AI Spending Is Entering Its Next Phase. This Stock Could Benefit Most
AI Spending Is Entering Its Next Phase. This Stock Could Benefit Most
Vandita JadejaThu, October 1, 2026 at 6:00 PM UTC
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Credo (CRDO) stock fell 17% despite beating Q1 earnings with 115% revenue growth, and trades 38% below its 52-week high.
CRDO trades at just 27x forward earnings versus peers Astera Labs (56x) and Marvell (62x), despite posting the fastest revenue growth in the group.
Two customers account for 61% of Credo's revenue, making supplier concentration the biggest risk to the $242 price target.
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AI infrastructure spending is moving from buying accelerators to wiring huge clusters together reliably. Credo (NASDAQ:CRDO) sells into that connectivity bottleneck.
The 24/7 Wall St. price target for Credo is $242.79, which implies 25.97% upside from $192.73. Our model rates the stock a buy.
CRDO Price Target — 24/7 Wall St.
Metric
Value
Current Price
$192.73
Price Target from 24/7 Wall St.
$242.79
Upside/Downside
25.97%
Recommendation
Confidence Level
90%
Analyst sentiment runs 95% bullish, revenue growth is still in the triple digits, and management expects business to accelerate in the second half of fiscal 2027. A beta of 3.23 means the path to our target will likely be volatile.
A September Selloff Hit Credo Even After an Earnings Beat
Credo fell 17.39% over the past month and is up 33.62% year to date. The stock trades 37.6% below its 52-week high of $308.67.
The decline came after Q1 fiscal 2027 earnings. Revenue was $479 million, up 114.73% and ahead of the $470.38 million estimate. Non-GAAP EPS of $1.20 beat the $1.1651 consensus. Q2 guidance is $525 million to $535 million.
CRDO Earnings Explorer — 24/7 Wall St.Why Bulls See $334 Coming From Optics
Management expects fiscal 2027 revenue to grow more than 85%, including more than $600 million of optical revenue. ZeroFlap optics, silicon photonics chips and optical DSPs are each expected to top $100 million. Management noted that "AECs continue to grow, optics is growing faster."
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OmniConnect, Credo's memory connectivity line, could add thousands of dollars of Credo content per GPU starting in fiscal 2028. Wall Street is enthusiastic, with 4 Strong Buy, 14 Buy and 1 Hold ratings and a consensus target of $280.1. In our bull case, the stock reaches $334.45, a 73.53% gain.
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CRDO Analyst Ratings — 24/7 Wall St.Customer Concentration Is the Risk to Watch
Credo's two largest customers made up 33% and 28% of Q1 revenue. GAAP gross margin fell to 64.5% from 68.2%, driven by amortization from acquisition. Non-GAAP gross margin held at 68%. In a bear case, the stock ends the year at $193.30, roughly flat.
Is Credo Cheaper Than Astera Labs and Marvell?
Company
Forward P/E
Quarterly Revenue Growth (YoY)
Credo
27x
114.7%
Astera Labs
56x
104.5%
Marvell
62x
36.5%
Broadcom
19x
85.5%
Astera Labs (NASDAQ:ALAB) is the closest match, selling AI connectivity chips. It trades at about twice Credo's forward multiple despite slower growth.
Marvell (NASDAQ:MRVL) competes in optical DSPs at 62x forward earnings while growing at a third of Credo's pace.
Broadcom (NASDAQ:AVGO) is cheaper at 19x, reflecting its larger size and diversified business. Against this group, the 24/7 Wall St. price target looks conservative.
Credo Screens as a Buy at $192
Our model rates Credo a buy with a 24/7 Wall St. price target of $242.79 and 90% confidence. Credo is the fastest grower in the group but trades at a lower forward multiple than peers.
Prospects improve if the DSP and silicon photonics ramps land on schedule, and weaken if hyperscaler orders slow or a top customer switches suppliers.
Credo is one piece of the AI expansion beyond the GPU makers, and we featured seven other suppliers driving that same wave in a free report you can grab here. At today's price, growth outweighs risk.
Credo Price Prediction 2026-2030
If current growth and market conditions continue, the 24/7 Wall St. price target model projects the following base-case prices:
Year
Price Target from 24/7 Wall St.
2026
$196.42
2027
$248.02
2028
$286.39
2029
$333.96
2030
$370.29
These projections assume Credo executes on its current strategy. Revenue from ALCs and OmniConnect starting in fiscal 2028 could push results higher, while a slowdown in AI capital spending could pull them lower.
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Source: “AOL Money”
