CRDO's double digits correction has been well warranted, as the AI bubble burst thanks to DeepSeek, intensified tariff war, and decelerating infrastructure chip sales. The selloff has already triggered an improved upside potential as the connectivity company delivers triple digits topline growth, richer profit margins, and growing hyperscaler partnerships. CRDO's long-term data center related prospects remain extremely bright, as guided by numerous hyperscalers, NVDA, and TSM in the recent earning calls.
Shares of Credo Technology declined this week despite the company reporting strong fiscal Q3 2025 results and providing guidance for Q4 2025 that was well above the Street consensus. Negative industry sentiment and the recent correction of high-growth tech stocks are the likely culprits, and Credo's valuation is also asking for a lot of growth. Credo is delivering exceptional growth and exceeding expectations, and it is a stock worth watching.
Credo Technology's stock is severely undervalued, trading at a 0.52x adjusted PEG ratio, significantly lower than the industry average, despite strong revenue and EPS growth. The company reported a substantial revenue increase of 87% QoQ and 154% YoY in Q3, beating consensus estimates by 12.17%, and EPS by 36.53%. Credo's growth is driven by high demand for faster, energy-efficient connectivity and AI infrastructure, with promising future revenue diversification reducing customer concentration risks.
Credo Technology suffers from competitive pressures and macroeconomic uncertainties despite growing demand for AI-driven solutions.
Shares of Credo Technology (CRDO 7.74%), which makes high-speed connectivity solutions for data centers, declined 2.9% in Tuesday's after-hours trading, following the company's release of its report for the third quarter of its fiscal year 2025 (ended Feb. 1).
Credo Technology Group Holding Ltd (NASDAQ:CRDO ) Q3 2025 Earnings Conference Call March 4, 2025 5:00 PM ET Company Participants Dan O'Neil - VP, Corporate Development and IR Bill Brennan - CEO Dan Fleming - CFO Conference Call Participants Vivek Arya - Bank of America Securities Tom O'Malley - Barclays Karl Ackerman - BNP Paribas Quinn Bolton - Needham & Company Tore Svanberg - Stifel Vijay Rakesh - Mizuho Sean O'Loughlin - TD Cowen Christopher Rolland - Susquehanna Richard Shannon - Craig-Hallum Suji Desilva - ROTH Capital Operator Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode.
Credo Technology Group Holding Ltd. (CRDO) came out with quarterly earnings of $0.25 per share, beating the Zacks Consensus Estimate of $0.18 per share.
I expect a blowout Q3 FY2025 quarter from Credo Technology - it should help the stock price recover from the current dip soon. Credo's impressive growth in AI infrastructure and strong customer base (Amazon, Microsoft, Tesla) support its valuation and future potential. CRDO's non-GAAP forward PEG ratio is by 1/3 lower than the sector's norms. Credo's technicals and PEG ratio indicate strong growth prospects.
CRDO's fiscal third-quarter performance is set to gain from AI demand, but valuation and competition risks make it a cautious bet.
The launch of Chinese AI model DeepSeek erased nearly $1T from the stock market, impacting AI and semiconductor stocks. Tariffs on Chinese imports and the Trump administration's tougher line on semiconductor exports have ignited trade tensions between the two nations, increasing risks for semiconductor stocks with China exposure. However, super-charged growth in the AI sector has led some analysts to remain bullish on U.S. chipmakers.
Credo is successfully capitalizing on surging AI-driven data center demand through specialized high-speed connectivity products. The company's Q2 revenue grew 21% QoQ and 64% YoY, demonstrating strong market adoption. Credo should be able to invest aggressively in R&D while scaling, due to its profitability, healthy gross margins, and low debt levels.
Credo Technology Group Holding Ltd's product isn't groundbreaking, but the AI boom makes it valuable. Its smart copper cables solve a growing problem in data centers, pushing its sales and stock price up fast. Market timing, not product innovation, is Credo's biggest win. The company has been around for years, but only now—thanks to AI-driven data center expansion—is its technology getting serious traction. Valuation is high, but growth is real. With sales surging and Wall Street projecting big gains, CRDO stock looks pricey, but momentum and market demand could keep pushing it higher.