Wall Street expects up to 40% growth from a little-known AI company. What's its potential?

Wall Street analysts raised their target prices on shares of small semiconductor company Credo after its results and profit forecasts exceeded experts' expectations for the second fiscal quarter, CNBC reports. Against this backdrop, Credo shares soared 15%.

Credo, a company that makes cables and chips to connect powerful computers with artificial intelligence, has not been discussed in the media and among analysts as often as the leaders of the current AI boom. Nevertheless, its stock has surged 155% this year, outperforming the likes of Nvidia and Broadcom. On December 2, however, Credo found itself in the spotlight after it reported its results and outlook for its fiscal second quarter. They far exceeded analysts' expectations. Namely:

- The company reported adjusted earnings of $0.67 per share for the second fiscal quarter, compared to analysts' expectations of $0.49 for LSEG.

- The company's revenue reached $268 mln versus the expected $235 mln.

- In addition, Credo provided revenue guidance for the current quarter in the range of $335 mln to $345 mln, while analysts had forecasted it at $247.6 mln.

Although the stock has already soared 155% since the beginning of the year, some Wall Street analysts see up to 40% upside potential.

The target prices for Credo shares were raised, in particular, by the experts of Barclays (from $165 to $220; growth of about 29% relative to current levels), Mizuho Securities (from $165 to $225, which implies growth of about 31%), Stifel (from $160 to $225; +31.6%), Susquehanna and TD Cowen. The highest estimates for Credo were set by analysts at Bank of America. They believe Credo's share price could rise to $240 next year, up 40% from current levels.

"Connecting new customers and increasing shipments, as well as long-term product line diversification, remain key drivers for Credo's sales outlook - and both continue to deliver strong results," Bank of America said.

"We believe Credo's projected FY 2026 revenue of approximately $1.19 billion is still Ma small compared to the opportunities in the market for cable solutions designed for scalable computing architectures, which is valued at approximately $22 billion," Mizuho said.

"Strong results and an even stronger outlook that likely surpassed even the highest expected bars," TD Cowen assessed the AI company's latest results.

This isn't Credo's first strong report. In September, the company reported quarterly growth of 274% year-on-year, while, for example, Nvidia grew 56% in the same period.

This article was AI-translated and verified by a human editor