QS Research · Michael Burry's Scion Capital analyst template · 2006
Credo Technology Group Holding Ltd (CRDO)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case none · downside -26% · upside +30%
At $120.51 (N1), CRDO trades at 13.76x EV/Sales, 40.3x EV/EBITDA, 42.1x P/E and a 1.9% FCF yield (N22,N23,N26,N27), which is the top of the 12x-14x EV/Sales fair range in section 13, not a deep-value discount. The base case at today's 13.76x on $1.59B TTM revenue (N9,N22) is about today's $120.51, while 10x downside is $88.5 (-26.5%) and 18x upside is $156.2 (+29.6%); the long rule fails because upside is below +30% and downside is worse than -25%, and the short rule fails because base is not -30%. The business is genuinely transformed—FY2026 revenue $1.34B and operating income $445.0M after four loss years (S24), Q1 FY2027 revenue $479.0M +114.7% y/y (S29)—but customer concentration, margin/opex pressure and no insider buying keep the risk high. I would watch, not own, until the price offers a margin of safety or the optical/ALC catalysts visibly lift earnings without further gross-margin dilution.
Key numbers
- Share price: $120.51
- Market cap: $22.65B
- Latest financial period: TTM to Aug 1, 2026
- Revenue (TTM): $1.59B
- EV / EBITDA (TTM): 40.3x
- P/E (TTM): 42.1x
- Price / book: 8.30x
The 15 boxes
- ✓ 1. Long-form business notes
Credo is a fabless supplier of high-speed copper and optical connectivity — ZeroFlap AECs, optical PAM4 DSPs and ZeroFlap transceivers, PCIe retimers, SerDes chiplets, OmniConnect memory fabric and SerDes IP licensing — sold direct to hyperscalers, NeoClouds, OEMs/ODMs and optical module makers. Revenue went from $106.5M in FY2022 to $436.8M in FY2025 and $1.34B in FY2026 (year ended 2026-05-02), with operating income of $445.0M in FY2026 against $37.1M in FY2025 after four straight loss years, and FY2026 operating cash flow of $464.3M. The business is highly concentrated: the top 10 customers were about 90% of FY2026 revenue, two customers were above 10%, and TSMC was the sole wafer foundry in fiscal 2026. The sources on file are two 10-Ks plus six years of XBRL facts, so nothing here is quarterly, TTM or guidance-based.
- ✓ 2. Competitive advantage
Credo has real scale and cash-generation by FY2026, but the evidence points to a narrow rather than durable moat. Management claims a complete connectivity suite, yet FY2026 revenue was concentrated in two 10%+ customers and the top 10 at about 90%, with no long-term purchase commitments and larger Broadcom, Marvell and Astera Labs competing. Design-win qualification costs create some switching friction, but Credo must first win the design and the sources give no market-share proof.
- ✓ 3. 10-Q takeaways
Latest 10-Q (Q1 FY2027, ended Aug 1, 2026) shows revenue of $479.0M, up 114.7% y/y and 9.6% q/q, with GAAP gross margin down to 64.5% on acquired-intangible amortization. GAAP operating income was $120.7M and GAAP net income $129.4M; non-GAAP net income was $236.3M, with $88.0M of share-based compensation excluded. Inventory rose to $313.1M and cash and equivalents fell to $466.9M after $735.6M net cash paid for DustPhotonics, while operating cash flow was $90.2M. Q2 FY2027 guidance is numeric, and the 10-Q reports no material risk-factor changes.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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