Analysts from BNP Paribas have indicated that Credo Technology Group Holding Ltd (CRDO.US) is poised to remain a primary beneficiary of the artificial intelligence infrastructure build-out, leveraging its expertise in copper and optical interconnect technologies. The bank has set a price target of $275 for the company.

In a note to clients, BNP Paribas analyst Karl Ackerman stated, "We continue to believe Credo will be a key beneficiary as hyperscale data centers adopt innovations in copper and optical interconnect, which are applicable to both the back-end networks for scale-out and scale-up, as well as front-end network deployments driven by agentic AI."

The analyst further noted, "We believe products such as Active Electrical Cables, ZR/ZR+ optical modules, Active LED Cables (ALC), and the OmniConnect gearbox expand Credo's total addressable market to over $10 billion, which is three times larger than it was 18 months ago."

Ackerman highlighted that as Credo's customer base diversifies, new cloud services are expected to become a more significant component of its business. He added, "We view Credo's customer base as continuing to diversify, with an expectation of adding three to four new 10%-plus hyperscale customers by fiscal year 2027. We also anticipate that sales from new cloud business could approach 20% of the total over time. Credo has indicated partnerships with five of the six major hyperscale cloud providers, which we believe are Amazon, Meta, Microsoft, xAI, and Oracle."

The company also maintains strong visibility into its supply chain, with its hyperscale customers providing demand forecasts spanning 12 to 36 months and typically placing firm orders 3 to 6 months in advance.

"Aside from direct shipments to xAI, Credo typically ships products to logistics partners, which are then forwarded to original design manufacturers for rack assembly before final deployment in data centers. We believe this delivery chain further enhances Credo's supply chain visibility, allowing the company to understand whether inventory is building up or has been deployed," the analyst explained.

Other strengths for Credo include having "ample capacity" to capture opportunities, particularly in the Active Electrical Cable segment; growing optical business sales with an expanding customer base; and an optical digital signal processing (DSP) product portfolio projected to achieve over $100 million in sales by fiscal year 2027.

Shares of Credo Technology Group Holding Ltd closed up 11.29% at $302.52 on Monday. The stock has gained 110% year-to-date.