Key Takeaways
- Credo Technology stock fell 13% in the past week (through Monday’s close). First it fell in an AI chip selloff after Lam Research’s outlook, and then again after MaxLinear said it’s going after Credo’s active electrical cable market.
- MaxLinear is aiming for 20% to 30% of the 1.6T cable market over the next couple of years, and those cables aren’t shipping in volume yet.
- Analysts still expect Credo’s revenue to almost double this fiscal year to $2.50 billion, so nothing this week has changed the near-term numbers.
- Credo looks like a buy after the selloff, and its fiscal second-quarter report in early December is the next test.
Credo Technology (CRDO) is down 13% in the past week and 28% in the past month (through Monday’s close), with no news of its own. First came a chip selloff set off by Lam Research (LRCX). Then a rival, MaxLinear (MXL), said it’s coming for Credo’s cable market.
A chip selloff, then a rival takes aim
Lam Research’s December-quarter outlook, out after Wednesday’s close, revived worries about AI spending, and chip stocks, Credo included, fell across the board Thursday.
On MaxLinear’s earnings call that evening, CEO Kishore Seendripu put Credo’s share of active electrical cables (AECs), the copper links between AI servers and switches, at “93% or maybe 99%.”
“But I think the market is diversifying now because the problem is getting a lot more complicated,” he said. MaxLinear aims to win 20% to 30% of the next-generation 1.6T AEC market over the next couple of years.
Credo fell again Friday as an Edgewater Research note reportedly found little sign of large 1.6T deployments soon.
MaxLinear’s target is years out
On the same call, MaxLinear said it expects its first 1.6T revenue in 2027 and volume in 2028. And since MaxLinear sells only the chip, a hyperscaler that wants one company answerable for the whole cable has reason to stick with Credo.
AI hardware demand is holding up, too: Super Micro raised its quarterly revenue forecast by $4 billion at the midpoint after Tuesday’s close.
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
The selloff went too far
Analysts still expect Credo’s revenue to almost double this fiscal year (ending in spring 2027), to $2.50 billion.
Nothing this week threatens that number: Credo expects 1.6T cables to start contributing only in the year’s second half. The $3.88 billion estimate for fiscal 2028 is the one MaxLinear’s push could test.
Yet Credo trades at around 20x forward earnings, about where it bottomed in March and far below its 3-year average of 64x.
And the average analyst target of $284 sits 88% above Monday’s close.
The next test is Credo’s fiscal second-quarter report in early December, against revenue guidance of $525 million to $535 million, plus any word on 1.6T orders.
My take: the stock is pricing in more competition than has shown up, and at around 20x forward earnings, Credo looks like a buy.
Of course, Edgewater also named a Cisco program that could buy from Broadcom or MaxLinear. A rival win there would bring the 1.6T fight forward.
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:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
