Goldman Sachs has opened coverage on Credo Technology Group Holding Ltd. (NASDAQ: CRDO) with a Buy rating and a price target set at $165.00. At the time of the report, shares were trading at $127.91 and the company's market capitalization stood at $23.1 billion, according to InvestingPro data.
The bank said its $165 target implies about 27% potential upside from the prevailing share price. Goldman Sachs highlighted Credo's focus on high-speed, short-range wired connectivity components for the datacenter market as a central element of its investment thesis.
Credo is noted for pioneering Active Electrical Cables - copper-based cables that incorporate signal-boosting components. Goldman Sachs characterized AECs as delivering lower cost, high-bandwidth connections with high reliability when compared with competing technologies for short-range datacenter links.
On the earnings front, Goldman Sachs' models show fiscal 2026 and fiscal 2027 earnings per share estimates that are 7% and 32% above consensus, respectively. The firm also stated it expects copper solutions to remain relevant through at least 2032. Supporting market activity cited by InvestingPro includes recent upward analyst revisions - 10 analysts have revised earnings higher, with fiscal 2026 EPS forecast at $3.39.
Goldman Sachs supplemented its qualitative view with quantitative work: a bull/bear discounted cash flow analysis that points to a positive skew of 1.6:1 for the stock. The bank flagged Credo’s recent operating momentum - the company recorded 224% revenue growth over the last twelve months - and InvestingPro assigns the company a "GREAT" overall financial health score. The InvestingPro offering also notes a comprehensive Pro Research Report with 19 additional ProTips related to the company.
Credo has also provided preliminary operational guidance that underpins the optimistic analyst tone. The company projected third-quarter fiscal 2026 preliminary revenue in a range between $404 million and $408 million. That projection notably exceeds its prior guidance of $335 million to $345 million and outpaces analyst consensus of $341.2 million.
Looking ahead, Credo updated its fourth-quarter outlook to expect sequential revenue growth in the mid-single digits, which the company said would result in more than 200% year-over-year revenue growth for the current fiscal year if achieved.
Market participants reacted with additional analyst coverage moves. Needham reiterated its Buy rating on Credo with a price target of $220 after the company’s revenue update.
Product and standards milestones were also highlighted. Credo’s Toucan retimer, which is PCIe 6.0-capable, has attained PCI-SIG compliance, a development Goldman Sachs said will ease deployment in both current and upcoming PCIe systems. The company also introduced the Blue Heron 224G AI scale-up retimer designed to support extended cable and PCB backplane links, which the firm noted expands options for AI networking applications.
Key points
- Goldman Sachs initiates coverage with a Buy rating and $165 price target - implying ~27% upside from $127.91.
- Credo reported very strong recent revenue momentum and provided preliminary Q3 FY2026 revenue guidance of $404M-$408M, well above prior guidance and consensus.
- Product and compliance milestones - PCIe 6.0 Toucan compliance and the Blue Heron 224G AI retimer - support Credo’s positioning in datacenter and AI networking markets.
Risks and uncertainties
- The bullish case relies in part on Goldman Sachs’ expectation that copper solutions will remain relevant through at least 2032 - a shorter-than-expected persistence of copper-based technologies could alter forecasts.
- Analyst upside is tied to Credo delivering on its preliminary revenue guidance and on continued high revenue growth; failure to meet the company’s updated guidance would increase uncertainty for earnings and valuation assumptions.
Overall, Goldman Sachs’ initiation combines product-level differentiation in AECs and retimer technologies with recent top-line acceleration and favorable analyst revisions to form a constructive view on Credo. The firm’s DCF analysis and elevated EPS estimates relative to consensus underline a positive stance, while the company’s updated guidance and technical certifications add near-term operational support for that outlook.