Bank of America initiated coverage of Credo Technology Group Holding Ltd (NASDAQ:CRDO) with a Buy rating and a $175 price target, arguing the market is significantly underestimating the company’s role in the artificial intelligence infrastructure buildout.
The brokerage said it views Credo as a “premium growth name” trading at a discounted valuation, citing a disconnect between investor perception and the company’s actual opportunity over the next several years, particularly in AI-driven data center connectivity.
Bank of America’s valuation is based on 23 times its calendar 2028 earnings per share estimate of $7.60. The firm also sees upside to consensus forecasts, projecting revenue and earnings ahead of market expectations through 2027.
A key driver of the bullish outlook is Credo’s position in active electrical cables (AECs), which are used to connect high-speed networking equipment in data centers. The bank expects the AEC market to expand rapidly as AI and general-purpose computing workloads increase demand for high-bandwidth connectivity.
Under a bull-case scenario, Credo could retain about 70% market share, translating into roughly $3 billion in AEC revenue alone.
Bank of America said concerns about the long-term viability of copper-based connectivity solutions are overdone. “Fears of the death of copper or potential impact from CPO are wildly overblown and the business is receiving essentially zero credit for the ALC or OmniConnect opportunities,” analysts wrote.
Beyond AECs, the firm highlighted Credo’s expansion into optical transceivers through its ZeroFlap Optics offering as a potential growth lever. It sees a $300 million-plus annual revenue opportunity in this segment, supported by strong demand visibility through 2027 and potential wins with hyperscale customers.
Shares of Credo rose about 11% on Monday following the initiation.