A New All-Time High Is Coming Soon for Credo Technology Group

Key Points

• Credo Technology blew past estimates as strength from hyperscalers bleeds through into connectivity solutions.
• The company reports improved diversification and new client wins.
• Guidance led analysts to lift targets and lead the stock price to new all-time high levels.

Credo Technology Group’s NASDAQ: CRDO stock price surged 25% following its FQ4 earnings release and guidance update, and it will likely set a new all-time high soon. The results were strong and affirmed the company’s growing importance in the data center, high-performance computing, and AI industries.

Once dependent on Amazon NASDAQ: AMZN and Amazon Web Services for its business, new client wins among leading hyperscalers have established it as a leading purveyor of optical and electrical connectivity solutions to the global technology industry. 

The report's critical details are the Q4 strength, margin leverage, and guidance. The company’s $170.03 million in Q4 revenue is up 180% compared to last year and outpaced MarketBeat’s consensus by 650 basis points.

The revenue strength helped drive significant margin leverage, resulting in a GAAP profit versus last year’s losses and a 450% increase in adjusted profit. 

The net result is adjusted EPS of $0.35, compared to $0.07 in the previous year, $0.08 above the consensus forecast, or 2,900 basis points better than expected. 

The company issued strong guidance for the year, citing client wins, improving diversification, and a robust pipeline in the commentaries and conference call. The Q1 and full-year outlooks are both well above the analysts’ consensus, leading some to lift targets.

As it stands, the company forecasts 85% revenue growth, which may be exceeded due to the ramping of global data center activity. The estimates vary but generally agree that data center capacity will double to triple by the decade's end, a significant driver of demand for high-speed, power-efficient connectivity solutions.

Analysts Agree: Credo Technology Is a Buy

The initial analysts’ response to Credo’s news is bullish, aligning with trends that include steady coverage, firming sentiment, and a rising price target. The group unanimously rates the stock as a Buy and expects it to trade near $80 at the consensus and up to $90 at the high end. The first revision tracked by MarketBeat is a price target increase to $85, affirming that a move to the high-end range is likely.

That is significant for the gain, but also because the market will cross a vital pivot point and set a new all-time high, potentially triggering an influx of new money. 

Insiders, institutions, and short-sellers are a risk because they have been selling in 2025. Insiders and institutions are a potentially strong headwind for the market moving forward, as they effectively own 100% of the stock, leaving little for retail investors, and short-sellers are also in the mix.

Short interest wasn’t astronomically high in the mid-May report, but has been trending at elevated levels since late 2024, raising the risk that short sellers will reposition at a higher level despite the robust outlook. 

Credo Technology Is a Solid Investment in 2025

Credo Technology’s balance sheet raises no red flags for investors, reflecting only a healthy financial position and capital structure. There is an increase in total and current liability, but it is minimal in light of the company’s cash position and shareholder equity.

The company is net cash relative to its total liability, a feature few can boast, and equity is rising. Total leverage is about 0.15x the equity, providing a robust foundation for future growth efforts and potential for capital returns. 

The price action following the release is bullish and bearish at the same time. The stock price surged, topping out about 25% above the previous session’s close, but failed to hold all the gains. The resulting candle is bearish with a long upper wick indicating resistance at a critical level. That level is near the analysts’ consensus at $80 and may cap gains until later in the year.