Is CRDO The AI Stock You've Probably Missed? Why Retail Interest Has Rocketed 460% In A Year

• High-speed connectivity solutions provider Credo Technology’s stock has more than doubled this year.
• The company reportedly said that three of four hyperscalers would make up more than 10% of its revenue in the coming quarters, including two new hyperscaler customers.
•  JPMorgan expects the company to grow its revenue by more than 50% a year and earnings by more than 70% a year through 2028.

Shares of Credo Technology Group Holding Ltd. (CRDO), a provider of high-speed connectivity solutions, fell nearly 5% to $144.17 on Tuesday, with retail sentiment toward the stock shifting lower to ‘neutral.’  The pullback came after a four-day rally.

Retail following of the stock on Stockwits jumped nearly 460% over the past year. Notwithstanding Tuesday’s sell-off, the stock is up 115% year-to-date (YTD). Most recently, investment firm JPMorgan issued an upbeat commentary on the company that manufactures cables and chips to connect powerful artificial intelligence (AI) computers.

Credo Stock’s Stellar Rally

Credo stock has been on a broader uptrend ever since its sharp drop early this year, which culminated in a YTD low of $29.09 on April 7 amid the Trump tariff sell-off. Since then, the stock has run up to a high of $176.70 (Sept. 18 intraday high) before seeing a consolidation move.

Chart courtesy of Koyfin

More importantly, the rally has come on top of the 238% jump seen in 2024, with much of the upside coming in the final three months of the year.

AI Exposure Props Stock

Credo operates as a semiconductor company that has significant leverage in AI technology. A late July X post by Elon Musk touting xAI’s Colossus 2 data center facility showed purple cables behind servers connecting computers. According to a CNBC report, these purple cables, made from copper, are Credo’s signature offerings. Citing data from industry researcher 650 Group, the report stated that Credo’s cables cost between $300 and $500.

Outlining the importance of Credo’s cables. CEO Bill Brennan told CNBC that hyperscalers prefer the company’s cables because they are more reliable than fiber-optic cables. He reportedly said customers seek to avoid “link flap,” which happens when the optical cable connecting an AI cluster fails, sending them offline, costing hours or GPU time. 

Credo reportedly said that three of four hyperscalers would make up more than 10% of its revenue in the coming quarters, including two new hyperscaler customers.

JPMorgan Bullish On Credo Stock

Friday, JPMorgan initiated coverage of Credo stock with an ‘Overweight’ rating and a $165 price target, according to Barron’s, which implies 15% upside potential from Tuesday’s close. The firm’s analyst Joseph Cardoso believes that the company has strong and expanding relationships with the largest cloud service providers (CSPs). “This positions Credo well to benefit from growing demand for AECs [active electrical cables], placing the company on the trajectory for strong revenue growth and expanding margins in the coming years.”

The firm expects Credo to grow its revenue by more than 50% a year and earnings by more than 70% a year through 2028. It names Microsoft, Amazon, Meta, and xAI as Credo’s current customers, and Oracle and Alphabet as future customers.

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