2 Must-Buy Tech Stocks for July: ROK, CRDO

Wall Street's confidence in de-escalating Middle East tensions, cooling inflation, and strong Q2 earnings potential has propelled tech stocks, including Nvidia, to new highs. The market is now focused on AI beneficiaries like Rockwell Automation (ROK) and Credo Technology Group (CRDO). ROK, an industrial automation firm collaborating with Nvidia on AI, reported strong Q2 FY25 earnings and projects significant FY26 growth, while CRDO, a high-speed connectivity provider for AI hyperscalers, saw FY25 revenue surge 126% and anticipates substantial FY26 EPS growth, with its stock up 440% in two years. Both companies are rated "Strong Buy," underscoring their pivotal roles in the ongoing AI-driven market rally.

Analysis

A favorable macroeconomic environment, characterized by cooling inflation and easing geopolitical tensions, is providing a bullish backdrop for technology equities, propelling the Nasdaq-100 to record highs. This rally is heavily concentrated in companies integral to the artificial intelligence boom. The analysis highlights two distinct beneficiaries: Rockwell Automation (ROK) and Credo Technology Group (CRDO). ROK, an industrial automation firm, represents a cyclical recovery and AI integration play. After exceeding Q2 FY25 earnings estimates and providing upbeat guidance, the company is projected to see a significant rebound with 16% adjusted EPS growth in FY26. Its stock has formed a bullish 'golden cross' technical pattern, suggesting upward momentum. Credo Technology Group (CRDO) is a high-growth AI infrastructure provider whose high-speed connectivity solutions are critical for AI hyperscalers. The company reported explosive fiscal 2025 growth, with revenue up 126% and adjusted EPS soaring from $0.09 to $0.70. Its forward-looking outlook is exceptionally strong, with analysts forecasting 111% adjusted EPS growth in fiscal 2026 on 86% revenue expansion, supported by nine out of ten brokerage recommendations being 'Strong Buys'. Despite a 440% stock price increase over two years, its price-to-earnings to growth (PEG) ratio remains in line with the tech sector.

Key Decisions for Investors

• Investors should consider Rockwell Automation (ROK) as a potential breakout candidate, given its position at the bottom of its business cycle, strong FY26 growth projections, and bullish technical signals like the recent 'golden cross'.
• For high-growth portfolios, Credo Technology Group (CRDO) presents a compelling opportunity due to its exponential revenue and earnings growth driven by strong demand from AI hyperscalers, though its significant 440% two-year stock appreciation warrants caution regarding potential short-term volatility.
• The current bullish thesis for the tech sector is partially dependent on continued geopolitical stability and favorable inflation data, so investors should monitor these macroeconomic indicators for any shifts that could impact market sentiment.
• Given both ROK's collaboration with Nvidia and CRDO's role as a key supplier to AI infrastructure, investors should evaluate these stocks as distinct ways to gain exposure to the AI value chain, beyond chipmakers alone.