"Light copper synergy" unlocks a billion-dollar market! Faba: Credo (CRDO.US) deeply benefits from the AI infrastructure wave, with a target price of $275.

French bank BNP Paribas said that Credo Technology (CRDO.US) is expected to continue to be a major beneficiary of the artificial intelligence (AI) infrastructure wave with its copper cable and Optical Cable Corporation interconnection technology. The bank has a target price of $275 for Credo. BNP Paribas analyst Carl Ackman wrote in a report to clients: "We still believe that with innovative technologies in the field of copper and optical interconnection being adopted by hyperscale data centers, Credo will be a major beneficiary. These innovative technologies can be used for both horizontal and vertical expansion of backend networks, as well as for frontend network deployments driven by Agentic AI (Agentive AI)." The analyst stated, "We believe that Credo's potential market size will expand to over $10 billion with active cables, ZF optical modules, active LED cables (ALC), and OmniConnect gearboxes, tripling Credo's market size from 18 months ago." Ackman noted that with the diversification of Credo's customer base, new cloud services may become a more important part of the business. Ackman added, "We believe Credo's customer base is constantly diversifying, with an expected addition of 3-4 hyperscale customers accounting for 10% in the fiscal year 2027. We also expect that over time, the proportion of sales from new cloud business could approach 20%. Credo has partnerships with five out of six hyperscale cloud service providers, we believe these five are Amazon.com, Inc., Meta, Microsoft Corporation, xAI, and Oracle Corporation." The company also has strong control over its supply chain: its hyperscale customers provide demand forecasts spanning 12 to 36 months, and customers typically place "firm" orders 3 to 6 months in advance. "Besides directly shipping to xAI, Credo typically ships products to logistics partners, who then transfer them to original design manufacturers (ODMs) for rack assembly before deployment in data centers. Based on this, we conclude that this delivery chain further enhances Credo's supply chain visibility, allowing the company to understand if inventory is backlogged or deployed." Other strengths for Credo include: having "ample capacity" to seize opportunities, especially in the active cable sector; growing sales in the fiber optic business with an expanding customer base; and the fiber optic digital signal processing (DSP) product portfolio is expected to achieve over $100 million in sales by the fiscal year 2027. As of the close of the US stock market on Monday, Credo rose by 11.29% to $302.52. The stock has increased by 110% year-to-date.