Credo Technology Group Holding Ltd Ordinary Shares
CRDO
$102.46
+1.00%
Credo Technology Group Holding Ltd is a technology company that designs and delivers high-speed connectivity solutions to address bandwidth bottlenecks in data infrastructure markets, operating within the Communication Equipment industry. The company is a niche player and technology enabler, specializing in secure, power-efficient connectivity solutions critical for the exponential growth in data rates across cloud, AI, and hyperscale data centers. The current investor narrative is heavily focused on its role as a critical enabler for AI infrastructure, with recent news highlighting a disconnect between its strong fundamental performance and a declining stock price attributed to broad market weakness, positioning it as a potential beneficiary of hyperscalers' massive AI investments.…
CRDO
Credo Technology Group Holding Ltd Ordinary Shares
$102.46
Related headlines
Investment Opinion: Should I buy CRDO Today?
Rating & Thesis: Hold. CRDO presents a compelling but high-risk growth story where exceptional fundamental progress is currently offset by extreme volatility and a valuation that demands perfection. The strong bullish analyst sentiment (7 analysts with recent Buy/Outperform ratings) and implied growth to a $7.05 forward EPS support a positive long-term view, but the severe technical breakdown advises caution for new capital.
Supporting Evidence: The recommendation is grounded in four key data points: 1) Explosive Q3 revenue growth of 201.5% YoY, 2) A rapid shift to profitability with net income of $157.1M and 68.5% gross margins, 3) A forward P/E of 21.5x that is digestible if the company hits its high-growth targets, and 4) A pristine balance sheet with minimal debt (D/E 0.024) and strong liquidity (Current Ratio 6.62). However, these are counterbalanced by a trailing P/E of 138.2x and a P/S of 16.5x, which are at a steep premium to industry peers, and a stock price down 29% in three months.
Risks & Conditions: The two biggest risks are a growth deceleration that crushes its premium multiple and continued broad market weakness exacerbating its high beta (2.72). This Hold rating would upgrade to a Buy if the stock stabilizes above key technical support (e.g., holds above $95), or if the forward P/E compresses further towards 18x while growth remains intact. It would downgrade to a Sell if quarterly revenue growth decelerates below 100% YoY or if gross margins contract significantly below 65%. On valuation, the stock is fairly valued to slightly overvalued relative to its own history after its recent derating, but it commands a justifiable premium relative to slower-growing peers due to its hyper-growth profile.
Sign up to view all
CRDO 12-Month Price Forecast
The AI assessment is neutral based on a clash between stellar fundamentals and perilous technicals. The company's hyper-growth and profitability trajectory are undeniable, but the stock's 29% three-month decline and extreme beta of 2.72 signal that market forces are currently in control. The forward P/E of 21.5x offers a reasonable entry point for the growth on offer, but only for investors with high risk tolerance. The stance would upgrade to bullish on a confirmed technical reversal (e.g., a sustained move above $120) or a downgrade to bearish on a breakdown of key fundamental metrics like gross margin or quarterly growth.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Credo Technology Group Holding Ltd Ordinary Shares's 12-month outlook, with a consensus price target around $133.20 and implied upside of +30.0% versus the current price.
Average Target
$133.20
7 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
7
covering this stock
Price Range
$82 - $133
Analyst target range
Credo is covered by 7 analysts, and the institutional sentiment is predominantly bullish, as evidenced by recent ratings actions including 'Buy' from Needham and Roth Capital, 'Outperform' from Mizuho, and 'Positive' from Susquehanna, with a consensus leaning strongly towards a positive recommendation. The average analyst target price is not explicitly provided in the data, but the estimated EPS average for the forward period is $7.05 on estimated revenue of $3.4 billion, implying significant growth expectations; the wide range between the low EPS estimate of $6.91 and high of $7.41, alongside a target price range that is data not available, suggests some variability in assumptions about future execution, competitive landscape, and AI-driven demand cycles, though the recent reaffirmations of bullish ratings post-earnings indicate underlying conviction in the growth story.
Bulls vs Bears: CRDO Investment Factors
The bull case, anchored in CRDO's demonstrable hyper-growth (201.5% YoY revenue increase) and rapid journey to high profitability (68.5% gross margin), currently holds stronger fundamental evidence. The bear case is primarily technical and sentiment-driven, citing a severe price correction (-29.2% in 3 months) and premium valuations that are vulnerable to compression. The single most important tension in the investment debate is whether the company's explosive fundamental performance can overcome the extreme volatility (beta 2.72) and negative momentum that have decoupled the stock price from its improving financials. The resolution of this disconnect will determine the next major price move.
Bullish
- Explosive Revenue Growth: Q3 FY2026 revenue of $407 million grew 201.5% YoY, accelerating sequentially from $268M in Q2 and $223M in Q1. This demonstrates hyper-growth driven by AI and data center demand, with analysts forecasting $3.4B in forward revenue.
- Rapid Profitability Turnaround: The company swung from a net loss a year ago to a Q3 net income of $157.1 million, with gross margins expanding to 68.5%. This showcases powerful operating leverage as scale increases, validating its business model.
- Strong Balance Sheet & Cash Flow: With a debt-to-equity ratio of 0.024 and a current ratio of 6.62, the company has minimal leverage and high liquidity. Trailing free cash flow of $283.7 million provides ample internal funding for growth, reducing financial risk.
- Strategic AI Infrastructure Enabler: As a critical provider of high-speed connectivity for AI data centers, CRDO is a direct beneficiary of hyperscalers' massive investments. Recent news highlights this rising tide, positioning it in a secular growth market.
Bearish
- Extreme Stock Price Volatility: With a beta of 2.72, CRDO is 172% more volatile than the market. The stock is down 29.2% over the past 3 months despite strong earnings, indicating it is highly susceptible to broad market sentiment shifts and momentum selling.
- Premium Valuation Multiples: A trailing P/E of 138.2x and a P/S ratio of 16.5x represent a significant premium to typical communication equipment peers. This leaves the stock vulnerable to multiple compression if growth expectations falter.
- Technical Downtrend & Correction: The stock has corrected 29.5% over six months from its 52-week high of $213.80 and recently tested a low of $87.81. This steep decline suggests a breakdown from overextended momentum levels, with key support far below at $29.09.
- High Growth Expectations Embedded: The market is pricing in sustained hyper-growth, with a forward P/E of 21.5x implying massive earnings expansion. Any deceleration in the 200%+ revenue growth rate or a miss on the $7.05 forward EPS estimate could trigger a severe re-rating.
CRDO Technical Analysis
The prevailing price trend for CRDO is a pronounced downtrend from recent highs, with the stock having declined 29.16% over the past three months and 29.49% over the past six months, despite a remarkable 135.71% gain over the past year. The stock closed at $101.45 on April 2, 2026, which positions it at approximately 47% of its 52-week range ($29.09 to $213.80), indicating it is trading near the midpoint but has fallen significantly from its peak, suggesting a substantial correction from overextended momentum levels. Recent short-term momentum shows a modest 4.27% gain over the past month, which contrasts sharply with the steep 3-month decline, signaling a potential attempt at stabilization or a bear market rally within the context of a larger correction; this divergence may indicate either a temporary relief bounce or the early stages of a trend reversal, though the stock's high beta of 2.72 suggests extreme volatility relative to the market. Key technical support is anchored at the 52-week low of $29.09, while immediate resistance lies at the recent highs near $213.80; a sustained breakdown below the recent March 2026 low of $87.81 could signal a continuation of the downtrend, whereas a breakout above the descending trendline would require significant momentum shift, with the stock's beta of 2.72 indicating it is 172% more volatile than the SPY, which necessitates careful risk management for investors.
Beta
2.72
2.72x market volatility
Max Drawdown
-53.6%
Largest decline past year
52-Week Range
$29-$214
Price range past year
Annual Return
+207.7%
Cumulative gain past year
| Period | CRDO Return | S&P 500 |
|---|---|---|
| 1m | -6.7% | -2.0% |
| 3m | -22.9% | -4.8% |
| 6m | -31.2% | -2.1% |
| 1y | +207.7% | +30.4% |
| ytd | -28.5% | -3.4% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
CRDO Fundamental Analysis
Credo's revenue trajectory exhibits explosive growth, with the most recent quarterly revenue for Q3 FY2026 reaching $407.01 million, representing a 201.5% year-over-year increase, and a sequential acceleration from $268.03 million in Q2 and $223.07 million in Q1, demonstrating a clear multi-quarter trend of accelerating growth driven by demand for its high-speed connectivity solutions in AI and data center markets. The company is solidly profitable, with net income of $157.14 million in Q3 and a robust gross margin of 68.5%, marking a significant expansion from a net loss position in the same quarter a year prior and showcasing a powerful turnaround to high profitability as operating leverage kicks in with scale. The balance sheet and cash flow position are exceptionally strong, with a debt-to-equity ratio of only 0.024 indicating minimal financial leverage, a current ratio of 6.62 reflecting ample liquidity, and trailing twelve-month free cash flow of $283.69 million, which provides substantial internal funding for growth and underscores a low financial risk profile.
Quarterly Revenue
$407012000.0B
2026-01
Revenue YoY Growth
+2.01%
YoY Comparison
Gross Margin
+0.68%
Latest Quarter
Free Cash Flow
$283694000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is CRDO Overvalued?
Given that Net Income is positive ($157.14 million in the latest quarter), the primary valuation metric selected is the Price-to-Earnings (PE) ratio. The trailing PE ratio is an elevated 138.2x, while the forward PE is a much lower 21.5x, indicating the market is pricing in exceptionally high earnings growth expectations for the coming year, with the forward multiple reflecting anticipated normalization of profitability. Compared to industry averages, CRDO's trailing PE of 138.2x and Price-to-Sales (PS) ratio of 16.5x are at a significant premium to typical Communication Equipment sector multiples, which often trade at lower earnings multiples; this premium is likely justified by the company's superior growth profile (over 200% YoY revenue growth) and its strategic positioning in the high-growth AI infrastructure ecosystem. Historically, the stock's own valuation has compressed from extreme levels, as its trailing PE of 138.2x is below the 1913x recorded in January 2024 but above the 35.2x from January 2026, suggesting the current multiple, while high, reflects a partial derating from peak optimism while still embedding expectations for sustained hyper-growth.
PE
138.2x
Latest Quarter
vs. Historical
High-End
5-Year PE Range -7974x~1913x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
116.6x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: CRDO's primary financial risk is not leverage or liquidity—its debt-to-equity of 0.024 and $283.7M in TTM FCF are strong—but rather the extreme growth expectations embedded in its valuation. A trailing P/E of 138.2x and a forward P/E of 21.5x require flawless execution of its $3.4B revenue forecast. Any quarterly deceleration from the current 200%+ growth trajectory could trigger a severe multiple contraction. Furthermore, while gross margins are robust at 68.5%, the company must maintain this premium pricing power against potential competitive incursions into the AI connectivity niche.
Market & Competitive Risks: The stock's beta of 2.72 signifies extreme sensitivity to broad market swings, as evidenced by its 29% decline over three months amid a flat-to-down market for the S&P 500. Trading at a significant premium to sector averages on both P/E and P/S multiples, CRDO is highly exposed to valuation compression if investor appetite for growth stocks wanes or if sector rotation occurs. Competitively, while well-positioned for the AI infrastructure build-out, the company is a niche player whose fortunes are tied to the capital expenditure cycles of a handful of hyperscalers, introducing customer concentration and cyclical risks.
Worst-Case Scenario: The most damaging scenario would involve a simultaneous slowdown in AI infrastructure spending, a competitive product launch that erodes pricing power, and a broader market downturn compressing growth stock multiples. This could cause revenue growth to decelerate sharply towards sector norms, collapsing the forward P/E multiple. The realistic downside could see the stock re-testing its recent March 2026 low of $87.81, representing a -13% decline from the current $101.45, or, in a more severe scenario, trending towards the 52-week low of $29.09, which would be a catastrophic -71% loss. A more probable adverse scenario, aligning with a bear-case analyst target, might see a -25% to -35% correction.
FAQ
The key risks are: 1) Valuation & Volatility Risk: The stock's high beta (2.72) and premium multiples make it vulnerable to sharp declines if growth expectations moderate or market sentiment sours. 2) Execution Risk: The forward P/E of 21.5x embeds flawless execution of a $3.4B revenue forecast; any stumble could trigger a severe re-rating. 3) Competitive & Cyclical Risk: As a niche enabler, CRDO's fortunes are tied to the capital expenditure cycles of hyperscalers, and technological shifts or new competitors could disrupt its strong gross margins (68.5%). 4) Technical Risk: The stock is in a pronounced downtrend, down 29% in three months, and a break below the recent $87.81 low could signal further declines.
The 12-month forecast is bifurcated, with a 50% probability Base Case target range of $120-$160, a 30% probability Bull Case target of $180-$214, and a 20% probability Bear Case target of $75-$95. The Base Case, which is most likely, assumes the company meets analyst consensus for ~$3.4B in revenue and $7.05 in EPS, with the stock's high volatility causing swings within a range. The key assumption is that the explosive growth moderates but remains robust, allowing the forward P/E multiple to stabilize. The wide range reflects the stock's high beta and the binary nature of its growth narrative.
CRDO's valuation presents a paradox. Its trailing P/E of 138.2x and Price-to-Sales ratio of 16.5x are at a significant premium to the communication equipment sector, suggesting overvaluation. However, its forward P/E of 21.5x, based on an estimated EPS of $7.05, appears reasonable if the company delivers on its hyper-growth trajectory. The market is paying a premium price for exceptional growth, implying expectations of sustained 100%+ revenue increases. Relative to its own history, the valuation has derated from extreme levels but remains elevated. It is fairly valued to slightly overvalued, with the premium justified only if growth persists.
CRDO is a compelling but high-risk buy for aggressive growth investors. The fundamental case is strong, with 201.5% YoY revenue growth, a rapid shift to profitability, and a strategic role in AI infrastructure. However, the stock's extreme volatility (beta 2.72) and 29% decline over three months mean timing is critical. It is a good buy for investors who believe the AI investment cycle has years to run, can tolerate significant short-term price swings, and are looking to enter at a forward P/E of 21.5x. Conservative investors should wait for more stable price action.
CRDO is primarily suitable for a long-term investment horizon of 3-5 years, allowing its hyper-growth story to play out and mitigating the impact of extreme short-term volatility (beta 2.72). The company is in a rapid growth phase with no dividend, making it unsuitable for income investors. Short-term traders could capitalize on its high volatility, but this requires sophisticated risk management due to the potential for large drawdowns (recent 3-month decline of 29%). For most investors, a long-term hold is advised to capture the potential of the AI infrastructure mega-trend, with a minimum suggested holding period of 18-24 months to see through several earnings cycles.