullish due to sustained demand and increased AI spending [4] Group 3: Heico (HEI) - Heico, also rated Zacks Rank 1 (Strong Buy), operates in aerospace, industrial, defense, and electronics sectors, with products used in various aircraft [9] - The company achieved record Q2 sales and net income, with sales growing 15% and net income increasing by 27%, surpassing consensus expectations [10] - Both segments of Heico, Flight Support and Electrical Technologies, experienced sales growth of 19% and 7%, respectively, with an operating margin increase to 22.6% from 21.9% year-over-year [10]

Core Insights - Credo Technology Group Holding Ltd (CRDO) has experienced significant revenue growth, driven by strong demand for high-speed connectivity solutions despite facing tariff challenges and macroeconomic uncertainties [1][3][10] - The company's operating margin expanded by 2,500 basis points in fiscal 2025, indicating effective operational discipline and profitability improvements [2][10] - CRDO anticipates revenues exceeding $800 million in fiscal 2026, representing over 85% year-over-year growth, with a projected non-GAAP net margin approaching 40% [4][10] Revenue Growth - CRDO's revenues nearly tripled from the first to the fourth quarter of fiscal 2025, showcasing its ability to adapt to market shifts [3][10] - The company has seen strong growth in its HiWire Active Electrical Cables (AECs), optical products, and retimer products, with a robust pipeline for future offerings [3][4] Operational Efficiency - Operating expenses for CRDO grew at a significantly slower rate than revenues, contributing to a substantial increase in profitability [2][10] - The company is strategically aligned with AI and data center trends, enhancing its operational excellence [4] Market Position and Competitors - CRDO's share price increased by 41.4% year-to-date, outperforming the Electronics-Semiconductors industry, which grew by 13.1% [11] - The forward 12-month price/sales ratio for CRDO is 19.63, significantly higher than the sector's average of 8.67, indicating strong market positioning [12] Earnings Estimates - The Zacks Consensus Estimate for CRDO's earnings for fiscal 2026 has seen significant upward revisions over the past 60 days, reflecting positive market sentiment [13][14]

Group 1: Momentum Investing Overview - Momentum investing involves following a stock's recent trend, with the strategy of buying high and selling higher, capitalizing on established price movements [1] - The Zacks Momentum Style Score helps define momentum characteristics, with Credo Technology Group Holding Ltd. (CRDO) currently holding a Momentum Style Score of B [2] Group 2: Zacks Rank and Performance - CRDO has a Zacks Rank of 1 (Strong Buy), indicating strong potential for outperformance in the market [3] - Stocks rated Zacks Rank 1 and 2 with Style Scores of A or B have historically outperformed the market over the following month [3] Group 3: Price Performance - CRDO shares have increased by 16.36% over the past week, significantly outperforming the Zacks Electronics - Semiconductors industry, which rose by 1.65% [5] - Over the past month, CRDO's price change is 47.03%, compared to the industry's 11.19% [5] - In the last quarter, CRDO shares increased by 114.22%, and over the past year, they gained 210.33%, while the S&P 500 only moved 5.86% and 12.83%, respectively [6] Group 4: Trading Volume - CRDO's average 20-day trading volume is 6,990,481 shares, which serves as a bullish indicator when combined with rising stock prices [7] Group 5: Earnings Outlook - Over the past two months, four earnings estimates for CRDO have been revised upwards, increasing the consensus estimate from $1.08 to $1.48 [9] - For the next fiscal year, one estimate has moved upwards with no downward revisions during the same period [9] Group 6: Conclusion - Considering all factors, CRDO is positioned as a 1 (Strong Buy) stock with a Momentum Score of B, making it a promising near-term investment option [11]

Group 1: Nvidia and Market Trends - Nvidia stock reached all-time highs, contributing to the Nasdaq-100-tracking QQQ ETF achieving new records [1] - Wall Street's optimism is driven by cooling Middle East tensions and expectations of a cease-fire agreement between Israel and Iran [1][2] - The technology sector is experiencing a rally, with investors encouraged to buy strong technology stocks benefiting from the artificial intelligence boom [2] Group 2: Rockwell Automation (ROK) - Rockwell Automation is focused on industrial automation and digital transformation, providing solutions across Intelligent Devices, Software & Control, and Lifecycle Services [4] - ROK is integrating advanced AI and robotics technologies into its automation solutions, enhancing manufacturing efficiency [6] - The company exceeded Q2 FY25 earnings estimates and provided positive guidance, projecting a 16% increase in adjusted earnings for FY26 [7][8] Group 3: Credo Technology Group (CRDO) - Credo Technology designs high-speed connectivity solutions that are in high demand due to investments in artificial intelligence [14] - The company reported a 126% revenue growth for fiscal 2025, with adjusted earnings rising from $0.09 to $0.70 [16] - CRDO is projected to grow adjusted earnings by 111% in fiscal 2026, with revenue expected to increase from around $200 million in FY24 to nearly $1 billion in FY27 [18]

Core Insights - Credo Technology Group Holding Ltd (CRDO) is experiencing significant growth, with fiscal 2025 revenues reaching $436.8 million, a 126% year-over-year increase, driven by high demand for energy-efficient connectivity solutions in AI data centers [1][8] - The company anticipates revenues for fiscal 2026 to exceed $800 million, indicating more than 85% year-over-year growth, supported by the transition to 100 gig per lane solutions and increased adoption of Optical DSPs [5][8] Company Performance - In the fourth quarter of fiscal 2025, CRDO's revenues surged 179.7% year-over-year to $170 million, primarily due to strong performance in HiWire Active Electrical Cables and customer momentum in PCIe and Ethernet retimers [1][8] - For the first quarter of fiscal 2026, CRDO projects revenues between $185 million and $195 million, suggesting a 12% increase at the midpoint [5] Product Portfolio - CRDO's focus on low-power, high-bandwidth interconnects, including HiWire AECs, Optical DSPs, and SerDes solutions, positions it well within the AI infrastructure market [2][3] - The company is witnessing growing interest in its PCIe retimers and Ethernet retimers, which are crucial for scale-out networks in AI servers [3] Market Dynamics - The demand for AI infrastructure is driving CRDO's growth, with hyperscaler customers increasingly seeking advanced connectivity solutions [1][5] - Competitors like Marvell Technology and Broadcom are also capitalizing on the AI data center trend, with Marvell's data center revenues increasing by 76% year-over-year and Broadcom projecting a 21% year-over-year revenue increase for the third quarter of fiscal 2025 [6][7] Valuation Metrics - CRDO's shares have surged 209.4% over the past year, significantly outperforming the Electronics-Semiconductors industry's growth of 20.8% [9] - The company is currently trading at a price/book ratio of 25.25, which is higher than the sector's average of 9.62 [10]

Core Viewpoint - The article discusses the volatile market conditions in 2025, highlighting the performance of top stock picks and the impact of tariffs and geopolitical events on market dynamics [7][9][19]. Market Overview - The US equity market experienced significant fluctuations due to tariff announcements, leading to a major correction in April 2025, with the S&P 500 dropping approximately 15% from its 52-week high [9][10]. - A barbell investment approach was recommended to diversify portfolios during market corrections, focusing on stocks with strong fundamentals and good dividend yields [10][13]. Stock Performance - The top 10 stocks recommended at the beginning of 2025 saw a performance swing from over 20% gains to below 20%, reflecting a nearly 40% change during the volatile period [15][16]. - By mid-2025, many of these stocks rebounded as fear subsided and investors returned to fundamentals [16]. Economic Indicators - Inflation rates showed a surprising decrease, with core CPI at 0.1% for May, and there is speculation about potential interest rate cuts by the Federal Reserve in September [22][23]. - The recession risk appears less severe than previously anticipated, with GDP growth projected to exceed 2% annualized after a decline in Q1 [23][31]. Top Stock Picks - **Barclays (NYSE: BCS)**: A diversified bank with a market cap of $62 billion, ranked 12 out of 691 in financial institutions, offering a dividend yield of 2.47% and a forward EPS growth rate of 28% [80][81]. - **Prudential (NYSE: PUK)**: Based in Hong Kong, this insurance company ranks 1 out of 19 in its industry, with a forward dividend yield of 1.89% and a long-term EPS growth rate of 17% [86][89]. - **FinVolution (NYSE: FINV)**: A fintech company with a market cap of $2.2 billion, ranking 7 out of 691 in financials, showing a 255% operating cash flow growth rate [93][94]. - **Power Solutions International (NASDAQ: PSIX)**: A small-cap company with a market cap of $1.23 billion, ranked number one in the industrials sector, with a one-year return of 835% [97][99]. - **New Gold (NYSE: NGD)**: Focused on gold, silver, and copper exploration, with an operating cash flow growth rate of 56% [107][110]. - **Gold Fields Limited (NYSE: GFI)**: A diversified mining company with a 37% EPS forward long-term growth rate, ranking 5 in the materials sector [111][113]. Investment Strategies - The article emphasizes a data-driven approach to stock selection, utilizing a GARP (Growth at a Reasonable Price) strategy that combines growth, value, profitability, and momentum metrics [40][42]. - The new PRO Quant Portfolio offers a higher frequency of stock ideas, designed for active investors, with a focus on global stocks across various market caps [59][64].

Core Insights - The article compares two semiconductor companies, Credo Technology Group Holding Ltd. (CRDO) and Marvell Technology, Inc. (MRVL), focusing on their roles in the AI-driven data center market [2][3][21] Company Overview - CRDO specializes in high-speed connectivity solutions, particularly in Ethernet and Active Electrical Cables (AECs), which are crucial for data centers [5][10] - MRVL has a diversified product portfolio that includes custom ASICs, data center switches, and 5G chips, with a strong focus on AI infrastructure [10][11] Financial Performance - CRDO's fiscal 2025 revenues rose 126% year over year to $436.8 million, with fourth-quarter revenues surging 179.7% year over year to $170 million [5][10] - MRVL's data center revenues increased 76% year over year to $1.44 billion, driven by demand for custom AI silicon and electro-optics products [11][12] Growth Drivers - CRDO's AECs are gaining traction due to their reliability, with a product line that is expected to remain a growth engine [5][6] - MRVL's growth is supported by solid demand for its storage and networking chips, particularly from the 5G infrastructure and data center markets [10][11] Market Trends - The shift from copper to optical connectivity in AI infrastructure presents significant growth opportunities for MRVL's Co-Packaged Optics technology [13] - Both companies are positioned to benefit from the increasing reliance on high-performance solutions in the rapidly expanding AI-server market [8][12] Competitive Positioning - CRDO's integrated system-level approach provides a competitive edge, allowing for faster innovation cycles and cost efficiency [6] - MRVL's collaboration with NVIDIA to integrate NVLink Fusion into its custom silicon platform enhances its capabilities in developing next-generation AI infrastructure [12] Stock Performance and Valuation - Over the past month, CRDO and MRVL have registered gains of 38.2% and 20.2%, respectively [17] - CRDO is trading at a forward 12-month price/sales ratio of 17.40X, significantly higher than MRVL's 7.36X [18] Analyst Estimates - Analysts have revised CRDO's bottom line estimates upward significantly in the past 60 days, indicating strong growth expectations [20] - MRVL has seen marginal upward estimate revisions, reflecting steady performance [20] Investment Recommendation - CRDO currently holds a Zacks Rank 1 (Strong Buy), while MRVL has a Zacks Rank 3 (Hold), suggesting that CRDO may be a better investment pick at this time [21]

Group 1 - Ethernet is becoming the essential infrastructure for modern AI data centers, positioning Credo Technology Group Holding Ltd favorably to capitalize on this trend [1] - Credo Technology Group is a fabless designer based in San Jose, indicating a focus on design rather than manufacturing, which may enhance operational efficiency [1] Group 2 - The article highlights the increasing importance of AI tools and applications, suggesting a growing market for companies involved in AI infrastructure [1]

Group 1 - Credo Technology Group Holding Ltd. (CRDO) has reached a key level of support, with its 50-day simple moving average crossing above its 200-day simple moving average, indicating a "golden cross" [1] - A golden cross is a technical chart pattern that suggests a bullish breakout may be imminent, typically involving the 50-day and 200-day moving averages [1][2] - CRDO shares have increased by 22.2% over the past four weeks, and the company holds a 1 (Strong Buy) rating on the Zacks Rank, indicating potential for further upward movement [3] Group 2 - The earnings expectations for CRDO have improved, with four upward revisions and no downward changes in the past 60 days, leading to an increase in the Zacks Consensus Estimate [3] - Investors are encouraged to consider adding CRDO to their watchlist due to the significant technical indicator and positive earnings estimate trends [3]