Credo Technology stock jumped to an all-time high on Thursday. The maker of high-speed connectivity systems for data centers is due to report its fiscal first-quarter results next week.
The San Jose, Calif.-based company has been riding high on strong sales of its networking gear for AI and cloud computing.
Credo plans to release its fiscal Q1 results late Wednesday. Analysts polled by FactSet expect the company to earn an adjusted 35 cents a share on sales of $190.6 million in the quarter ended Aug. 2. In the year-earlier period, it earned an adjusted 4 cents a share on sales of $59.7 million.
On the stock market today, Credo stock climbed 7.4% to close at 131.82. Earlier in the session, it hit a record high of 134.35.
Credo's products include integrated circuits, active electrical cables (AEC), and serializer/deserializer (SerDes) chiplets. It also licenses its SerDes intellectual property.
Credo has a strong leadership position in active electrical cables for AI servers. Its three biggest customers are Amazon, Microsoft and xAI.
Credo could add Meta Platforms and Oracle as AEC customers later this year or early next, Mizuho Securities analyst Vijay Rakesh said in a client note Tuesday.
Rakesh rates Credo stock as outperform with a price target of 135.
Credo Stock Is On Two IBD Lists
Rakesh sees a huge opportunity for AEC sales as AI data centers scale up and scale out their systems. Scale-up and scale-out deployments will increase demand for AEC systems as customers look for performance efficiency with bandwidth speeds moving to 100 gigabits per second, 200G, 400G and up.
Customers will look to upgrade from direct attach copper (DAC) cables to AEC for improved signal integrity and lower power consumption, he said.
"We see Credo maintaining a strong moat in the AEC market with its leading SerDes IP (intellectual property) as its 'n-1' technology drives its key advantage vs. peers," Rakesh said.
Credo stock is on two IBD lists: Big Cap 20 and Tech Leaders.
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