Key Takeaways
- Evercore ISI launched coverage of Credo Technology (CRDO) with an Outperform rating and $325 price objective, approximately 20% higher than Friday’s all-time closing high of $271.83.
- The firm anticipates Credo’s flagship AEC copper segment to double in 2026, with another 60% expansion following in 2027.
- Analysts predict the company’s optical product line will comprise 25% of overall revenue by 2027, expanding its market opportunity by 10-20 times.
- Evercore’s model forecasts earnings per share surpassing $13 in 2028, representing a compound annual growth rate above 70% over three years.
- BNP Paribas reinforced its positive stance on Credo as a major AI beneficiary, noting the total addressable market has tripled to over $10B in eighteen months.
Credo Technology (CRDO) shares advanced 3.5% during Monday’s trading session following Evercore ISI analyst Mark Lipacis’s coverage initiation with an Outperform designation and a $325 price objective. This target represents approximately 20% upside from the stock’s record closing price of $271.83 reached on Friday.
Credo Technology Group Holding Ltd, CRDO
The coverage launch coincided with a separate optimistic report from BNP Paribas on the same company, creating a double dose of positive analyst sentiment for CRDO shareholders.
Lipacis contends that the investment community is significantly undervaluing the scale of Credo’s long-term growth runway. Currently, the market primarily views the company through the lens of copper-based AI connectivity — a perspective Evercore considers overly restrictive.
The central investment thesis centers on Credo experiencing a substantial valuation expansion as its optical product lineup achieves meaningful market penetration.
“We believe it will be increasingly viewed as a broad copper + optical AI-connectivity play,” Lipacis stated in his research note.
Credo established its market position by commercializing comprehensive Active Electrical Cable (AEC) solutions — delivering integrated cable and silicon packages — instead of discrete semiconductor components. The company is now deploying this integrated approach to optical technologies, introducing optical DSPs, Silicon Photonics platforms, and ZFOptics module systems.
Evercore’s Financial Forecasts Exceed Street Expectations
Evercore’s revenue and earnings projections stand notably above consensus estimates. The research house anticipates Credo’s established AEC copper segment will double in calendar 2026, followed by an additional 60% surge in 2027.
Regarding optical products, Evercore expects momentum to build significantly in late 2025, with this segment potentially representing a quarter of consolidated revenues by 2027.
The most striking forecast is the 2028 EPS estimate: exceeding $13, which translates to a three-year compound annual earnings expansion rate above 70%. This projection sits roughly 40% above current Wall Street consensus figures.
At the $325 price target, Evercore maintains the valuation remains attractive — calculating a PEG ratio of merely 0.4x when using the 2028 earnings projection.
BNP Paribas Echoes Optimism, Highlights Expanded $10B+ Market Opportunity
BNP Paribas analyst Karl Ackerman published his own favorable assessment independently. While maintaining his $275 price objective, he outlined a comprehensive rationale for Credo’s dramatically enlarged addressable market.
“We believe AECs, ZF optical transceivers, silicon photonics, Active LED Cables, and OmniConnect gearboxes expand Credo’s TAM to over $10B — or 3x from Credo’s opportunity just 18 months ago,” Ackerman noted.
Ackerman highlighted customer base expansion as an increasingly positive factor. He projects three to four hyperscale clients will each contribute 10%+ of revenue by fiscal 2027, while emerging cloud providers could approach 20% of total sales over time.
Credo maintains relationships with five of the six dominant hyperscalers — reportedly including Amazon, Meta, Microsoft, xAI, and Oracle.
BNP also emphasized robust supply chain predictability, with hyperscale customers sharing demand projections spanning 12 to 36 months and submitting confirmed orders three to six months ahead of delivery.
Credo’s optical DSP product family is projected to exceed $100M in revenue during fiscal 2027.
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