Key Takeaways
- Credo shares rose 7% this morning, with Lumentum, Coherent, Semtech and Astera Labs also higher, after Super Micro raised its fiscal first-quarter revenue estimate by about $4 billion.
- Super Micro’s beat is strong evidence that AI server builds are speeding up, and more AI racks mean more demand for Credo’s cables.
- Analysts already expect Credo’s revenue to nearly double to $2.5 billion in fiscal 2027.
- Credo’s forward P/E is still far below its three-year average, so the stock isn’t priced for perfection even with that growth built in.
Credo (CRDO) shares soared 7% this morning, even though Credo itself had no news.
The news came from Super Micro instead, and the rest of the AI networking group rallied too.
A $4 billion beat
In a business update filed after Tuesday’s close, Super Micro said it now expects $18.5 billion to $19.5 billion of revenue for the quarter ended Sept. 30, against guidance of $14.5 billion to $15.5 billion. It credited “increased demand for AI platforms.” It also expects gross margin of 12.0% to 12.5%, against guidance of 10.4% to 10.8%.
At the midpoint, that’s about 27% more revenue than Super Micro itself had forecast.
The suppliers followed. Lumentum (LITE) rose 5.5%, with an extra push from Jefferies, which raised its price target to $1,250 from $1,200. Coherent (COHR) gained 4.8%, Semtech (SMTC) added 5% on thin premarket trading, and Astera Labs (ALAB) was up 3.5%.
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
Why this matters for Credo
Every AI rack Super Micro ships needs connections between its servers and switches, and that’s where Credo’s active electrical cables come in. So a quarter this strong from a big AI server maker is good news for Credo’s demand as well.
It’s one company’s quarter, though, and some of that beat could be market share Super Micro won from rivals rather than more AI spending overall.
How much of the build-out analysts already expect is another matter. Credo’s revenue roughly tripled to $1.34 billion in fiscal 2026, and the 19 analysts covering it expect $2.5 billion in fiscal 2027 and $3.87 billion in fiscal 2028.
Those estimates came out before Super Micro’s update. If the beat reflects the whole AI build-out speeding up, and not just one server maker having a good quarter, they have room to move higher.
Still not priced for perfection
Credo’s stock fell 22% last week as it launched a new optical cable. At Tuesday’s close it traded at 23.5x forward earnings. Its three-year average is 64x, and it peaked at 140x in November 2023.
This morning’s move takes it closer to 25x, which is still near the bottom of its three-year range.
My take: that’s a reasonable price for a company that analysts expect to nearly double its revenue this year, and Super Micro just backed up those estimates.
Of course, Super Micro’s figures are preliminary and unaudited. Its earnings call on Nov. 3 should show how widely that AI demand is spread.
So what is Credo stock actually worth?
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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!
