Credo Technology pops 3.5% as Evercore initiates with monster $325 price target
Investing.com -- Credo Technology Group (NASDAQ: CRDO) shares climbed 3.5% on Monday after Evercore ISI analyst Mark Lipacis initiated coverage with a roaring Outperform rating and a $325 price target.
Following Friday’s close at $271.83, Lipacis’s target hands the high-speed connectivity challenger a premium of roughly 20% above its current record-high trading levels.
In a detailed note to clients, Lipacis argued that Wall Street is completely misjudging the scale of Credo’s long-term opportunity. Today, the market views Credo simply as a "copper-based AI-connectivity play"—largely because the company practically wrote the playbook on Active Electrical Cable (AEC) standards, successfully selling complete system hardware solutions (the full cable plus the silicon) rather than standalone chips.
However, Evercore believes a massive valuation re-rating is underway as Credo unleashes its optical roadmap.
“We believe it will be increasingly viewed as a broad copper + optical AI-connectivity play,” Lipacis noted.
By aggressively rolling out optical DSPs (digital signal processors), Silicon Photonics, and its flagship ZFOptics modules, Credo is applying its successful full-system strategy to the optical arena. According to Evercore, this hardware evolution dramatically expands Credo’s current Addressable Market (TAM) by a factor of 10x to 20x.
The numbers backing Evercore’s thesis are staggering, tracking significantly higher than general consensus estimates on the Street:
Near-Term AEC Surge: Evercore models a staggering 100% growth for Credo’s core AEC copper solutions in 2026, followed by another 60% jump in 2027.
The Optical Inflection: The newly minted optical portfolio is expected to accelerate late next year, potentially skyrocketing to make up 25% of total revenues by 2027.
The 2028 Earnings Jackpot: Lipacis projects a massive $13+ in earnings per share (EPS) by 2028. That implies a 70%+ three-year compound annual earnings growth rate—flying 40% higher than what the rest of Wall Street is modeling.
By discounting those 2028 projections back, Evercore points out that a $325 price target values the stock at a dirt-cheap Price-to-Earnings-to-Growth (PEG) ratio of just 0.4x. For a company sitting dead-center in the AI data center buildout, that is a bargain the market decided not to ignore on Monday morning.