Credo Technology Group Holding Ltd (CRDO): A Bull Case Theory

We came across a bullish thesis on Credo Technology Group Holding Ltd on Nikhs’s Substack. In this article, we will summarize the bulls’ thesis on CRDO. Credo Technology Group Holding Ltd's share was trading at $129.47  as of January 29th. CRDO’s trailing and forward P/E were 111.78 and 36.36 respectively according to Yahoo Finance.

Credo Technology Group Holding Ltd provides various high-speed connectivity solutions for optical and electrical Ethernet, and PCIe applications in the United States, Taiwan, Mainland China, Hong Kong, and internationally. CRDO’s latest results highlight a company whose value rests not on faster or cheaper cables but on eliminating the catastrophic “link flap” failures that can erase weeks of GPU training and millions in compute costs.

Its Q2 FY26 performance—272% revenue growth, expanding gross margins of 67.7%, and strong guidance—signals a business becoming embedded in hyperscaler AI workflows rather than a traditional semiconductor supplier riding a cyclical buildout.

Margin expansion during hypergrowth, simultaneous adoption across four hyperscalers, and operating leverage where revenue grows 20% while expenses rise just 5% collectively suggest that Credo is evolving into the de facto standard for AI cluster connectivity. Its AECs have become the reliable pathway through the bottlenecks of high-density GPU networks, and each deployment deepens operational dependencies that make alternatives increasingly impractical. The shift to NVIDIA’s 200G architectures further elevates connectivity reliability from an efficiency issue to a fundamental requirement, reinforcing why hyperscalers are converging on Credo’s approach.

The most important development may be Pilot, Credo’s telemetry and optimization layer that quietly turns every cable into a data-generating sensor. Pilot’s predictive monitoring and its extension into ZeroFlap Optics, Active LED Cables, and OmniConnect gearboxes hint at a long-term data moat built on accumulated operational intelligence.

This positions Credo not as a hardware vendor but as a potential toll collector across multiple domains of AI infrastructure. The investment debate now hinges on whether Credo is simply a well-timed component supplier or the backbone of reliability for AI computing. At current valuation levels, investors are effectively betting on the latter, with the next 12–18 months likely revealing whether Credo’s toll-road economics are real or already fully priced in.

Previously we covered a bullish thesis on Credo Technology Group Holding Ltd by Deep Value Returns in May 2025, which highlighted the company’s resilience, long-term growth potential, and benefits of a patient holding strategy. The company's stock price has appreciated approximately by 103.40% since our coverage. This is because the thesis played out. The thesis still stands as Credo’s AI positioning remains strong. Nikhs shares a similar view but emphasizes its toll-road economics.

Credo Technology Group Holding Ltd is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held CRDO at the end of the second quarter which was 41 in the previous quarter. While we acknowledge the potential of 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.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy NOW 

Disclosure: None.