Stifel Boosts Price Target for Credo Technology, Suggests Cyclical Recovery in Semiconductor Industry

Stifel has raised its price target for Credo Technology (CRDO) to $115 from $80, maintaining a Buy rating. The firm believes the semiconductor industry is emerging from a two-year inventory correction, and Credo Technology's revenue growth is expected to exceed 85% YoY in FY26. The company's Q4 revenue increased 26% sequentially and 180% YoY, with a non-GAAP net margin of 38.4%.

In a recent update, Stifel has raised its price target for Credo Technology (CRDO) to $115, up from the previous $80, while maintaining a Buy rating. The firm's optimism is driven by the semiconductor industry's emergence from a two-year inventory correction, with Credo Technology's revenue growth expected to exceed 85% year-over-year (YoY) in fiscal year 2026 (FY26). The company's strong financial performance, including a 26% sequential and 180% YoY increase in Q4 revenue, and a non-GAAP net margin of 38.4%, underscores the positive outlook [2].

Credo Technology's Q4 results, which saw a 26% sequential increase and a 180% YoY growth in revenue, highlight the company's robust performance. The company's fiscal year 2025 (FY25) revenue grew by 126% YoY, reaching $437 million. The strong performance is attributed to the company's innovative, high-performance connectivity solutions that are well-positioned to capitalize on the expanding AI infrastructure market [1].

Stifel's analysts believe that the semiconductor industry's cyclical recovery is likely beginning, which bodes well for Credo Technology's growth prospects. The firm advises maintaining an Overweight position in AI-related semiconductor stocks, with the group of AI-focused companies covered by the firm projected to achieve median revenue growth of 32% in 2025 and 17% in 2026 [2].

The company's recent earnings call provided additional insights into its financial health and future prospects. Credo Technology's CEO Bill Brennan expressed pride in the company's achievements in FY25, attributing the record-breaking financial results to surging demand for its innovative, reliable, and energy-efficient high-performance connectivity solutions. The company continues to see growing demand for its solutions across hyperscaler customers to power advanced AI services, a trend expected to persist [1].

Despite the positive outlook, investors should be aware of potential risks and uncertainties, including variability in customer mix and revenue contributions from quarter to quarter, and the potential for increased capital expenditures due to upcoming 3-nanometer tape-outs. Tariff risks and macroeconomic factors could also impact the company's operations and financial performance [2].

References:
[1] https://finance.yahoo.com/news/bull-day-credo-technology-group-090000811.html
[2] https://www.gurufocus.com/news/2987415/stifel-boosts-price-target-for-credo-technology-crdo-crdo-stock-news