Key Takeaways
- Credo fell 10% today as AI data center stocks sold off after Democrats won Congress and the Texas governor’s race.
- Credo’s growth depends on data centers that voters in Texas want to limit.
- Dell fell on the same worry, while Amazon rose.
- Credo’s forward P/E is at a three-year low, which already prices in plenty of doubt.
Credo Technology (CRDO) sank 10% today with the AI data center trade, after Democrats won both chambers of Congress and key governors’ races in Tuesday’s midterms, promising tougher limits on data center construction.
Dell Technologies (DELL) fell too, while Amazon (AMZN), a big data center buyer, rose.
Texas was the big blow
Democrat Gina Hinojosa beat Texas Gov. Greg Abbott on a promise of an immediate data center moratorium. Dan Ives, partner at Yorkville Ives & Co., called Texas the “biggest worry” of the night for the AI trade, since around 25% to 30% of data center capacity will come from there.
That hits Credo hard: active electrical cables supplied over 99% of its revenue growth in fiscal 2026, and every one goes into a data center somebody has to build.
Analysts expect Credo’s revenue to nearly triple from fiscal 2026 to fiscal 2028:
My read: a Texas moratorium is a bigger threat to fiscal 2028’s $3.88 billion than to this year’s estimate.
Coherent and Dell report first
Coherent (COHR) fell 7% and Dell dropped 9%, and both will show whether customers are changing plans before Credo does. Coherent reports today, after management said in August that fiscal 2027 was basically booked out. Dell, which ended its July quarter with a record $95 billion AI server backlog, reports on Nov. 24.
Amazon rose 7%. Its AWS sales grew 39% in the third quarter, and CEO Andy Jassy expects growth above 40% in both 2027 and 2028. Credo depends on buyers like that: it ships in high volume to five of the six big US hyperscalers, management said in June.
TIKR tracks 20 analysts on Credo Technology. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Credo Technology, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Credo Technology’s Analyst Ratings
Cheaper than it’s been in three years
At Tuesday’s close, Credo traded at 19x forward earnings, its three-year low and far below its 63x average:
At today’s price, it’s even lower, about 17x.
That’s too cheap for a company analysts expect to nearly triple its earnings per share by fiscal 2028.
Of course, if Texas passes a moratorium, I’d rethink that. Credo’s report in early December will show whether customers are still ordering fast enough for its guide of more than 85% growth this year.
So what is Credo stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what Credo could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
Disclaimer:
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