Credo Technology just posted the strongest set of financial results among its AI-leveraged peers, including Nvidia , according to Bank of America. The bank remains bullish. Analysts led by Vivek Arya reiterated a buy rating on Credo, a maker of active electrical cables (AEC), and hiked his price by $45, or 38%, to $165 from $120 previously. That new target suggests the stock, which has soared 130% in just the past six months, could gain another 32%. Shares popped more than 12% in early trading Thursday. CRDO 1Y mountain Credo Technology stock performance over the past year. Arya is particularly bullish on Credo’s cables business. Rapid hyperscaler adoption led the analyst to forecast the AEC market will double to $2 billion by 2027-2028, and still only account for 10% to15% of the $15 billion optical transceiver market. Credo also makes connectivity products such as optical devices and data networking chips that are used in data centers. “Reiterate Buy on CRDO, a top SMidcap and key part of our top 4 AI-levered stocks (along with NVDA, AVGO, AMD), as its active electrical cables (AEC) are delivering on the sweet spot of high-speed and low-cost/low-power connectivity in AI clusters,” Arya wrote in a 14-page report to clients. “In addition, the company continues to diversify its customer base (4th hyperscaler added on top of Amazon, xAI, Microsoft, 5th on the way) and work on expanding its pipeline (optical).” “We note continued operating leverage as the AEC/optics businesses gain scale, while faster speeds (1.6T/3.2T) may further expand margins,” he added. Arya noted that Credo is tapping into the optical systems market, which has established incumbent players in AECs including Broadcom , Astera Labs and Marvell Technology . Arya noted that Credo’s “premium multiple” is a risk for the stock, but he remains confident given that the company’s management has kept expectations conservative. His new price target comes after Credo on Wednesday reported better-than-expected financial results in its first quarter. The company, based in the Cayman Islands, earned 52 cents per share on revenue of $223.1 million, while analysts polled by FactSet expected 36 cents per share on $190.6 million.
