Key Takeaways CRDO projects over 200% FY26 revenue growth after boosting Q3 guidance to $404-$408M.TXN's Analog revenues rose 15% to $14B in 2025, driving total sales up 13%.CRDO holds $813.6M in cash, while TXN carries $14B in total debt.Semiconductor companies are at the core of the AI revolution, as they offer solutions that enable improved processing power and efficiency to execute cloud and AI workloads. Both Credo Technology Group Holding Ltd (CRDO) and Texas Instruments (TXN) operate in the semicondu ...

Credo Technology Group Holding Ltd (NASDAQ:CRDO) is among the 10 Unstoppable AI Stocks to Invest In Now. Goldman Sachs Initiates Coverage of Credo Technology Group Holding Ltd (CRDO) Stock Credo Technology Group Holding Ltd (NASDAQ:CRDO) is one of the Unstoppable AI Stocks to Invest In Now. On February 19, Goldman Sachs initiated coverage of the company’s stock with a “Buy” rating and a price objective of $165, as reported by The Fly. The analyst noted that Credo Technology Group Holding Ltd (NASDAQ:CRDO ...

Core Insights - The stock market is experiencing significant momentum driven by artificial intelligence (AI) investments, with major companies planning to spend up to $650 billion this year on AI-related infrastructure [1][2]. AI Infrastructure Companies - **Nvidia**: Recognized as a leading AI stock, Nvidia's GPUs are essential for data centers, performing complex AI tasks. The company reported record revenue of $57 billion in its last fiscal quarter, with $51.2 billion from the data center segment [4][5]. Demand for its Blackwell GPUs remains strong, and new Vera Rubin chips are expected this year [7]. - **Taiwan Semiconductor Manufacturing (TSMC)**: TSMC is a key player in chip manufacturing, producing over 11,800 products using 288 processes in 2024. The company has seen a shift in its revenue, with chips smaller than 7 nanometers accounting for 63% of shipments by Q4 2025 [8][9]. - **Nebius Group**: This Dutch company focuses on building AI data centers and plans to expand its power capacity from 220 megawatts to between 800 megawatts and 1 gigawatt by the end of this year. Nebius has contracts worth up to $19.4 billion with Microsoft and $3 billion with Meta Platforms [10][11][13]. - **Digital Realty Trust**: As a real estate investment trust (REIT), Digital Realty operates over 300 data centers and reported a revenue increase of 14% year-over-year, reaching $1.6 billion in Q4. The company offers a dividend yield of 2.8% [14][15]. - **Credo Technology Group**: Specializing in Active Electrical Cables (AECs), Credo's technology enhances data transfer efficiency in data centers. The company reported a revenue increase of 272% year-over-year, with expectations of $335 million to $345 million in revenue for the next fiscal year [16][19].

Core Insights - The AI infrastructure boom is driving significant demand for data centers, which require substantial power and speed to operate effectively [1][2] Group 1: Fluence Energy - Fluence Energy specializes in industrial-scale battery modules that provide stable energy for AI servers, particularly when paired with renewable energy sources [3][4] - The company was established in 2018 as a joint venture between Siemens and AES, and while revenues have been flat, analysts predict a 57% increase in annual sales over the next two years, driven by data center demand [4][5] - Fluence has 36 GWh of data center projects in development, with a total installed capacity of 46 GWh as of last September, indicating a significant growth opportunity [5][6] Group 2: Credo Technology Group - Credo Technology offers high-speed networking tools that help data center operators reduce power consumption and cooling needs while maintaining performance [7][8] - The company's Active Electrical Cables (AECs) can achieve data flows of up to 0.8 terabits per second, making them competitive with fiber-optic networks but with lower power requirements [8][9] - Credo's revenues are heavily reliant on a few major clients, with one unnamed client accounting for 67% of total revenues in fiscal year 2025, but the company reported a significant revenue increase to approximately $406 million in Q3 2026, tripling from the previous year [12][13]

Core Viewpoint - Credo Technology Group Holding Ltd (CRDO) has experienced a significant stock decline of 31.9% over the past month, raising concerns about volatility in AI-driven semiconductor investments. The broader Electronic-Semiconductors industry has also seen a decrease of 7.6% during the same period [1][7]. Group 1: Company Performance and Growth Drivers - CRDO's stock previously benefited from the AI infrastructure cycle, which increased demand for high-speed, energy-efficient data center connectivity solutions [2]. - The company's focus on high-performance, energy-efficient connectivity solutions positions it strategically as hyperscalers and cloud service providers upgrade their network architectures [3]. - CRDO's Active Electrical Cables (AECs) are central to its growth narrative, offering up to 1,000 times higher reliability and consuming approximately 50% less power compared to optical alternatives [4]. - The company is also advancing its IC portfolio, including retimers and optical DSPs, with expectations for design wins and revenue contributions in fiscal 2026 [5]. - CRDO anticipates revenues between $335 million and $345 million for the fiscal third quarter, indicating a sequential growth of 27% at the midpoint [12]. Group 2: Financial Health and Profitability - CRDO's non-GAAP gross margin improved by 410 basis points to 67.7%, exceeding the company's guidance [10]. - The company reported a non-GAAP operating income of $124.1 million, a significant increase from $8.3 million in the previous year [10]. - As of November 1, 2025, CRDO had $813.6 million in cash and cash equivalents, up from $479.6 million as of August 2, 2025, providing financial flexibility for innovation and expansion [11]. Group 3: Market Opportunities and Competitive Landscape - CRDO has introduced additional growth pillars, including Zero-Flap optics, active LED cables, and OmniConnect gearboxes, collectively representing a market opportunity likely to exceed $10 billion [9]. - The company faces competition from major players like Broadcom and Marvell Technology, which are also capitalizing on the AI semiconductor market [16][19]. - CRDO's forward 12-month price/sales ratio is 11.48, higher than the Electronic-Semiconductors sector average of 7.68, indicating a premium valuation [20]. Group 4: Risks and Challenges - CRDO's revenue is heavily reliant on a few hyperscalers, which poses risks if there are changes in spending or in-house solutions from these customers [13]. - The new connectivity pillars are not expected to generate significant revenues until fiscal 2027-2028, and execution delays could further impact timelines [14]. - Non-GAAP operating expenses are projected to rise approximately 50% year-over-year in fiscal 2026, which could pressure margins if revenue growth does not keep pace [14].

Core Insights - The article highlights the significant growth potential of Active Electrical Cables (AECs) for Credo Technology Group Holding Ltd (CRDO) as demand for advanced data center infrastructure surges [1][2]. Group 1: AEC Business Growth - AECs are the fastest-growing segment for CRDO, with sales increasing due to a diversified customer base, including four hyperscale customers contributing over 10% of total revenue [2][8]. - The reliability of zero-flap AECs is emphasized, being up to 1,000 times more reliable than laser-based optical modules while consuming about half the power, which is crucial for large-scale GPU deployments [3][8]. Group 2: Market Opportunities - CRDO's AEC and integrated circuit (IC) businesses target multibillion-dollar markets, with management identifying three new growth pillars that could expand the total addressable market (TAM) to over $10 billion, more than triple its size from 18 months ago [4][8]. - The company faces competition from Astera Labs and Marvell Technology, which are also expanding their offerings in the AI infrastructure and data center markets [5][6]. Group 3: Financial Performance - CRDO shares have increased by 93.1% over the past year, outperforming the Electronics-Semiconductors industry's growth of 40.3% [7]. - The forward 12-month Price/Sales ratio for CRDO is 16.91, significantly higher than the sector's average of 8.63, indicating strong market expectations [9]. Group 4: Earnings Estimates - The Zacks Consensus Estimate for CRDO's earnings for fiscal 2026 has been revised upward, reflecting positive sentiment and growth expectations [11].

Core Insights - Credo Technology Group Holding Ltd has released its 2025 Environmental, Social, and Governance (ESG) Report, showcasing its progress in key ESG priorities that support responsible growth and long-term value creation [1] Group 1: ESG Initiatives - Credo's ESG approach emphasizes strong oversight, accountability, and purpose-driven product innovation, with advancements in connectivity solutions aimed at reducing waste and enhancing energy efficiency in AI data centers [2] - The company has strengthened its Code of Business Conduct and Ethics and expanded health, safety, and professional growth programs for employees globally [2] - Through the Credo Cares initiative, the company has broadened partnerships that contribute to education, health, and local community needs, reflecting its commitment to integrity and continuous improvement [2] Group 2: Product Development - In 2025, Credo improved its product portfolio to help customers manage increasing operational demands in AI and hyperscale environments, focusing on high performance while reducing power consumption and waste [3] - The company is committed to developing low-power connectivity solutions that meet customer performance needs and align with its vision for sustainable connectivity [3] - Credo's innovations target the optical and electrical Ethernet applications market, including 100G, 200G, 400G, 800G, and the emerging 1.6T port markets, utilizing proprietary Serializer/Deserializer (SerDes) and Digital Signal Processor (DSP) technologies [5]

Group 1 - Credo Technology Group's stock has experienced a significant decline of nearly 12% in five market days and a total drop of 28% over two weeks, despite being up 103% year to date and 839% over the past three years [2][3][8] - The recent stock drop is attributed to typical volatility in high-growth stocks rather than any specific negative news related to the company, such as earnings misses or customer losses [4][8] - Credo's stock has a high beta value of 2.7, indicating that it tends to move 2.7 times faster than the S&P 500, leading to frequent double-digit weekly swings [5][8] Group 2 - The fundamental story of Credo remains strong, with significant opportunities in AI connectivity as GPU clusters expand, making data-transfer solutions critical [6] - Credo's active electrical cables (AECs) provide substantial advantages, including 1,000 times better reliability and approximately 50% lower power consumption compared to fiber-optic alternatives, which is crucial for large data centers [7] - The company has shown strong execution, with revenue more than doubling in the last fiscal year, expanding gross margins, and achieving profitability [7]

Core Insights - Credo Technology's stock surged 10% following a record-setting earnings report for Q2 of fiscal 2026, with a year-to-date increase of over 180% [1][4] - The company is positioned to benefit from the significant growth in the AI and data center markets, with projections indicating the AI market could expand from $279 billion to $3.5 trillion by 2033, and the data center market from $347.6 billion to $652 billion by 2030 [4] Company Overview - Credo Technology, based in San Jose, California, specializes in high-performance connectivity solutions for data centers, 5G carriers, AI, and high-performance computing markets [3] - The company offers products like Active Electrical Cables (AECs) that enhance data transfer efficiency in data centers, and its OmniConnect architecture aims to improve AI inference scalability [5][6] Financial Performance - For Q2 of fiscal 2026, Credo reported revenue of $268 million, a 272% increase year-over-year and a 20.2% increase from Q1, with gross margins at 67.5% [7][8] - The company achieved a net income of $86.2 million and earnings per share of $0.44, ending the quarter with a cash balance of $813.6 million [7] Future Outlook - Management provided guidance for Q3 revenue between $335 million and $345 million, indicating a potential 151% increase year-over-year, with projected gross margins between 63.8% and 65.8% [8] - Analysts have raised price targets for Credo, with Mizuho increasing its target to $225 and Bank of America raising it from $165 to $240, reflecting confidence in the company's growth trajectory [11] Market Position - Credo's valuation is characterized by a high price-to-earnings (P/E) ratio of 276 and a forward P/E of 90, which, while elevated, is seen as manageable compared to other companies in the sector [9][10] - The company is recognized as a critical player in the AI ecosystem, providing essential connectivity solutions that support the functionality of high-end chips from major AI companies [11][12]

Core Insights - Credo Technology has emerged as a crucial player in the generative AI sector, with a market capitalization of approximately $33 billion following a nearly 10% rise in stock price after a strong earnings report [2][5] - The company's stock has increased over 2.5 times year-to-date, indicating significant investor interest and confidence in its role in AI infrastructure [2] Financial Performance - In Q2 FY'26, Credo reported a revenue increase of 272% year-over-year, reaching $268 million, while adjusted net income surged over 10 times to $128 million ($0.67 per share) [5] - Guidance for Q3 indicates expected revenue could reach up to $345 million, representing a 156% growth compared to the previous year [5] - The company maintains robust profitability with a 19% operating margin and a 21% cash-flow margin, alongside a nearly debt-free balance sheet with over half of its assets in cash [13] Technological Edge - Credo addresses the "interconnect bottleneck" in data centers by utilizing Active Electrical Cables (AECs) and Bluebird DSPs, which enhance signal quality and reduce latency, making them suitable for high-density GPU environments [6][10][12] - AECs allow for thinner, longer, and faster copper connections, achieving speeds up to 1.6 Terabits per second without the heat and cost associated with optical cables [10] Market Positioning - Credo's growth is closely tied to the capital expenditure plans of major tech companies, with a total projected capex of $364 billion from Amazon, Alphabet, Microsoft, and Meta for their current fiscal years [7][8] - The company serves as a proxy for the spending of these "Big Four" tech giants, positioning itself as a focused investment in their competitive race to expand GPU clusters [8] Future Opportunities - The shift towards inference in AI could provide a significant boost for Credo, as it requires high rack density and low latency, areas where Credo's technology excels [9][12] - Despite high valuation metrics, including approximately 26 times trailing sales and over 120 times earnings, the company's strong fundamentals and rapid revenue growth justify these multiples [9][14]