Venu
Position Trader, Market Leaders, Fundamental/Technical Analysis
Credo's growth story remains very strong even as the stock suffers one of its four largest drawdowns as a public company, nearly 50% off its highs. Revenue went from $193M in 2024 to over $1.3B in 2026, with estimates near $3.9B for 2028 and over $5B for 2029, and EPS estimates rise from about $3.5 in 2025 to over $12 by 2028, nearly 4x in three years. x.com x.comÂ
Credo Technology's projected earnings acceleration adds a fundamental case to its optical-connectivity rerating thesis. Venu_7_ projects EPS rising from $0.31 in FY25 to $12.45 by FY29; that forecast, rather than realized earnings, underpins the call to own Credo. x.comÂ
Credo's near-total share of AI data-center cables and unchanged estimates make its lower multiple look like a fear-driven opportunity. Its stock went from 27x to 20x forward earnings while the supply chain building those systems guided 2027 revenue to double. Buyers this week will probably be very happy a year from now. x.comÂ
Credo needs a slightly lower price before adding. FY28 EPS of about $10, a 70% growth rate from today, would support a $350 stock at 35x, a 0.5x PEG. x.comÂ
Credo's repeatedly conservative guidance and quarterly beats suggest analysts understate next year's EBIT. It trades at 15x their estimate, but likely 12-13x next year's EBIT if management's guidance holds. Management has executed as well as almost any company in recent years, and the multiple could easily end up closer to 10x than 15x. x.comÂ
Credo looks cheap against its earnings at about 17.5x next year's EPS, versus the roughly 38x chipmakers usually get. At 38x the $9.63 forecast EPS, give or take 12%, fair value is about $322-410, leaving the stock near $168 about 48% below the low end. The view leans heavily on forecasts, as forward EPS is 284% above trailing, and it is a valuation-levels read rather than fundamental work. x.comÂ
Credo is a trade rather than a long-term hold because co-packaged optics is the technology that closes the copper-to-optics gap its retimers and active electrical cables fill. If CPO ramps faster than expected in the 2027 architecture cycle, those products get designed out. That is not a 2026 problem, but it is why a decelerating hyper-growth chipmaker can't keep a 15x sales multiple forever. Customer concentration, which hit the stock before, adds risk, and Credo fits no AI endgame theme. x.com … Show more
Credo's revenue is projected to double by 2029, which makes the stock hard not to be bullish on. x.comÂ
Credo is a steal at about 70 times forward free cash flow given how fast cash generation is growing, supporting a raised target of $280 by the end of 2027. Revenue is expected to grow more than 80% year over year, and free cash flow reached about $178 million this quarter, up over 225%, with a credible path to roughly $600 million a year. It has no debt and expanding profitability. Any after-hours weakness misses the point; what matters is where the stock will be next year. x.comÂ
Credo is buying its re-acceleration at a flat gross margin, and at 36 times forward earnings, growth without margin is worth less. Q2 revenue guidance of $525-535M topped the $514.7M consensus, but non-GAAP gross margin went 68.6%, 68.3%, 68.0% and is guided at 67-69% again, while the beat over estimates shrank from 41% to 0.8%. Three customers are 77% of revenue. Credo sells copper, and Marvell expects scale-up optics from 2027. A print above 69% on $530M would prove this too cautious. x.com … Show more
Credo is one of the cheapest AI growth stocks, trading around 26x forward earnings after a hard correction while revenue grew 115% to $479M and full-year growth is guided above 85%. Margin worries mostly reflect DustPhotonics amortization and stock comp; non-GAAP gross margin held near 68%. DustPhotonics adds a second engine in optics, with over $600M expected this year, and Credo's low-laser designs can ship through the laser shortage. One customer at about a third of revenue is the main risk. … Show more