We recently compiled a list of the 15 Best New Tech Stocks To Invest In. In this article, we are going to take a look at where Credo Technology Group Holding Ltd (NASDAQ:CRDO) stands against the other feminist stocks.
On January 8, Rashaun Williams, Atlanta Falcons limited partner and venture capitalist, joined “Closing Bell” on CNBC to discuss his investment strategy and his outlook on the IPO market as 2025 began. He acknowledged the high expectations for a revival in the tech sector’s IPO activity but noted that such optimism required multiple factors to align perfectly, something that had not yet occurred. Despite this, he emphasized the importance of holding onto optimism, as the tech IPO market continues driving innovation and economic growth. Williams highlighted that while the primary IPO market faced challenges, the secondary market had gained prominence, which provided liquidity for founders and employees. This ensured that companies could sustain themselves through downturns.
Williams also discussed his perspective as an alternative investment manager and noted a shift in investor interest toward alternative assets. Over the past year, he observed heightened enthusiasm for late-stage tech companies, particularly those focused on AI and cybersecurity. These sectors have been pivotal in driving activity within his portfolio and funds. He emphasized that late-stage AI companies are generating substantial interest due to their transformative potential and alignment with current technological trends.
On the same day, Keith Fitz-Gerald, principal of Fitz-Gerald Group, also appeared on CNBC on ‘The Exchange’ to discuss his bullish case for tech. As 2025 began, the tech sector experienced a notable decline, with the NASDAQ 100 falling 1.5%, largely due to NVIDIA’s 5% drop, which shaved 90 points off the index. Despite this, Fitz-Gerald viewed the downturn as an opportunity. He highlighted the imminent monetization of AI and described the recent rally as child’s play, and predicted that the S&P 500 could exceed 7,000 by midyear, which was a bold claim grounded in his belief in the strength of US-based AI companies with dominant market positions and profit margins.
On concerns about high valuations, he acknowledged historical trends linking elevated P/E ratios to lower returns but argued that this is misleading for digital companies. He explained that businesses benefiting from economies of scale, like those in AI, naturally exhibit higher P/E ratios due to minimal costs for acquiring incremental customers. This signal strength rather than overvaluation. He dismissed concerns about the current market softness and characterized it as a technical sell-off due to large traders reallocating funds rather than a reflection of weak fundamentals. He said that AI’s expansion and the trillions being invested into it mark only the beginning of a transformative era for tech.
Methodology
We first used the Finviz stock screener to look for companies that went public in the past 3 years. We sorted our screen by IPO date and market cap and looked through the top 35 stocks that recently went public and are trading at a valuation of over $1 billion. We then selected 15 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024.
Why are we interested in 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 Capitalization as of January 21: $13.21 billion
Number of Hedge Fund Holders: 30
Credo Technology Group Holding Ltd. (NASDAQ:CRDO) provides high-speed connectivity solutions for data centers and networking applications. It develops and delivers innovative optical and electrical interconnect solutions (including SerDes, PHY chips, and active cables) to different hyperscalers, OEMs, and other key players in the industry. Its solutions enable fast and reliable data transfer.
Stifel analyst Tore Svanberg raised the price target on the company to $85 from $80 while maintaining a Buy rating. Stifel emphasized the importance of active copper technology over optical and passive cable solutions. The firm believes that Credo Technology Group Holding Ltd. (NASDAQ:CRDO) is positioned to capitalize on the growing AI-driven data center spending. It made a record revenue of $72 million in FQ2 2025 due to the demand for its AEC (Active Electrical Cable) products.
AI-driven data center architectures necessitate high-speed, reliable, and power-efficient connectivity solutions. Credo Technology Group Holding Ltd.’s (NASDAQ:CRDO) AECs excel in this environment by offering superior performance compared to traditional optical solutions. These AECs eliminate Link Flaps, which are momentary disruptions in network links that are costly in AI clusters due to significant downtime and loss of productivity. The company anticipates growth in AEC demand as AI deployments accelerate across the data center ecosystem.
TimesSquare Capital Management expressed its preference for companies like Credo Technology Group Holding Ltd. (NASDAQ:CRDO) that provide critical systems and benefit from growing IT budgets. The firm highlighted its Q2 performance and positive outlook which is driven by AI spending. Here’s what the Q2 2024 investor letter stated:
“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 4th on our list of the new tech stocks to invest in. While we acknowledge the potential of CRDO as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an 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.
