CRDO
CRDO
Hold 2026-03-14
Model
DCF
Price at Report
$117.69
Base IV
$145.63
Bear IV
$75.13
Bull IV
$380.43
Entry Zone: 79-134 · Sell Above: 323
Bore Family Office
Valuation Report — Credo Technology Group (CRDO) • March 14, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 12.50% • Current Price: $117.69
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Credo Technology Group (CRDO) designs high-speed connectivity semiconductor solutions for AI and hyperscale data center infrastructure. Its core products include SerDes (Serializer-Deserializer) ICs, Active Electrical Cables (AECs), optical DSPs, and IP cores — all enabling the ultra-fast, low-latency data movement required by AI training clusters and inference deployments. Credo is a direct beneficiary of the AI infrastructure buildout, with its AEC products competing against traditional optical transceivers at a lower power and cost point.
Revenue has accelerated dramatically: FY2025 (ending May 2025) came in at $437M (+126%), and TTM revenue through January 2026 reached $1.07B — a 226% increase. Credo has strong gross margins (65-68%) and is generating meaningful FCF at scale. The company serves the top AI hyperscalers and benefits from the trend toward custom silicon and high-density switching fabrics in data centers. With $1.3B in net cash and no debt, the balance sheet is a competitive strength.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Product Revenue | $980M | 92% | +250.0% | — | AEC cables, SerDes ICs, optical DSPs for AI data centers |
| IP Licensing | $88M | 8% | +30.0% | — | SerDes IP licensing to semiconductor companies |
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | 58.7% | $106 | $184 | $193 | $437 |
| EBITDA ($M) | -23.0% | -17.2% | -11.7% | -23.3% | 59.1% |
| Operating Income ($M) | -25.2% | -22.0% | -21.2% | -37.1% | 37.1% |
| Net Income ($M) | -27.5% | -22.2% | -16.6% | -28.4% | 52.2% |
| EPS (diluted) | $-0.40 | $-0.25 | $-0.11 | $-0.18 | $0.29 |
| Free Cash Flow ($M) | -48.4% | -48.4% | -46.3% | 17.1% | 29.0% |
| Annual DPS | $0.000 | $0.000 | $0.000 | $0.000 | $0.000 |
| Total Debt ($M) | 0.0% | 14.8% | 12.9% | 11.1% | 12.7% |
| Rev YoY Growth | — | +81.4% | +73.0% | +4.8% | +126.3% |
| EBITDA Margin | -39.2% | -16.2% | -6.4% | -12.1% | 13.5% |
| Operating Margin | -42.9% | -20.7% | -11.5% | -19.2% | 8.5% |
| Net Margin | -46.8% | -20.8% | -9.0% | -14.7% | 12.0% |
📈 DCF Scenarios
$75
🔴 Bear
$146
📊 Base
$380
🚀 Bull
$117.69
Current Price
$176
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 30.0% | 15.0% | 2.5% | 12.50% | $75 | ▼36.2% |
| 📊 Base | 45.0% | 20.0% | 3.0% | 12.50% | $146 | ▲23.7% |
| 🚀 Bull | 65.0% | 30.0% | 3.5% | 12.50% | $380 | ▲223.2% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 30.0% | Stage 2: 15.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.39B | $0.35B | $0.35B |
| Year 2 | Stage 1 | $0.51B | $0.40B | $0.75B |
| Year 3 | Stage 1 | $0.66B | $0.46B | $1.21B |
| Year 4 | Stage 1 | $0.86B | $0.53B | $1.75B |
| Year 5 | Stage 1 | $1.11B | $0.62B | $2.36B |
| Year 6 | Stage 2 | $1.28B | $0.63B | $3.00B |
| Year 7 | Stage 2 | $1.47B | $0.65B | $3.64B |
| Year 8 | Stage 2 | $1.69B | $0.66B | $4.30B |
| Year 9 | Stage 2 | $1.95B | $0.67B | $4.98B |
| Year 10 | Stage 2 | $2.24B | $0.69B | $5.67B |
| Terminal | — | TV=$23.0B | PV(TV)=$7.1B (56% of EV) | EV=$12.7B |
Base Scenario
Stage 1: 45.0% | Stage 2: 20.0% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.43B | $0.39B | $0.39B |
| Year 2 | Stage 1 | $0.63B | $0.50B | $0.89B |
| Year 3 | Stage 1 | $0.91B | $0.64B | $1.53B |
| Year 4 | Stage 1 | $1.33B | $0.83B | $2.36B |
| Year 5 | Stage 1 | $1.92B | $1.07B | $3.42B |
| Year 6 | Stage 2 | $2.31B | $1.14B | $4.56B |
| Year 7 | Stage 2 | $2.77B | $1.21B | $5.77B |
| Year 8 | Stage 2 | $3.32B | $1.30B | $7.07B |
| Year 9 | Stage 2 | $3.99B | $1.38B | $8.45B |
| Year 10 | Stage 2 | $4.78B | $1.47B | $9.92B |
| Terminal | — | TV=$51.9B | PV(TV)=$16.0B (62% of EV) | EV=$25.9B |
Bull Scenario
Stage 1: 65.0% | Stage 2: 30.0% | Terminal: 3.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $0.49B | $0.44B | $0.44B |
| Year 2 | Stage 1 | $0.82B | $0.65B | $1.09B |
| Year 3 | Stage 1 | $1.35B | $0.95B | $2.03B |
| Year 4 | Stage 1 | $2.22B | $1.39B | $3.42B |
| Year 5 | Stage 1 | $3.67B | $2.04B | $5.46B |
| Year 6 | Stage 2 | $4.77B | $2.35B | $7.81B |
| Year 7 | Stage 2 | $6.20B | $2.72B | $10.53B |
| Year 8 | Stage 2 | $8.06B | $3.14B | $13.67B |
| Year 9 | Stage 2 | $10.48B | $3.63B | $17.30B |
| Year 10 | Stage 2 | $13.62B | $4.20B | $21.49B |
| Terminal | — | TV=$156.7B | PV(TV)=$48.2B (69% of EV) | EV=$69.7B |
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 10.5% | $173 | $180 | $188 | $196 | $206 |
| 11.0% | $161 | $167 | $174 | $181 | $190 |
| 11.5% | $151 | $156 | $162 | $168 | $175 |
| 12.0% | $141 | $146 | $151 | $156 | $162 |
| 12.5% | $133 | $137 | $141 | $146 | $151 |
| 13.0% | $125 | $129 | $132 | $136 | $141 |
| 13.5% | $118 | $121 | $124 | $128 | $132 |
| 14.0% | $112 | $114 | $117 | $120 | $124 |
| 14.5% | $106 | $108 | $111 | $114 | $117 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | Fwd P/E | EV/EBITDA | Rev Growth (FY) | Notes |
|---|---|---|---|---|---|
| Credo Technology | CRDO | 37× | N/A | +200% | AI AEC/SerDes; pure AI connectivity |
| Astera Labs | ALAB | 55× | N/A | +180% | Closest peer; PCIe/CXL connectivity |
| Marvell Technology | MRVL | 28× | 38× | +35% | Diversified semi; AI infra exposure |
| Broadcom | AVGO | 26× | 22× | +20% | Custom AI chip + networking |
| InPhi (Marvell) | — | — | — | — | Acquired; comparable optical DSP |
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $-0.40 | — | — | — | Actual |
| 2022 | $-0.25 | — | — | — | Actual |
| 2023 | $-0.11 | — | — | — | Actual |
| 2024 | $-0.18 | — | — | — | Actual |
| 2025 | $0.29 | — | — | — | Actual |
| 2026 | $2.65 | $3.18 | $3.49 | 20 | Estimate |
| 2027 | $3.41 | $4.46 | $5.83 | 20 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $0.1B | — | — | — | Actual |
| 2022 | $0.1B | — | — | — | Actual |
| 2023 | $0.2B | — | — | — | Actual |
| 2024 | $0.2B | — | — | — | Actual |
| 2025 | $0.4B | — | — | — | Actual |
| 2026 | $1.1B | $1.3B | $1.4B | 20 | Estimate |
| 2027 | $1.5B | $1.9B | $2.3B | 20 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $176.36 | Range $85–$240
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| N. Quinn Bolton | Needham | Strong Buy | $220 | +86.9% |
| Vijay Rakesh | Mizuho | Buy | $200 | +69.9% |
| Various | Others (6) | Strong Buy | $185 | +57.2% |
| Christopher Rolland | Susquehanna | Buy | $170 | +44.4% |
| Atif Malik | Citigroup | Buy | $165 | +40.2% |
| George Wang | Barclays | Buy | $155 | +31.7% |
| Mike Genovese | Rosenblatt | Hold | $125 | +6.2% |
(e) Confidence Band Commentary
20 analysts covering CRDO — excellent coverage for a $22B market cap company. 10 Strong Buy, 5 Buy, 1 Hold. The wide PT range ($85–$240) reflects high growth uncertainty. Revenue consensus for FY2026 has a 27% spread (low $1.1B vs high $1.4B). CRDO has been a consistent upside surprise — the company has beaten estimates in 3 of the last 4 quarters on revenue, with EPS beats of 20%+ in recent quarters.
💡 Investment Thesis
- AI data center connectivity supercycle: Every AI training cluster (Nvidia, AMD, Google TPU) requires massive inter-GPU and intra-rack bandwidth. Credo's AEC and SerDes products are at the center of this bottleneck. Demand visibility extends to 2027+.
- Product mix advantage: AEC cables consume 3-5× less power than optical transceivers at <100m reaches — a critical differentiator as hyperscalers optimize PUE (Power Usage Effectiveness) and compete for power infrastructure.
- Analyst conviction overwhelming: 10 of 11 analysts are Buy/Strong Buy with avg PT of $176.36 — 50% upside from current levels. Needham reiterated Strong Buy $220 as recently as March 2026. Only 1 Hold (Rosenblatt at $125).
- Clean balance sheet: $1.3B net cash provides M&A optionality and insulation against any demand slowdown. Zero debt means no financial risk.
- Rapid FCF inflection: From -$48M FCF in FY2022 to $284M TTM FCF (26.6% margin) — the business has reached operating leverage that self-funds future growth.
⚖️ DCF Verdict: Hold — Credo Technology Group (CRDO)
Current price: $117.69 | Analyst Avg PT: $176.36
$75
🔴 Bear
$146
📊 Base
$380
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$134 | Begin position |
| Tier 2 — Add | ≤$110 | Add on weakness |
| Tier 3 — Full | ≤$79 | Full allocation |
| Sell Alert | ≥$323 | Above fair value — consider trimming |
Accumulate — Credo Technology is one of the highest-quality AI infrastructure plays available. The stock has pulled back from highs and now trades at 37× FY2026 earnings (non-GAAP) with 50%+ growth expected. Analyst consensus target of $176 implies 50% upside.
Initiate or add to positions in the $110-125 range. Full position at $100 or below. The primary risk is customer concentration (top 3 hyperscalers likely >60% of revenue) and the possibility that optical transceivers regain cost competitiveness at longer reaches. Becomes a Sell above $220 (bull case intrinsic value) or if AI capex cycle shows signs of deceleration.
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 118 |
| Average Cost Basis | $84.91 |
| Current Market Value | $13,887 |
| Unrealized P&L | $+3,868 (+38.6%) |
| Annual DPS | — (not provided) |
| Annual Dividend Income | — (DPS missing) |
| Current Yield (at price) | — |
| Yield on Cost | — |
| vs Target (~$200K) | $13,887 / $200,000 (7%) |
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| FCF Base | Used $300M FCF (conservative) vs TTM FCF of $284M and projected $327M at 25% margin on $1.31B FY2026 consensus revenue. TTM FCF margin of 26.6% used as starting point. FCF has inflected sharply from -$48M (FY2022) to +$284M (TTM) — operating leverage is real. |
| WACC | Rf=4.3%, Beta=1.45, ERP=5.5%. Ke=12.3%. No meaningful debt. WACC=12.5% (small premium to pure Ke for concentrated customer risk and valuation multiple risk). |
| Net Cash Treatment | Net debt = -$1,289M (i.e., net CASH of $1.29B). This adds to equity value. Per share cash = $6.91 (FY2025 basis). Significant cushion vs downside scenarios. |
| Growth Rate Calibration | FY2026 consensus revenue growth is +200% from FY2025 ($437M to $1.31B). FCF growth rates of 45%/yr for 5 years reflects continuation of margin expansion as the revenue base scales. By Year 5, FCF would be ~$1.3B on an estimated $3-4B revenue base — reasonable. |
| Sanity Check | Base IV $155 vs consensus PT $176.36 — within ±20% range (-12%). Model is slightly conservative vs street, appropriate given high growth uncertainty. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.