By Nate Wolf

Credo Technology stock was soaring Tuesday after the company reported a fiscal fourth-quarter earnings beat and received a flurry of price-target boosts from Wall Street.

Credo, which provides high-speed connectivity solutions for data centers, posted adjusted earnings of 35 cents a share for the quarter on revenue of $170 million. Analysts' consensus forecasts had called for a profit of 20 cents and revenue of $160 million.

In perhaps the most thrilling news for investors, the company said it expects first-quarter revenue of $185 million to $195 million, well above the consensus of $162 million, buoyed by demand from some of the major players in artificial-intelligence,

The stock was up 18% at $74.16 on Tuesday, putting it on pace for its highest close since Feb. 18.

Nine analysts reiterated Buy ratings on Credo in the wake of the strong earnings print, according to FactSet, with eight of them lifting their price targets. Much of that optimism stems from Credo's widening base of customers. According to analysts, Microsoft and xAI reemerged as key clientele last quarter, joining Credo's main customer Amazon.com, and the company said it expects to add two so-called "hyperscalers" in fiscal 2026.

Microsoft and xAI now account for 12% and 11% of quarterly revenue, respectively, N. Quinn Bolton of Needham & Co. estimated in a research note Tuesday. Amazon, meanwhile, made up 61% of Credo's business last quarter, down from a staggering 86% the prior quarter. That number may fall further in the long run as the company brings in more customers.

"I think all of the hyperscalers have the potential to be a 10% customer long-term," said Credo CEO William Brennan on a conference call Monday.

Needham's Bolton boosted his price target to $85 from $80 and maintained a Buy rating, arguing that Credo will be "one of the fastest revenue growth stories in semiconductors" over the next three years.

Growth hasn't been an issue recently. The company reported revenue of $437 million last fiscal year, up from $193 million a year earlier. The stock has followed suit. Credo shares have risen more than 200% over the last 12 months and now trade at above 50 times projected year-ahead earnings.

Other analysts concur that Credo's shares have more room to rise.

"This was a very positive report for Credo as we were pleased to see revenue at Amazon sustain and customer diversification progress," Christopher Rolland of Susquehanna International Group wrote in a research note, boosting his price target to $90 from $60.

Vijay Rakesh of Mizuho also raised his price target for Credo to $81 from $70 and maintained an Outperform rating, noting both the growth in the company's customer base and the continued demand for its digital signal processors and active electrical cables.

Management doesn't see demand dissipating any time soon as the AI boom continues.

"We continue to see growing demand for our solutions across hyperscaler customers to power advanced AI services, a trend we believe will persist for the foreseeable future," Brennan said in a press release.

Write to Nate Wolf at nate.wolf@barrons.com

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June 03, 2025 12:59 ET (16:59 GMT)

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