Credo Technology (CRDO): Future Prospects and Stock Price Outlook

This site is a great place for me (@mifsee(2) has been working on company and stock analysis while learning privately.

This is only a record of my personal analysis and the contents may contain errors or information that differs from the actual situation. Please understand in advance when viewing this site.

Introduction.

Credo Technology Group Holding (CRDO) is a provider of high-speed connectivity solutions for data centers and telecommunications networks. Growth is expected to be driven by increasing demand, especially in AI-related markets.

In the field of high-speed connectivity technology, we are leveraging our unique technological innovations and competitive advantages to increase our presence in the industry.

After the announcement of the financial results for the second quarter of FY2025, the share price grew rapidly due to the strong performance of the company and I focused my attention on this company.

In this section, we explore in detail Credo Technology's (CRDO) business, strengths, and future growth potential.

What is Credo Technology Group Holding (CRDO) and what does it do?

Credo Technology Group Holding (CRDO) is,a high-speed connectivity technology company headquartered in San Jose, California, U.S.A.
Established in 2014,Provides next-generation connectivity solutions for data centers and telecommunications networksThe company is doing so.

Credo Technology is,High-Performance Connectivity TechnologyThe company's business is based on the following three main areas of focus

1. Solutions for Data Centers
   Developed low-power interface technology for high-speed, large-capacity communications. Supporting data center efficiency and cost reduction.
2. Cloud Connectivity
   Provides reliable, high-speed network solutions for cloud service providers. We provide technologies that support the foundations of the next-generation Internet.
3. Solutions for AI and Machine Learning
   The company has developed technologies to streamline the massive data transfer required for training and inference of AI models. Specialized products that meet the demands of the AI market are particularly noteworthy.

Credo Technology's strengths lie in its product line of data transfer speed and energy efficiency and its presence in the rapidly growing data communications market.

The company's solutions contribute significantly to performance improvement and cost optimization in the cloud and data center industry.

Corporate information on Credo Technology Group Holding is below.

• Company Name:: Credo Technology Group Holding Ltd.
• Year Established: 2014
• Head Office Location: San Jose, California, U.S.A.
• representativeBill Brennan : Bill Brennan
• Official Site: https://credosemi.com/
• Main Businesses: Providing high-speed connectivity solutions for data centers, cloud, and AI.

What are Credo Technology Group Holding's (CRDO) main services?

Credo Technology Group Holding (CRDO) offers the following core services in the data infrastructure market

Provide high-speed connectivity solutions

The company offers optimized high-speed connectivity solutions for optical and electrical Ethernet applications with speeds ranging from 100 gigabits per second (G) to 1.6 terabits per second (T).

Product Family Expansion

• Integrated Circuit (IC)IC for the optical and line card markets.
• Active Electric Cable (AEC)AEC: AEC for high-performance data transmission.
• SerDes chipletChiplet: Highly efficient data serialization/deserialization.

Providing Intellectual Property (IP) Solutions

The company provides intellectual property solutions consisting primarily of SerDes IP licenses to assist other companies in developing their products.

Through these services, Credo Technology is solving bandwidth challenges in the data infrastructure market, enabling high-speed, power-efficient connectivity.

What are the features and technical capabilities of the high-speed connectivity solution?

Credo Technology (CRDO) provides high-speed, power-efficient connectivity solutions to solve bandwidth challenges in the data infrastructure market.

Main Features and Technical Capabilities

• HiWire Active Electric Cable (AEC)
  Technology for high-performance data transmission; supports 100G, 200G, 400G, and 800G data rates and operates with low power consumption.Flexible configuration options to meet the diverse needs of data centers and AI networks.Compared to conventional active optical cables (AOC), reliability and signal integrity are enhanced.
• SerDes chiplet technology
  Designed for high-speed data transmission. Enables fast and efficient communication while minimizing the number of interconnects.Designed for high performance yet low power consumption to improve energy efficiency.
• Optical Digital Signal Processor (DSP)
  Technology for high bandwidth; supports 100G to 800G modules to help build cloud-scale and hyperscale data centers.It is also compatible with next-generation networks and supports optical interconnect for 5G wireless service providers.

Utilizing these technologies, the company provides secure, high-speed connectivity solutions that can handle rapid increases in data rates.

What is the trading market?

Credo Technology Group Holding is listed on the NASDAQ market in the United States. Its ticker symbol is "CRDO."

What are Credo Technology's (CRDO) sectors, industries, and themes to which it belongs?

sector

Information Technology:CRDO is a company in the information technology sector. The company provides high-speed connectivity solutions for data centers and telecommunications networks. The company's technology helps to meet increasing data rates and bandwidth requirements and improve power efficiency.

type of industry

Semiconductors:CRDO is a developer and provider of integrated circuits (ICs) and active electrical cables (AECs) based on serializer-deserializer (SerDes) and digital signal processor (DSP) technologies. The company provides high-speed, power-efficient connectivity in data centers and telecommunications networks.

Themes belonging to

Enhanced cloud connectivity and AI infrastructure:CRDO provides fast and reliable connectivity solutions for cloud service providers and AI applications. The company will help build next-generation data infrastructure and grow in the AI market.

Dividends?

Credo Technology Group Holding (CRDO) does not currently pay a dividend.

Who are the competitors of Credo Technology (CRDO)?

Credo Technology Group Holding (CRDO)'s main competitors are.

• Broadcom (AVGO): A U.S.-based semiconductor company. Provides a variety of connectivity solutions for the data center and networking markets. Competes with CRDO, especially in high-speed data transfer technology.
• Marvel Technology (MRVL): A U.S. semiconductor company. Deploys storage, networking, and connectivity solutions. Competes with CRDO in high-speed connectivity technology in the data center and cloud markets.
• Montage Technology: A Chinese semiconductor company. Provides memory interface chips and high-speed interconnect solutions. Competes with CRDO in high-speed connectivity technology in the data center market.
• Parade Technologies, Inc.: A Taiwanese semiconductor company. Provides display and high bandwidth data transfer solutions. Competes with CRDO in high-speed interface technology.
• Microchip Technology (MCHP): A U.S. semiconductor company. Provides microcontrollers and analog semiconductor products. Competes with CRDO in connectivity solutions for the data center and telecommunications markets.
• Rambus (RMBS): A U.S. semiconductor company. Provides microcontrollers and analog semiconductor products. Competes with CRDO in connectivity solutions for the data center and telecommunications markets.

These companies compete in a similar market to CRDO, offering high-speed connectivity solutions for data centers and cloud service providers.

What is the size and growth potential of the industry to which Credo Technology (CRDO) belongs?

The data center and high-speed interconnection solutions industry, of which Credo Technology Group Holding (CRDO) is a part, has experienced significant growth in recent years.

Data center market size and growth potential

What is the size of the global data center market?Estimated at about $341 billion in 2023 and projected to reach $367 billion in 2024The total amount of the market is estimated to be $3.5 trillion by 2032. Furthermore, it will expand to 464.6 billion dollars by 2032,The compound annual growth rate (CAGR) during the forecast period is expected to be 10.301 TP3T.

Size and Growth Potential of the High-Speed Interconnection Solutions Market

The high-speed interconnect product market is worth approximately $1,987.2 million in 2022.It is projected to reach approximately $5.892 billion in 2029. The CAGR during this period is 16.51 TP3T.

growth factor

Growth in these markets is primarily driven by increased data demand due to the spread of AI and cloud computing. In particular, the increase in AI-related data processing capacity has led to the construction and expansion of new data centers. However, securing equipment, land, and electricity to build data centers has been a challenge, and supply has not kept pace with demand.

These market trends provide a favorable environment for Credo Technology's business development. The company's high-speed connectivity solutions are positioned as a key technology to meet the growing data demands.

What are the differentiating factors and advantages of Credo Technology (CRDO) over the competition?

Credo Technology Group Holding (CRDO) differentiates itself from its competitors in the following ways

 Focus on AI infrastructure

The company has been active in the AI infrastructure market,Expand customer base, especially in enterprise and hyperscale data centers.By this strategy,AI-related revenues increasedThe number of new jobs is expected to double by the end of fiscal year 2025, compared to the previous year.

High performance and low power consumption solutions

Credo Technology offers optimized high-speed connectivity solutions for optical and electrical Ethernet applications with speeds ranging from 100G to 1.6T.These products offer high performance and low power consumptionThe company is contributing to the efficiency of data centers and telecommunication networks.

Diverse product portfolio

The company's diverse product portfolio includes integrated circuits (ICs), active electrical cables (AECs), and SerDes chiplets, providing flexible solutions to meet the diverse needs of its customers.

These differentiators give Credo Technology an edge over its competitors and strengthen its position in the data infrastructure market.

Credo Technology (CRDO) Financial Results

Credo Technology Group Holding's (CRDO) financial year ends on April 30.

The quarterly schedule of financial results announcements is as follows

• First Quarter ResultsLate Aug.
• Second Quarter Financial ResultsLate Nov.
• Third Quarter ResultsLate Feb.
• Fourth Quarter and Full Year ResultsLate May

First, we will review the following four indicators to perform a minimum performance analysis of Credo Technology (CRDO).

1. Sales:An indicator of a company's performance and growth.
2. Operating cash flow and operating cash flow margin:An indicator that looks at how much cash a company generates from its services. Margins are considered excellent when they are 15% of that ratio.
3. Operating Income:Profit earned by a company from its core business. An indicator to evaluate a company's performance.
4. Free Cash Flow:Free cash that a company keeps on hand. Indicates financial flexibility and business stability.
5. EPS:An indicator that looks at a company's earning power "profitability" and "growth potential" in terms of net income per share. The higher the number, the higher the profitability.

Each data is,Investing.com, ,TradingViewSee from

Credo Technology (CRDO) Stock Price

View the current real-time stock price chart (TradingView) for Credo Technology (CRDO).

The chart shows the Relative Strength Index (RSI). Reference as an indicator of market overheating.

*An overbought indicator when the RSI exceeds 70% to 80%, and conversely, an oversold indicator when the RSI falls below 20% to 30%.

Credo Technology (CRDO) Quarterly: Sales Trends

Quarterly sales forecasts and actual sales and year-on-year changes.

Sales forecasts and actual results are shown in graphs.

Credo Technology (CRDO) Quarterly: Operating Cash Flow and Free Cash Flow Trends

Quarterly operating cash flow, operating cash flow margin and free cash flow.

Each transition is shown in the graph below.

Credo Technology (CRDO) Quarterly: Operating Income and Operating Margin Trends

Quarterly operating income and operating margin trends.

Each transition is shown in the graph below.

Credo Technology (CRDO) Quarterly: EPS Trends

Quarterly EPS forecast and actual EPS.

Each transition is shown in the graph below.

Credo Technology (CRDO) Full Year: Sales Trends

This is the sales forecast for the full year and actual sales and year-on-year changes.

Each transition is shown in the graph below.

Credo Technology (CRDO) Full Year: Operating Cash Flow and Free Cash Flow Trends

Operating cash flow, operating cash flow margin and free cash flow for the full year.

Each transition is shown in the graph below.

Credo Technology (CRDO) Full Year: Operating Income and Operating Margin Trends

The following is a trend of operating income and operating income margin for the full year.

Each transition is shown in the graph below.

Credo Technology (CRDO) Full Year: EPS Trends

This is the EPS forecast and actual EPS for the full year.

Each transition is shown in the graph below.

What is the future life and outlook for Credo Technology (CRDO)?

Credo Technology is expected to have a promising future, especially with the increasing demand in AI-related markets.

Strong performance

In the second quarter of fiscal year 2025, the company posted adjusted earnings per share (EPS) of $0.07 and sales of $72 million, representing an increase of $641 TP3T over the same period last year. This growth was due to increased demand for AI-enabled products.

Growing demand in the AI market

Increased demand for AI-related products has driven the company's stock price to record highs. In particular, the company's aggressive entry into the AI infrastructure market is helping to expand its customer base of enterprise and hyperscale data centers.

Future Outlook

CRDO offers innovative Ethernet connectivity solutions for port speeds from 100G to 1.6T. In particular, the company's Active Electric Cable (AEC) excels in maintaining signal integrity, optimizing power efficiency, and providing reliability as the AI cluster architecture evolves.

These factors suggest that Credo Technology is expected to continue to grow.

Credo Technology (CRDO) Q1 2025 Financial Summary

Date of announcement: 24/09/05 

Sales and Revenues

• total sales: $59.71 million (up 701 TP3T from the same period last year).
  • Product sales: $53.84M (+80% y/y)
  • Product engineering service sales: $3.48 million (up 521 TP3T from the same period last year).
  • IP license sales: $2.38 million (down $141 TP3T from the same period last year).
• GAAP Gross Margin: 62.4%.
• Non-GAAP Gross Margin: 62.9%.
• GAAP net loss: $9.54 million (improved from $11.69 million in the same period last year).
• Non-GAAP Net Income: $7.03 million (turned profitable from a deficit in the same period of the previous year).
• Non-GAAP Earnings Per Share: $0.04.

Costs and Profit Margins

• GAAP Operating Expenses: $51.73 million (+471 tp3t y/y).
• Non-GAAP Operating Expenses: $35.37 million (+291 TP3T y/y).
• Operating income (Non-GAAP): $2.18 million (turned profitable from an operating loss of $6.42 million in the same period of the previous year).

Cash Flow and Financial Condition

• Cash and short-term investments: $398.6M (-5% y/y).
• Operating Cash Flow: Positive (negative in the same period of the previous year).

Major Business Developments

1. Growth in AI-related demand:
   • Demand for high-bandwidth connectivity solutions for AI infrastructure drives sales.
   • Custom connectivity solutions are adopted by major customers.
2. Product Portfolio Expansion:
   • Increased product adoption in the optical and telecommunications markets.
3. technological innovation:
   • Introduce new technologies to eliminate bandwidth bottlenecks and improve power efficiency.

Future Guidance

• FY2025 2nd Quarter Forecast:
  • Sales forecast: $65-$68 million.
  • GAAP gross margin: 61.31 TP3T to 63.31 TP3T.
  • Non-GAAP gross margin: 62.01 TP3T to 64.01 TP3T.
  • GAAP operating expenses: $51.33 million to $53.33 million.
  • Non-GAAP operating expenses: $36-$38 million.

Credo Technology continues to grow on the back of increasing demand in the AI and high bandwidth connectivity markets. In particular, demand for products for AI is accelerating sales and revenue growth, and continued market expansion is expected in the future.

Credo Technology (CRDO) Q2 2025 Financial Summary

Date of announcement: 24/12/03

Sales and Revenues

• total sales: $72.03 million (+63.6% y/y; +20.6% y/y).
  • Product sales: $64.44 million (+88% y/y).
  • Product engineering service sales: $4.63 million (90% increase over the same period last year).
  • IP license sales: $2.96 million (down 60% from the same period last year).
• Adjusted net income: $12.25 million (a significant increase from $1.16 million in the same period last year).
• Adjusted Earnings Per Share (Non-GAAP EPS): $0.07.

Costs and Profit Margins

• GAAP Gross Margin: 63.2%.
• Adjusted gross margin ratio: 63.6%.
• GAAP Operating Loss: $8.4 million (improvement over the same period last year).
• Adjusted operating income: $826,000,000 (surplus over the same period last year)

Cash Flow and Financial Condition

• Cash and short-term investments: $383 million.
• Operating Cash Flow: Positive (negative in the same period of the previous year).
• inventory: Increased by 40% from the previous quarter.

Major Business Developments

1. Growing demand for AI:
   • Growth of products to meet the growing bandwidth demands of data infrastructure.
   • AI implementation accelerates demand for products.
2. Success of new product lines:
   • Strengthening relationships with key customers drives sales growth.
   • New products that improve power efficiency and cost-effectiveness are appreciated in the market.

Future Guidance

• FY2025 3Q Forecast:
  • Sales forecast: $115 million to $125 million.
  • Adjusted gross margin: 61.0% to 63.0%.
  • Adjusted operating expenses: $42-$44 million.

Credo Technology is maintaining sales and revenue growth on the back of rising demand for AI and data infrastructure. In particular, deep relationships with key customers and new product development are the pillars of growth, and the company is expected to continue to expand its market share.

Which brokerage firms can I buy shares of Credo Technology (CRDO)?

The following is a list of major brokerages that offer shares of Credo Technology (CRDO). At these brokerages, you can choose to invest as a CFD (Contract for Difference) as well as directly as a foreign stock.

I myself mainly use SBI Securities, but some stocks they handle may not be available for purchase. In such cases, I sometimes use CFDs at Saxo Bank Securities or IG Securities.

summary

We have delved into the details of Credo Technology's (CRDO) business, its unique strengths, competitive advantages, and performance growth.

Credo Technology (CRDO) has been driving its own innovations in the field of high-speed connectivity solutions and accelerating growth, especially in the context of increasing demand for AI data centers.

As AI communication technology requires cutting-edge technology in all aspects, including power efficiency as well as high speed, Credo Technology is attracting attention as a company with a competitive advantage in this field.

The company's performance has been steadily growing, and future earnings growth is expected.

Operating cash flow has also turned positive, and we expect profit growth in the future.