We recently published a list of 10 Unstoppable Stocks to Buy in 2025. In this article, we are going to take a look at where Credo Technology Group Holding Ltd (NASDAQ:CRDO) stands against other unstoppable stocks to buy in 2025.
As per the recent earnings update by FactSet dated 24th January 2025, the Q4 2024 earnings season for the S&P 500 has seen a strong start. Notably, the percentage of S&P 500 companies publishing positive earnings surprises and the magnitude of earnings surprises are more than 10-year averages. The analysts anticipate YoY earnings growth rates of 11.3% and 11.6% for Q1 2025 and Q2 2025, respectively. For CY 2025, they project a YoY earnings growth of 14.8%.
Outlook for US Equities For 2025
UBS expects the S&P 500 to reach 6,600 by 2025. Despite the potential for tariff imposition, which can result in volatility over the short term, UBS expects that healthy US economic growth and structural tailwinds from AI might lend some support. The combination- resilient growth and lower Fed rates- has earlier been a powerful force for US stocks. History has suggested that when the Fed cut rates and the country did not enter recession, the broader US equities saw an increase of 18% on average in the 12 months after the first cut.
UBS also believes that the earnings season showcases strong AI capital spending intentions, which supports the positive outlook on technology stocks. Furthermore, the earnings growth continues to broaden into non-tech companies. The US deregulation and tax cuts might support this trend.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Growth Drivers for the US Equities
UBS expects that the US economic backdrop remains supportive, the broader market is less at risk from tariffs compared to other international markets, and structural trends around AI and power & resources boost the outlook. It believes technology, utilities, financials, and healthcare sectors are attractive in the US. The AI infrastructure spending is strong, and the firm expects that key semiconductor components required for AI will remain supply-constrained in 2025, supporting pricing. Furthermore, the tech sector is expected to benefit from an improvement in PC and smartphone end markets.
With respect to utilities, UBS expects that significant growth in AI data centers will fuel power demand, resulting in higher power prices. While the broader financials sector is expected to be aided by Fed rate cuts, the healthcare sector might see recovery in the next few months. This recovery is expected to be driven by higher healthcare spending and advancements in digitalization that can fuel efficiency and reduce costs.
Our Methodology
To list the 10 Unstoppable Stocks to Buy in 2025, we used a screener to filter out the companies having at least $2 billion of market capitalization. Next, we chose stocks that have gained more than 30% over the past 6 months and in which analysts expect an upside of at least 30%. Finally, the stocks were arranged in ascending order of their average upside potential, as of 27 January. We also mentioned the hedge fund sentiment around each stock, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An engineer in a cleanroom testing and tweaking an integrated circuit.
Credo Technology Group Holding Ltd (NASDAQ:CRDO)
Market Cap as of 27th January: $9.84 billion
Return Over Past 6 Months: ~103.1%
Average Upside Potential: ~34.8%
Number of Hedge Fund Holders: 30
Credo Technology Group Holding Ltd (NASDAQ:CRDO) offers various high-speed connectivity solutions for optical and electrical Ethernet applications. Mizuho analyst Vijay Rakesh upped the price objective on the company’s shares to $85 from $70, keeping an “Outperform” rating as part of the 2025 semiconductors and automotive technologies outlook. The analyst remains optimistic for the PHLX Semiconductor Sector in 2025. Furthermore, the firm anticipates continued strength in AI, custom silicon, and connectivity.
The increased adoption of AI clusters has been a key driver of Credo Technology Group Holding Ltd (NASDAQ:CRDO)’s recent success. Its solutions focus on enabling power-efficient AI clusters, a key factor as data centers plan to optimize energy consumption while scaling AI capabilities. The broader AI infrastructure market continues to witness significant growth, thanks to the increased adoption of AI technologies throughout industries. Credo Technology Group Holding Ltd (NASDAQ:CRDO)’s focus on power-efficient solutions for AI clusters remains in line with the broad-based trends, with data centers seeking to balance performance with energy consumption.
As AI workloads grow in complexity and scale, there are expectations of increased demand for high-speed and efficient connectivity solutions. TimesSquare Capital Management, an equity investment management company, released a Q2 2024 investor letter. Here is what the fund said:
“Among the wide variety of Information Technology companies, we prefer critical system providers, specialized component designers, systems that improve productivity or efficiency for their clients, and others that closely tie to increasing shares of corporate IT budgets. Credo Technology Group Holding Ltd (NASDAQ:CRDO), a supplier of high-speed connectivity solutions, surged ahead by 51%. The company reported inline April quarter results and management’s July quarter guidance met expectations; AI spending is a growth driver.”
Overall, CRDO ranks 6th on our list of unstoppable stocks to buy in 2025. While we acknowledge the potential of CRDO as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than CRDO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
