Credo: The Market Got It Wrong

Yiannis Zourmpanos15.06K FollowersFollow5ShareSavePlay(9min)Comments(5)SummaryCredo delivered $407M revenue (+200% YoY), ~68.6% gross margins, and ~50% operating margins despite a sharp stock pullback. Stock declined ~21% due to margin guidance compression to mid-60s, not weakening demand or fundamentals. Hyperscaler demand remains strong with top customers growing sequentially and new wins supporting sustained growth into FY2027. Expansion into optics, retimers, and chip connectivity positions Credo beyond AEC into a full AI infrastructure connectivity platform. Valuation compressed to ~14.3x forward sales and ~21.9x forward P/E, with expected 50%+ growth supporting multiple re-rating potential. JuSun/iStock via Getty Images Investment Thesis I believe that the market is misunderstanding Credo (CRDO), especially after Nvidia's (NVDA) GTC 2026 event, leading to a 21% pullback since my last coverage which has likely resetThis article was written byYiannis Zourmpanos15.06K FollowersFollowHi, I'm Yiannis. Spotting winners before they break out is what I do best.Experience: Previously worked at Deloitte and KPMG in external/internal auditing and consulting. Education: Chartered Certified Accountant, Fellow Member of ACCA Global, with BSc and MSc degrees from U.K. business schools. Investment Style: Spotting high-potential winners before they break out, focusing on asymmetric opportunities (with at least upside potential of 3-5X outweighing the downside risk). By leveraging market inefficiencies and contrarian insights, we seek to maximize long-term compounding while protecting against capital impairment.Risk management is paramount—we seek a strong margin of safety to protect against capital impairment while maximizing long-term compounding. Our 2-3 year investment horizon allows us to ride out volatility, ensuring that patience, discipline, and intelligent capital allocation drive outsized returns over time.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in CRDO over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.