30 Best and Worst Data Center Stocks

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8. Credo Technology Group Holding Ltd (NASDAQ:CRDO)

Upside Potential: 35%

Number of hedge funds: 30

Credo Technology Group Holding Ltd (NASDAQ:CRDO) is a recent addition to the stock market, having gone public in 2022. The company is renowned for providing innovative, secure, high-speed connectivity solutions that enhance power and cost efficiency in the infrastructure market. Their primary products include active electrical cables (AECs), optical digital signal processors (DSPs), line card retimers, SerDes chiplets, and SerDes IP licenses, all of which enable high-speed connectivity within data centers.

Credo Technology Group Holding Ltd (NASDAQ:CRDO)’s management believes that AI cluster architectures are rapidly evolving due to advancements in processing, cooling, and power sourcing. These advancements are making clusters increasingly dense and scalable, creating significant opportunities for high-speed connectivity solutions to prevent service disruptions. Management has anticipated an ‘inflection point’ in its revenue and business momentum for several quarters and announced reaching this milestone in the second quarter of 2025, which led to a strong rally in the share price in 2024. The CEO highlighted:

“While we’re proud of our achievements, we are also optimistic about the future of our AEC business. We believe that we are still in the early stages of widespread market adoption and we are well positioned as the market leader. AI driven demand for high-speed power efficient and reliable connectivity is accelerating. I am pleased to share that the turning point has arrived, and we are experiencing even greater demand than initially projected.”

The stock received a number of rating and target price upgrades following strong Q3 earnings and positive management commentary. Immediately after the December results announcement, a Bank of America analyst double upgraded Credo Technology Group Holding Ltd (NASDAQ:CRDO) stock from Underperform to Buy. The analyst’s positive investment thesis is based on the company’s transition towards a more profitable earnings growth model and the multi-year adoption cycle for its AEC product. However, he also highlighted the stock’s premium valuation and intensifying competition in the AEC market as potential risks to the upside. The stock has surged by an impressive 274% since January 2024 (as per closing prices on January 26th, 2025), leading to a cautious market outlook on further upside.

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