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Credo Technology Group Holding Ltd (CRDO)
NASDAQ:CRDO
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Credo Technology Group Holding Ltd
(NASDAQ:CRDO)
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Rating:76Outperform
Price Target:
$159.00
▼(-6.23% Downside)
Credo Technology Group's strong financial performance and positive earnings call outlook are the primary drivers of its stock score. The company's robust revenue growth and strategic market positioning are significant strengths. However, the high P/E ratio suggests potential overvaluation, and technical indicators point to possible overbought conditions, which could lead to short-term volatility.
Positive Factors
Revenue Growth
The significant revenue growth highlights Credo's expanding market presence and strong demand for its high-speed connectivity solutions, indicating robust business fundamentals and potential for sustained growth.
Cash Generation
Strong cash generation underscores Credo's ability to fund operations and growth initiatives internally, enhancing financial stability and reducing reliance on external financing.
Market Position
Partnerships with major hyperscalers solidify Credo's market position, providing a competitive edge and driving significant revenue contributions, which supports long-term growth.
Negative Factors
Inventory Levels
Rising inventory levels could strain cash flow and indicate potential overproduction or slowing demand, posing risks to operational efficiency and financial health.
Market Transition Delays
Delays in transitioning to new optical technologies may hinder Credo's ability to capitalize on emerging market opportunities, impacting growth prospects in the optical segment.
Tariff Regime Impact
Uncertainty in tariff policies could lead to increased costs and pricing pressures, affecting profitability and competitive positioning in global markets.
Credo Technology Group Holding Ltd (CRDO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$29.33B
Dividend YieldN/A
Average Volume (3M)4.91M
Price to Earnings (P/E)249.4
Beta (1Y)2.94
Revenue Growth175.81%
EPS GrowthN/A
CountryUS
Employees500
SectorTechnology
Sector Strength88
IndustryCommunication Equipment
Share Statistics
EPS (TTM)0.34
Shares Outstanding172,995,590
10 Day Avg. Volume5,327,864
30 Day Avg. Volume4,908,456
Financial Highlights & Ratios
PEG Ratio-0.57
Price to Book (P/B)11.86
Price to Sales (P/S)18.51
P/FCF Ratio278.54
Enterprise Value/Market Cap0.66
Enterprise Value/Revenue32.31
Enterprise Value/Gross Profit48.96
Enterprise Value/Ebitda138.20
Forecast
1Y Price Target
$159.90Price Target Upside-5.70% 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 generates revenue primarily through the sale of its high-performance semiconductor products and optical interconnect solutions. The company's revenue model is based on direct sales to original equipment manufacturers (OEMs) and cloud service providers, who integrate Credo's technology into their data center infrastructure. Key revenue streams include product sales, licensing agreements for its patented technologies, and ongoing support and maintenance services. Significant partnerships with major technology firms and cloud providers also play a crucial role in expanding Credo's market reach and driving revenue growth, as these collaborations often lead to large-scale contracts and increased demand for their innovative solutions.
Credo Technology Group Holding Ltd Earnings Call Summary
Earnings Call Date:Sep 03, 2025
(Q1-2026)
| % Change Since: |
Next Earnings Date:Nov 26, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong performance with significant revenue growth and successful expansion in various market segments, including AEC and optical businesses. Despite challenges such as nonlinear growth patterns and inventory increases, the company's robust guidance and strategic positioning in emerging markets contribute to an overall positive outlook.Q1-2026 Updates
Positive Updates
Record Revenue Growth
Credo reported Q1 revenue of $223 million, reflecting a 31% sequential increase and a 274% year-over-year increase.
Strong Non-GAAP Financial Performance
Non-GAAP gross margin was 67.6%, with non-GAAP net income nearing $100 million, demonstrating significant financial leverage.
Expansion of AEC Market
AEC product line shows robust growth with diversification in customer base, including a fourth hyperscaler contributing to revenue.
Optical Business Momentum
Sustained strong momentum in optical business with expectations to double optical revenue in fiscal 2026.
Retimer Business Success
Ethernet retimer business achieved stronger results with PCIe retimer family gaining significant traction.
Positive Guidance and Outlook
Revenue guidance for fiscal 2026 is expected to be between $230 million and $240 million, with anticipated 120% year-over-year growth.
Negative Updates
Challenges in Nonlinear Growth Patterns
Shipment timing may lead to nonlinear growth patterns at a customer level, affecting predictability.
Inventory and Working Capital Increase
Q1 ending inventory was $116.7 million, up $26.6 million sequentially, affecting cash flow from operations.
Optical Market Transition Delays
Transition to 1.6 T optical transceivers is expected to take more time than anticipated, affecting market uptake.
Tariff Regime Impact
Current tariff regime remains fluid, potentially impacting future financial results.
Company Guidance
During the fiscal year 2026 first-quarter earnings call, Credo reported robust financial performance, with revenue reaching $223 million, marking a 31% sequential increase and a 274% year-over-year growth. The company achieved a non-GAAP gross margin of 67.6% and a non-GAAP net income of nearly $100 million. Demand for Credo's high-speed connectivity solutions, particularly in the AEC market, was fueled by strategic partnerships with hyperscalers, with three contributing over 10% of revenue. As the company anticipates significant year-over-year growth, it expects continued diversification in customers, protocols, and applications. Credo's optical business sustained strong momentum, aiming to double its optical revenue, while its Ethernet retimer business saw stronger results, positioning the company for PCIe design wins in 2025, with production revenue anticipated in 2026. Credo projects around 120% year-over-year growth for fiscal 2026, with non-GAAP net margins expected to be approximately 40% in the coming quarters.Credo Technology Group Holding Ltd Financial Statement Overview
Summary
Credo Technology Group exhibits strong financial health with significant revenue and profit growth, efficient operational management, and a stable balance sheet. The company has effectively managed its leverage and demonstrated robust cash flow generation, positioning it well for future growth and stability in the communication equipment industry.Income Statement
Credo Technology Group has demonstrated strong revenue growth with a 37.4% increase in the TTM period, supported by a robust gross profit margin of 65.98%. The net profit margin has improved significantly to 20.85%, indicating enhanced profitability. The EBIT and EBITDA margins also show healthy figures at 19.52% and 23.38% respectively, reflecting efficient operational management.85
Very Positive
Balance Sheet
The balance sheet is solid with a low debt-to-equity ratio of 0.02, indicating minimal leverage and financial risk. The return on equity is strong at 18.89%, showcasing effective use of equity to generate profits. The equity ratio stands at 86.32%, highlighting a stable financial structure with a high proportion of equity financing.78
Positive
Cash Flow
Cash flow performance is impressive with a substantial free cash flow growth rate of 222.06% in the TTM period. The operating cash flow to net income ratio is 1.17, indicating strong cash generation relative to net income. The free cash flow to net income ratio of 0.74 further supports the company's ability to generate cash from its operations.82
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 600.13M | 436.77M | 192.97M | 184.19M | 106.48M | 58.70M |
| Gross Profit | 395.99M | 282.91M | 119.43M | 106.19M | 64.02M | 38.28M |
| EBITDA | 140.30M | 59.94M | -22.52M | -9.31M | -14.04M | -23.02M |
| Net Income | 125.12M | 52.18M | -28.37M | -16.55M | -22.18M | -27.51M |
Balance Sheet | ||||||
| Total Assets | 905.17M | 809.26M | 601.93M | 397.29M | 375.69M | 155.49M |
| Cash, Cash Equivalents and Short-Term Investments | 479.65M | 431.34M | 410.00M | 217.81M | 259.32M | 103.76M |
| Total Debt | 15.61M | 16.04M | 13.87M | 15.50M | 17.19M | 0.00 |
| Total Liabilities | 123.79M | 127.67M | 61.73M | 49.65M | 41.53M | 210.92M |
| Stockholders Equity | 781.38M | 681.58M | 540.20M | 347.63M | 334.16M | -55.43M |
Cash Flow | ||||||
| Free Cash Flow | 93.47M | 29.02M | 17.09M | -46.33M | -48.41M | -48.42M |
| Operating Cash Flow | 126.49M | 65.08M | 32.74M | -24.61M | -30.83M | -42.36M |
| Investing Cash Flow | 1.69M | 111.99M | -249.49M | -130.94M | -17.58M | -6.06M |
| Financing Cash Flow | -12.30M | -7.73M | 175.28M | 4.88M | 204.18M | 77.89M |
Credo Technology Group Holding Ltd Technical Analysis
Positive
169.56
Price Trends
122.52
Positive
96.52
Positive
77.85
Positive
Market Momentum
14.72
Negative
75.34
Negative
83.71
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 169.56 is above the 20-day moving average (MA) of 143.38, above the 50-day MA of 122.52, and above the 200-day MA of 77.85, indicating a bullish trend. The MACD of 14.72 indicates Negative momentum. The RSI at 75.34 is Negative, neither overbought nor oversold. The STOCH value of 83.71 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 |
|---|---|---|---|---|---|---|---|
77 Outperform | 32.97B | 31.56 | 5.11% | 2.08% | 14.39% | -38.96% | |
76 Outperform | 19.52B | 142.91 | 5.05% | ― | 12.97% | 4.71% | |
76 Outperform | $29.33B | 249.39 | 18.75% | ― | 175.81% | ― | |
72 Outperform | 38.46B | 54.05 | 106.53% | 0.41% | 33.45% | 103.34% | |
69 Neutral | 27.18B | 16.10 | 20.02% | 3.38% | 0.98% | 0.00% | |
62 Neutral | 25.38B | 24.33 | 6.18% | 3.27% | -2.39% | 157.33% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
Performance Comparison
CRDO
Credo Technology Group Holding Ltd
169.56
139.77
469.18%
CIEN
Ciena
138.37
76.69
124.34%
ERIC
Telefonaktiebolaget LM Ericsson
8.07
0.67
9.05%
NOK
Nokia
4.74
0.54
12.86%
UI
Ubiquiti Networks
635.65
417.43
191.29%
HPE
Hewlett Packard Enterprise
24.99
6.66
36.33%
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.