Credo Technology (CRDO) is Benefiting from AI Data Center Buildouts

Renaissance Investment Management, an investment management company, released its Q2 2025 “Small Cap Growth Strategy” investor letter. A copy of the letter can be downloaded here. The stock market was highly volatile in the second quarter. The unexpected tariff announcement panicked the market, causing stock prices to drop 7% from April 2 to April 7. The market experienced a dramatic recovery following the Trump Administration's backing away from some of its more extreme tariff proposals. Sound corporate earnings levels and solid economic data suggest positive economic growth ahead. The Russell 2000 Growth Index rallied in the second quarter; the strategy also rallied and outperformed the index. For more information on the fund’s best picks in 2025, please check its top five holdings.

In its second-quarter 2025 investor letter, Renaissance Investment Small Cap Growth Strategy highlighted stocks such as Credo Technology Group Holding Ltd (NASDAQ:CRDO). Credo Technology Group Holding Ltd (NASDAQ:CRDO) offers a wide range of high-speed connectivity solutions for optical and electrical Ethernet applications. The one-month return of Credo Technology Group Holding Ltd (NASDAQ:CRDO) was 46.92%, and its shares gained 469.18% of their value over the last 52 weeks. On September 19, 2025, Credo Technology Group Holding Ltd (NASDAQ:CRDO) stock closed at $169.56 per share, with a market capitalization of $29.333 billion.

Renaissance Investment Small Cap Growth Strategy stated the following regarding Credo Technology Group Holding Ltd (NASDAQ:CRDO) in its second quarter 2025 investor letter:

"The top contributor to performance was Credo Technology Group Holding Ltd (NASDAQ:CRDO), a semiconductor and connectivity solutions provider that targets the AI data center market. The company grew revenues by nearly 180% in its most recent reported quarter and expects revenue growth to be greater than 200% in the current quarter. The company is benefiting from the AI data center buildouts by its largest customers, including Amazon and Microsoft. In addition, the company expects to ramp revenues with two new hyperscale customers in fiscal 2026. While we expect revenue growth to slow later this year, the company should continue to see robust growth going forward."

Credo Technology Group Holding Ltd (NASDAQ:CRDO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held Credo Technology Group Holding Ltd (NASDAQ:CRDO) at the end of the second quarter, which was 41 in the previous quarter. Credo Technology Group Holding Ltd (NASDAQ:CRDO) reported revenue of $223 million in fiscal Q1 2026, reflecting an increase of 31% sequentially and 274% year over year. While we acknowledge the potential of Credo Technology Group Holding Ltd (NASDAQ:CRDO) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Credo Technology Group Holding Ltd (NASDAQ:CRDO) and shared the list of best performing data center stocks to buy. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.