This AI infrastructure leader is setting up for a move to all-time highs, according to the charts

According to Todd Gordon of Inside Edge Capital, Credo Technology (CRDO), a leader in high-speed connectivity solutions for AI infrastructure, has been added to their Active Opps portfolio due to strong fundamentals and technical indicators. CRDO's revenue has seen substantial growth, with an expected 85.37% increase to $809 million in 2026, and maintains industry-leading gross margins; technically, a breakout above all-time highs near $86.49 is anticipated, potentially leading to a test of $116.35, though the company's rich forward valuation of 130 times earnings leaves little room for error.

Analysis

Credo Technology (CRDO) has demonstrated significant growth since its 2022 IPO, expanding its market capitalization from approximately $1.5 billion to $13 billion, driven by the AI boom. The company is a key enabler in AI infrastructure, providing high-speed connectivity solutions, including hardware and software stacks, vital for efficient data center operations. While CRDO is guarded about its specific clientele, large data center hyperscalers such as Amazon and Microsoft are noted as typical customers, indicating a concentrated but high-value customer base. This concentration presents a risk, though the ongoing expansion of data centers and potential for customer roster growth offer substantial upside. Financially, CRDO has exhibited impressive revenue growth, with figures including 81.4%, 72.99%, 4.76%, and 126.34% over the past four years, and is projected to grow a further 85.37% to $809 million in revenue by 2026. The company also maintains superior gross margins of 62%-65% compared to its peers. However, its forward valuation is exceptionally high at 130 times expected 2026 non-GAAP earnings per share of $0.89, leaving no room for operational disappointments. Technical analysis suggests a bullish outlook, with the stock pending a breakout above its all-time high of $86.49, potentially targeting $116.35. Recent trading volume indicates institutional accumulation and support above the $60 level, while a near-term breakout around $83 could test the $86.70 all-time highs, with an advanced technical model suggesting an immediate upside target of $101.61.

Key Decisions for Investors

• Investors should acknowledge CRDO's strong position in the AI infrastructure buildout and impressive growth metrics, while carefully considering the very high forward valuation which demands flawless execution and sustained market leadership.
• Monitor key technical levels, specifically a potential breakout above $86.49 as an indicator for further upside towards targets like $101.61 or $116.35, alongside the $70.00 level as a critical support and risk management point.
• Evaluate the customer concentration risk associated with reliance on a few large hyperscalers, but also recognize the significant ongoing buildout in this segment and view any expansion of CRDO's customer base as a positive catalyst.