TLDR
- Credo stock fell 7.5% on Friday, after a 10.7% drop on Thursday to $162.77.
- MaxLinear’s CEO said Credo holds 93% to 99% of the AEC cable market and that rivals are emerging.
- Edgewater Research sees limited near-term 1.6T cable deployments at the largest AI programs.
- CTO Chi Cheng sold 27,500 of his stock on Oct. 20 at $172.62 under a pre-arranged plan.
- Analysts still rate the stock “Moderate Buy,” with a consensus target of $262.67.
Credo Technology Group (CRDO) stock fell 7.5% on Friday, following a 10.7% drop on Thursday. The stock traded at $162.77 midday Thursday, well below its 50-day average of $199.85.
Credo Technology Group Holding Ltd, CRDO
Three things weighed on the stock: comments from MaxLinear, a third-party research note on 1.6T cables, and more insider selling. Each one hit a different part of the bull case.
MaxLinear CEO Kishore Seendripu spoke on his company’s analyst call. He said Credo holds an estimated 93% to 99% of the active electrical cable (AEC) market.
He argued the industry is starting to diversify as the technology gets more complex. That is not what Credo holders want to hear.
MaxLinear does not plan to build full cables. It will sell silicon parts to cable makers and other suppliers instead.
The company is aiming at one or two large U.S. data centers. Seendripu expects to win 20% to 30% of the 1.6T AEC market over the next couple of years.
He said MaxLinear does not plan to spread its efforts across multiple data centers. So the threat, for now, is narrow.
What the Research Says
Edgewater Research said it sees limited evidence of near-term 1.6T AEC deployments among the largest AI programs. That could push back the revenue investors expect from faster connectivity.
Edgewater did point to a large in-house 1.6T program at Cisco. Cisco is seeking quotes for 100,000 cables per month, possibly bundled with its switching silicon.
Cisco could source the signal processors from Broadcom or MaxLinear. Amphenol and TE Connectivity would make the cable assemblies.
Edgewater also named Astera Labs as a possible rival in future custom AI-chip platforms. That includes Amazon’s next-generation Trainium3, though it depends on Astera fixing performance issues at scale.
Insider Selling and Analyst Views
CTO Chi Cheng sold 27,500 of his stock on Oct. 20 at an average of $172.62, worth about $4.75 million. The sale cut his position by 0.49%, leaving him with 5.58 million.
It was not a one-off. Cheng sold the same amount on Oct. 13 at $192.99 and on Oct. 6 at $221.48.
CEO William Brennan also sold 16,666 of his stock, worth about $2.9 million. Both sales ran under pre-arranged Rule 10b5-1 plans.
The business itself looks sound on paper. Last quarter, revenue hit $479 million, up 114.7% from a year earlier, and earnings of $1.20 per share beat the $1.17 estimate.
Of the analysts tracked by MarketBeat, one has a Strong Buy, fourteen have a Buy and three have a Hold. Stifel cut its target from $350 to $310 on Oct. 5.
On Friday, Credo’s move stood apart from its peers. Cisco rose 0.9% to $105.83 and Astera Labs gained 2.4%, while MaxLinear slipped about 2%.
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