Credo Technology (US:CRDO) The Motley Fool·2025-12-07 11:45Core Insights - Credo Technology (CRDO) has experienced significant stock price appreciation since its IPO, currently trading around $177, up from an initial public offering price of $10 per share [1][2] - The company has shown explosive growth, particularly benefiting from the expanding artificial intelligence (AI) market, with a revenue increase of 273% year-over-year in the first half of fiscal 2026 [2][9] Company Overview - Credo Technology specializes in high-speed connectivity solutions for data centers, offering products such as active electrical cables (AECs) and serializer/deserializer (SerDes) chiplets [4][5] - Its products are essential for modern data centers, facilitating upgrades necessary for cloud and AI applications [5] Financial Performance - In fiscal 2025, Credo generated 94% of its revenue from product sales, with a notable revenue growth of 126% compared to the previous year [7][9] - The company reported an adjusted gross margin of 67.6% in the first half of fiscal 2026, with adjusted net income rising nearly ninefold to $226 million [9][10] - Analysts project revenue growth of 173% and adjusted EPS growth of 301% for fiscal 2026, with continued growth expected in fiscal 2027 [10] Market Position and Competition - Credo has established an early-mover advantage in the AI infrastructure sector but may face increased competition from larger, diversified chipmakers like Broadcom and Marvell Technology [11] - Customer concentration poses a risk, as four hyperscale customers accounted for over 10% of its revenue, indicating potential vulnerability if any major customer is lost [11] Future Outlook - While Credo is expected to continue expanding, it may not sustain triple-digit growth rates indefinitely, and its stock is currently valued at 93 times its forward adjusted earnings [12] - The long-term growth potential remains strong, driven by the ongoing expansion of the AI market, making it a potential investment opportunity [12]