Credo: 'Optics Threat' Creates The Kind Of AI Buying Opportunity I Dream Of

Julian LinInvesting Group LeaderFollow5ShareSavePlay(7min)Comments(11)SummaryCredo Technology is initiated with a strong buy rating, offering direct exposure to accelerating data center growth fueled by generative AI.CRDO trades at a compelling ~25x forward earnings despite projected 50%+ revenue growth, with a PEG ratio below 1x, reflecting market skepticism about optical disruption.Management expects over 50% year-over-year growth next year, and CRDO maintains a robust balance sheet with $1.3 billion in cash and no debt.While optics pose a theoretical long-term risk, AECs remain mission-critical; CRDO’s hyperscaler customer concentration (88% of revenue) is a key risk to monitor.Looking for a portfolio of ideas like this one? Members of Best Of Breed Growth Stocks get exclusive access to our subscriber-only portfolios. Learn More » Getty Images The AI trade is offering a buying opportunity due to ongoing market volatility. Credo (CRDO) looks particularly attractive as it offers direct exposure to ongoing data center growth. Investor fear regarding the long-term risks from optics looksThis article was written byJulian Lin37.5K FollowersFollowJulian Lin is a financial analyst. He finds undervalued companies with secular growth that appreciate over time. His approach is to look for companies with strong balance sheets and management teams in sectors with long growth runways. Julian is the leader of the investing group Best Of Breed Growth Stocks where he only shares positions in stocks which have a large probability of delivering large alpha relative to the S&P 500. He also combines growth-oriented principles with strict valuation hurdles to add an additional layer to the conventional margin of safety. Features include: exclusive access to Julian's highest conviction picks, full stock research reports, real-time trade alerts, macro market analysis, individual industry reports, a filtered watchlist, and community chat with access to Julian 24/7. Learn more.Analyst’s Disclosure: I/we have a beneficial long position in the shares of CRDO, NVDA either through stock ownership, options, or other derivatives. 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.