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Credo Technology Group (CRDO) is a Zacks Rank #1 (Strong Buy) company that provides innovative, secure, high-speed connectivity solutions with improved power efficiency. The company's EPS outlook is bullish, with expected 110% EPS growth in FY26 and 22% growth in FY27. CRDO benefits from the AI frenzy and has seen strong demand for its services, with sales up 180% YoY.

Credo Technology Group Holding Ltd. (CRDO) has emerged as a standout performer in the high-speed connectivity space, driven by its focus on innovation, operational discipline, and cost efficiency. The company's impressive financial performance, highlighted by a non-GAAP operating margin of 36.8% in the fourth quarter of fiscal 2025, underscores its ability to scale rapidly while expanding profitability [1].

For the fiscal year 2025, Credo's operating margin expanded by 2,500 basis points (bps), driven by strong revenue growth and tight cost control. This operating leverage boosted the company's bottom-line results, with non-GAAP net margin reaching 38.4%, well above its long-term target range of 28% to 33%. The company's product momentum, particularly in Active Electrical Cables (AECs), optical products, and retimers, has been a significant driver of this growth [1].

Looking ahead, Credo expects revenues to exceed $800 million for fiscal 2026, implying year-over-year growth of more than 85%. The company projects non-GAAP operating expenses to rise at less than half the pace of revenues, which is expected to drive non-GAAP net margin to nearly 40%. This strong outlook is further supported by a healthy pipeline of PCIe Gen6 AECs and retimers, with additional customer wins anticipated to support growth in fiscal 2026 [1].

The company's bullish EPS outlook is a testament to its robust financial performance. Credo is expected to achieve 110% EPS growth in fiscal 2026 and 22% growth in fiscal 2027, driven by strong demand for its AI-driven connectivity solutions. The company's sales have surged by 180% year-over-year, benefiting from the AI frenzy and a key market shift toward more efficient connectivity solutions [1].

Analysts have maintained a strong consensus on Credo, with a Zacks Rank of #1 (Strong Buy) and a price target consensus of $92.80. Mizuho Securities, in particular, reiterated a Buy rating with a price target of $112.00, citing the company's strong financial performance and growth prospects [2].

Despite the positive outlook, rising market competition and ongoing macroeconomic uncertainty may pose challenges to Credo's growth trajectory. The company competes with semiconductor giants like Broadcom Inc. (AVGO) and Marvell Technology, Inc. (MRVL), both of which have demonstrated solid margin performance driven by strong demand for their AI semiconductor solutions [1].

In conclusion, Credo Technology Group's strong financial performance and bullish EPS outlook position it as a compelling investment opportunity. The company's focus on innovation, cost efficiency, and operational discipline has driven its rapid growth and profitability, making it a standout player in the high-speed connectivity space.

References:
[1] https://www.theglobeandmail.com/investing/markets/stocks/AVGO/pressreleases/33387456/can-sound-cost-management-continue-driving-credos-margin-growth/
[2] https://www.theglobeandmail.com/investing/markets/stocks/CRDO-Q/pressreleases/33420914/mizuho-securities-keeps-their-buy-rating-on-credo-technology-group-holding-ltd-crdo/