Credo Technology Group (NASDAQ: CRDO) has entered bear market territory, with shares tumbling roughly 50% from their 52-week high. The stock hit a low of $148 this week, its weakest level since mid-April, as broader concerns about the artificial intelligence sector weigh on investor sentiment.
The selloff is not isolated to Credo. Other AI-related names, including Coherent, Lumentum, CoreWeave, and Nebius, have also fallen more than 30% from their peaks. The recent slide follows warnings from prominent AI executives—including leaders at OpenAI, Anthropic, DeepSeek, and SpaceX—about potential existential risks posed by unchecked AI development. Some have called for global coordination, fueling fears that regulatory hurdles could slow the industry's momentum.
Despite these concerns, the fundamental demand for AI infrastructure remains robust. Competition among model providers continues to drive spending on GPUs, CPUs, servers, and storage, supporting the need for high-speed connectivity solutions like those Credo offers.
Credo's fiscal first-quarter results underscored this strength. Revenue rose 9.6% sequentially and 114.7% year-over-year to $479 million, driven by demand for its active electrical cables (AEC), optical DSPs, SerDes technology, and PCIe/CXL connectors. The company's AEC products, which integrate copper cables with connectors to clean and retime signals, are particularly well-positioned as data center buildouts accelerate.
Looking ahead, analysts expect the momentum to continue. The consensus for the current quarter calls for revenue of $531 million, a 98% year-over-year increase. For the full fiscal year, projections point to $2.5 billion in revenue, up 87% from last year, with further growth to over $3.8 billion expected next year. Some analysts believe these estimates could prove conservative.
Wall Street remains largely bullish on Credo. Evercore ISI has a price target of $292, while JPMorgan targets $310. Other firms, including Bank of America, Rosenblatt, TD Cowen, and Susquehanna, also see further upside. The average analyst target implies significant potential gains from current levels.
However, the technical picture suggests more near-term weakness. The daily chart shows a double-top pattern with a neckline at $176, which has been broken. The stock is trading below the 50-day exponential moving average and the Strong, Pivot, Reverse level on the Murrey Math Lines indicator. If selling pressure persists, the next major support could be around $125. Conversely, a rebound could occur if AI fears subside and the broader sector stabilizes.
For investors, the key question is whether the recent decline represents a buying opportunity or a warning sign. While revenue growth is impressive, the market's reaction suggests concerns about valuation and the sustainability of AI spending. As seen with neocloud stocks sliding despite strong revenue, high-growth names in this space are vulnerable to sentiment shifts.
Credo's fundamentals remain strong, and the long-term outlook for AI infrastructure is intact. But near-term volatility is likely to persist until the market gains clarity on AI regulation and spending trends. Investors should monitor the company's next earnings report and any updates from AI leaders.
This article is for informational purposes only and does not constitute financial advice.
