Key Takeaways
- Evercore ISI launched coverage of Credo Technology (CRDO) with an Outperform rating and $325 price target, approximately 20% above the stock’s Friday record close of $271.83.
- The firm forecasts 100% expansion in Credo’s Active Electrical Cable (AEC) copper segment during 2026, with another 60% surge in 2027.
- Analysts expect Credo’s optical solutions to comprise 25% of overall revenue by 2027, expanding the company’s addressable market by 10x to 20x.
- Evercore’s financial model anticipates earnings per share exceeding $13 by 2028, representing a compound annual growth rate above 70% over three years.
- BNP Paribas confirmed its positive outlook on Credo as a major AI infrastructure beneficiary, noting the total addressable market has tripled to over $10 billion in just 18 months.
Credo Technology (CRDO) shares advanced 3.5% during Monday’s trading session following Evercore ISI analyst Mark Lipacis’s initiation of coverage with an Outperform rating and a $325 price objective. This target represents approximately 20% potential 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 bullish commentary from BNP Paribas, creating a notably optimistic Monday for CRDO shareholders.
Lipacis contends that the investment community is significantly undervaluing the scope of Credo’s long-term growth prospects. Currently, market participants primarily view the company as a copper-focused AI connectivity provider — a perspective Evercore considers overly restrictive.
The investment firm’s central investment thesis revolves around Credo experiencing a substantial valuation expansion as its optical product lineup generates meaningful revenue.
“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 delivering comprehensive Active Electrical Cable (AEC) solutions — integrated cable and silicon packages — instead of discrete chip components. The company is now deploying this same integrated approach to optical products, introducing optical DSPs, Silicon Photonics technology, and ZFOptics modules.
Evercore’s Projections Significantly Exceed Street Estimates
Evercore’s revenue and earnings forecasts demonstrate considerable optimism. The firm anticipates 100% year-over-year growth in Credo’s established AEC copper segment throughout 2026, with an additional 60% expansion in 2027.
Regarding optical products, Evercore predicts this emerging portfolio will gain momentum in late 2025 and could represent 25% of consolidated revenues by 2027.
The most striking projection is the 2028 EPS forecast: above $13 per share, suggesting a compound annual earnings growth rate exceeding 70% over a three-year period. This estimate sits roughly 40% higher than consensus Wall Street expectations.
At the $325 price target, Evercore maintains the shares remain attractively valued — trading at a PEG ratio of merely 0.4x based on the firm’s 2028 earnings estimates.
BNP Paribas Maintains Positive Stance, Highlights $10B+ Market Opportunity
BNP Paribas analyst Karl Ackerman contributed his own favorable analysis independently. While maintaining his $275 price target, he presented a comprehensive argument for Credo’s dramatically expanded total 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 diversification as an increasingly important tailwind. He anticipates three to four hyperscale clients will each contribute 10% or more of revenue by fiscal 2027, while emerging cloud providers could approach 20% of total sales in subsequent years.
Credo currently maintains relationships with five of the six leading hyperscalers — understood to include Amazon, Meta, Microsoft, xAI, and Oracle.
BNP also emphasized robust supply chain transparency, with hyperscale customers providing demand projections spanning 12 to 36 months and submitting confirmed purchase orders three to six months ahead of delivery.
Credo’s optical DSP product family is projected to exceed $100 million in revenue during fiscal 2027.
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