Credo Technology Group (NASDAQ: CRDO) saw its stock climb 8.6% in trading on Monday after Evercore ISI initiated coverage with an Outperform rating and a $325 price target, the most bullish call on Wall Street. The target represents a roughly 20% upside from Friday's record-high close of $271.83.
Evercore analyst Mark Lipacis argued that the market is underestimating Credo's long-term opportunity, expecting the company to evolve from a copper-focused AI connectivity provider into a broader copper-plus-optical platform. The initiation came on the same day BNP Paribas also issued a positive note on the stock, adding to a wave of bullish sentiment around the company.
Evercore Sees Major Expansion in Copper and Optical Business
Evercore's thesis centers on strong growth in Credo's Active Electrical Cable (AEC) business and the emerging optical segment. The firm projects 100% growth in AEC solutions in 2026, followed by 60% growth in 2027. It also expects Credo's optical portfolio to become a meaningful driver, potentially accounting for roughly 25% of total revenue by 2027.
Credo has built its business around full-system solutions, selling complete Active Electrical Cable systems rather than standalone chips. The company is now extending this model into optical products, including optical DSPs, silicon photonics, and ZFOptics modules. Evercore also expects the optical portfolio to accelerate in the coming years, with its adoption expanding across hyperscale infrastructure. The firm estimates Credo's total addressable market could expand 10 to 20 times from its current $5 billion to $10 billion range as optical capabilities scale.
Strong Earnings Momentum and Expanding Market Opportunity
Evercore's projections follow a strong earnings performance from Credo. The company reported Q4 FY2026 revenue of $437 million, up 157% year-over-year, with non-GAAP EPS of $1.16 beating estimates. Full-year FY2026 revenue more than tripled to $1.34 billion. Several major brokerages, including Needham, Roth Capital, Bank of America, Jefferies, Mizuho, JPMorgan, and Goldman Sachs, raised their price targets after the results, citing strong momentum and FY2027 revenue guidance projecting over 80% growth.
Evercore's outlook is notably more aggressive than consensus, with a 2028 EPS projection above $13, implying a compound annual growth rate of more than 70% and roughly 40% above Street estimates. BNP Paribas analyst Karl Ackerman also maintained a constructive stance, keeping a $275 price target and highlighting expansion in Credo's total addressable market. “We believe AECs, ZF optical transceivers, silicon photonics, Active LED Cables, and OmniConnect gearboxes expand Credo's TAM to over $10B — or 3x from Credo's opportunity just 18 months ago,” Ackerman wrote.
BNP also pointed to strong supply chain visibility, with hyperscaler customers providing demand forecasts 12 to 36 months out and firm orders placed three to six months in advance. The firm expects Credo's optical DSP portfolio to surpass $100 million in sales in fiscal 2027. Credo is currently engaged with five of the six major hyperscalers, including Amazon, Meta, Microsoft, xAI, and Oracle, reinforcing investor focus on its role in AI infrastructure growth.
For context, other AI-related stocks have also seen significant moves recently. For instance, Enphase Surges 8% on Barclays Upgrade, AI Data Center Transformer Play highlights similar investor enthusiasm for AI infrastructure plays. Meanwhile, Amazon Hits Water Positive Milestone in India Ahead of 2027 Target Amid Data Center Expansion Scrutiny underscores the broader hyperscaler expansion driving demand for Credo's products.
This article is for informational purposes only and does not constitute financial advice.
