Credo Technology Analyst Double Upgrades AI Play, Raises Forecast By Almost 200%

Credo Technology Group Holding Ltd CRDO shares jumped almost 40% in early trading on Tuesday.

The visibility into the company's growth inflection in the back half of the year improved significantly, according to BofA Securities.

Analyst Vivek Arya upgraded the rating for Credo Technology from Underperform to Buy while raising the price target from $27 to $80.

The Credo Technology Thesis: The company delivered a "solid beat and material raise" quarter, Arya said in the upgrade note.

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Credo Technology's outlook suggests "the start of a multi-year adoption cycle for its Active Electrical Cable (AEC) product that enables power-efficient AI clusters," he added.

The company's earnings call addressed the concerns around the market for AEC, "with 3x 10% customers," including Microsoft Corp MSFT, Amazon.com Inc AMZN and Tesla Inc TSLA as well as "growing momentum in other adjacent areas (optical DSP, line card PHY, retimer)," the analyst stated.

Credo Technology is likely to generate robust results in the back half of fiscal 2025, "driven by strong AI growth at Amazon Web Services, a key customer (and investor)," he further wrote.

CRDO Price Action: Shares of Credo Technology had risen by 49.24% to $71.34 at the time of publication on Tuesday.

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Photo: Courtesy Credo