CREDO TECHNOLOGY GROUP HOLDING LTD (CRDO): what the price requires
At today's price, CREDO TECHNOLOGY GROUP HOLDING LTD (CRDO) is priced for today's economics sustained for ~24.3 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-19 · Exported: 2026-07-20 · Source: https://boothcheck.com/report/CRDO
Headline
| Field | Value |
|---|---|
| Ticker | CRDO |
| Company | CREDO TECHNOLOGY GROUP HOLDING LTD |
| Current price | $238.98/sh |
| Composition | United States 58% / Hong Kong 28% / Mainland China 6% / Taiwan 2% / Rest of World 6% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin today | 30.5% |
| Must persist for | 24.3y |
| Multiple paid | 138x operating income |
Solve inputs: computed at a 13.5% cost of capital; growth searched up to the 28% self-funding ceiling; each 1pp moves the implied horizon ~2.7 years.
Reconcile: at the x-ray's 9.3% required return this reads ~14.8 years; the models below use their own rates.
How unusual the bet is: elevated (limited comparison data)
| Reference | Value |
|---|---|
| sustained it ~10 years at this level | 10% |
| implied end-window share | 0% |
Valuation X-Ray
Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 8.99x | 5 | expensive |
| Earnings | 8.57x | 4 | expensive |
| Relative | 5.23x | 5 | expensive |
| Growth | 1.97x | 3 | expensive |
Families that call it expensive: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=17)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $101.10 | 2.36x | yes | FCF base $0.5B, growth 25% (input: historical growth), terminal g 4.0%, WACC 9.2%, 7yr projection |
| DCF Exit Multiple | Growth | $253.13 | 0.94x | yes | Exit EV/EBITDA: 90.4x / 93.4x / 96.4x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | $112.55 | 2.12x | yes | P/E 44.55x (blended: static sector reference 22x + trailing (TTM) 97x), scenarios: 35.6x / 44.5x / 53.5x (bear / base = reference held flat / bull), EV/EBITDA 35.2x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $26.59 | 8.99x | yes | BV/sh $10.75, ROE (TTM) 22.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $41.71 | 5.73x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $121.06 | 1.97x | yes | Rev $1.3B, growth 30% (input: historical growth; tapered), Terminal P/S: 9.6x / 12.0x / 14.4x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $30.12 | 7.93x | yes | EPS $2.51, growth 2% (input: historical EPS growth), PEG=48.59 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $9.35 | 25.56x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.08B × (1−21%) / WACC 9.2% → EPV (no growth) (excluded from median) |
| Residual Income | Asset | $38.61 | 6.19x | yes | BV $10.75 + 5yr PV of (ROE (TTM) 22.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $24.64 | 9.70x | yes | √(22.5 × EPS $2.51 × BVPS $10.75) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $45.72 | 5.23x | yes | EBITDA $0.48B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $28.67 | 8.34x | yes | FCF $407.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $18.38 | 13.00x | yes | SBC-adj FCF $0.22B (FCF $0.41B − SBC $0.18B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $80.99 | 2.95x | yes | EPS $2.51 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $14.93 | 16.01x | yes | BV $10.75 × (ROIC 12.8% / WACC 9.2%) |
| P/Sales Sector | Relative | $34.76 | 6.88x | yes | Revenue $1.34B × sector P/S 5.0x |
| PEG Fair Value | Relative | $94.12 | 2.54x | yes | EPS $2.51 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $27.14 | 8.81x | yes | EPS $2.51 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $1.4b |
| Net debt / NOPAT (after-tax) | -5.79x (net cash) |
| Net debt / operating income (pre-tax) | -4.58x (net cash) |
| Share count CAGR (dilution) | 6.8% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- Credo sells the wiring of the AI build-out: its HiWire active electrical cables and SerDes connectivity link the chips inside hyperscale data centers, and that single product line drove fiscal 2026 revenue to $1.34 billion, up 206%, at a 67.5% gross margin.
- The defining risk is concentration: the company tells investors it relies on "a limited number of customers for a significant part of" its revenue, so a single hyperscaler pausing its capex cycle can swing a quarter.
- The next read is the fiscal Q1 2027 report due September 2, 2026, guided to $465 to $475 million, with management pointing to optical products crossing $600 million in the new fiscal year as the next leg.
Bull Case
Begin with the gap between the price and every method we use to value the business, because the gap is the thesis stated in reverse. None of the valuation families reaches the price. The asset-value lens, the earnings-power lens, the peer-multiple lens, and even the forward-growth lens all land below it. The price is a bet that sits above what any standard frame supports. The bull case is not that the methods are wrong. It is that they are backward-looking on a business whose economics changed in a single year, and the forward number is the only one that matters.
What changed is the AI data center build-out, and Credo is positioned at a useful chokepoint inside it. Fiscal 2026 revenue grew 206% to $1.34 billion, with quarterly revenue in the period ended November 1, 2025 jumping to $268.0 million from $72.0 million a year earlier on active electrical cable shipments to hyperscalers, at a 67.5% gross margin. Credo pioneered the AEC category, and its 10-K describes a deliberately broad connectivity portfolio, "HiWire AECs" among the products it lists as a "Comprehensive Family of Connectivity Solutions," built on an IP base it calls "a significant competitive advantage." When chip counts inside a rack rise, the number of high-speed links between them rises faster, and the company that makes those links cheaply and reliably sells more of them per system.
The next leg is optical, and it is the part of the story that turns a single-product franchise into a platform. Management guides optical products to cross $600 million in the coming fiscal year and is integrating vertically through the DustPhotonics acquisition to build an end-to-end interconnect platform rather than a cable supplier. Fiscal 2027 revenue guidance points to growth above 80%, and the balance sheet funds the expansion from a position of strength: $1.44 billion of net cash and no debt. The bull case is that AEC was the opening act, optical is the second act, and the customer base broadens from a handful of hyperscalers toward the Neo Clouds and new entrants management says are ramping. If that diversification arrives on the timeline guidance implies, the forward number is the only one that was ever going to be right.
Bear Case
The bear case starts where Credo's own risk disclosure starts: a customer list short enough to be a single point of failure. The company tells investors it relies "on a limited number of customers for a significant part of" its revenue, and at this stage of the AI cycle that means a small number of hyperscalers whose capex decisions, made for their own reasons, set Credo's quarter. The company frames diversification as the cure, telling investors that as "our number of customers increase, customer concentration will decrease." That is a forward promise, not a current fact, and the bear case is that the promise has to be kept while the price already assumes it was.
The competitive question is whether the AEC franchise stays defensible as the prize grows. The active electrical cable market Credo pioneered is on pace toward $4 billion by 2028, and a market that size pulls in capable competitors, from connectivity specialists like Astera Labs to the optical-module incumbents Credo is now trying to displace by moving into optics itself. A company expanding from cables into optical engines is attacking entrenched suppliers on their home ground, and the DustPhotonics integration is execution risk as much as it is opportunity. Each new hyperscaler design win is also a new chance for a competitor to be designed in instead.
Then there is the price, which assumes that almost none of this goes wrong. At today's level the market pays roughly 157 times company-wide operating income, a multiple that implies operating growth held at its self-funding ceiling for something like 26 years. Among comparable fast-growers, only about one in ten sustained that kind of pace even a decade. State the requirement plainly: the price needs Credo to compound near its maximum self-funded rate for a generation, and if growth fades toward the merely excellent, the multiple has a long way to compress. The $1.44 billion of net cash bounds the downside on solvency, the company is not burning cash, but net cash is a floor on survival, not on a multiple that rests almost entirely on the durability of a one-year inflection. One more pressure sits in the share count, which has been rising around 7% a year, so per-share growth has to clear that dilution before it reaches the holder.
Valuation
The price is making a bet that no standard method endorses. Read backward, today's level pays roughly 157 times company-wide operating income, which is the same as saying the market expects operating growth to hold near its self-funding ceiling for about 26 years. Keep those figures approximate; they are a single solve, not a measurement. The point they make is blunt: only about one in ten comparable fast-growers sustained that pace for even ten years, so the price is underwriting a persistence history has rarely delivered.
The disagreement among the methods we use to triangulate is unusually one-sided. Normally some families reach the price and others do not, and the spread tells you what kind of bet you are looking at. Here every family sits below the price. The asset-value methods, anchored on book value plus profitability, land in the $25 to $40 range. The peer-multiple methods, blending the sector multiple against Credo's own trailing multiple, land near $45 to $120. The earnings-power methods, which capitalize current cash generation without growth, land lowest of all because they credit none of the inflection. Even the forward-growth methods, the ones that should be most generous, do not reach today's price. When no family reaches it, the price is not a value read or a durability read. It is a bet beyond what any of these frames can support, and the only way to defend it is to argue that the frames are too slow to catch a business that grew 206% in a year.
Solvency is the one place the numbers are unambiguous in Credo's favor. The company holds $1.44 billion of net cash against no debt, it is generating free cash flow rather than burning it, and that gives it the means to fund the optical expansion and the DustPhotonics integration internally. That balance sheet removes financial-distress risk from the equation entirely. What it does not do is justify the multiple. The cash is the floor under the company; the 157-times figure is the bet on top of it, and the two should not be confused.
Catalysts
The cleanest near-term catalyst is the fiscal Q1 2027 report due September 2, 2026, guided to revenue of $465 million to $475 million. That print is the first test of whether the AEC ramp keeps its slope and, more importantly, whether the customer base is actually broadening the way management says it is. Diversification away from the two largest customers is the single variable the bull and bear cases disagree about, and each quarter is a data point on it.
The structural catalyst is optical. Management guides optical products to cross $600 million in the coming fiscal year and is building toward a vertically integrated interconnect platform through the DustPhotonics acquisition, with fiscal 2027 revenue growth guided above 80%. Optical revenue ramping on schedule would turn a cable franchise into a multi-product platform and validate the forward number the price depends on; a slip would leave the company more concentrated in AEC and more exposed to a single product cycle.
Analyst sentiment has run hot into the print. Stifel set a $350 target on June 22, 2026 and Bank of America set $340 on June 23, 2026, and the stock rose more than 11% on June 22 on the wave of target hikes. Worth noting against that enthusiasm: the broader analyst consensus price target sat near $210 as of late June, well below where the most bullish desks landed, which tells you the range of views on this name is wide. The hyperscaler capex backdrop underpins all of it. Amazon, Microsoft, Meta and Google have all signaled higher data center spending, which is the demand Credo's products plug into, for as long as the build-out lasts.
Peer Cohorts (Per Segment, With Filing Citations)
High-speed connectivity solutions (Credo consolidated) (reported)
- ALAB (Astera Labs, Inc.)
- (no filing in the citation store)
- MXL (MaxLinear, Inc.)
- (no filing in the citation store)
- SMTC (SEMTECH CORP)
- (no filing in the citation store)
- MTSI (MACOM Technology Solutions Holdings, Inc.)
- (no filing in the citation store)
- RMBS (RAMBUS INC)
- (no filing in the citation store)
- SLAB (SILICON LABORATORIES INC.)
- (no filing in the citation store)
- ALGM (ALLEGRO MICROSYSTEMS, INC.)
- (no filing in the citation store)
- MPWR (MONOLITHIC POWER SYSTEMS INC)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
CRDO FY2025 10-K, accession 0001628280-25-033813 · CRDO fiscal Q2 2026 results · CRDO management commentary, 2026 · CRDO solvency, latest filings · AEC market coverage, 2026 · priced-in inversion · CRDO guidance, 2026 · analyst notes, June 2026 · analyst consensus, June 2026 · hyperscaler capex coverage, 2026