QS Research · Michael Burry's Scion Capital analyst template · 2006
Credo Technology Group Holding Ltd (CRDO)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case -7% · downside -37% · upside +35%
All three cases use section 13's TTM base (EBITDA $542.7M, net cash $738.9M, 187.95M shares), not an averaged cycle. The base midpoint of 37.5x EV/EBITDA gives $20.35B EV + $0.739B net cash = $21.09B equity, or about $112/share, roughly -7% from $120.51. Downside at 25x gives about $76 (-37%); upside at 55x gives about $163 (+35%), so the long rule fails on the -25% downside test and the short rule fails on the +25% upside test. The market has de-rated a genuine hypergrowth connector franchise, but at 40.3x TTM EBITDA and a 1.9% FCF yield it still pays for much of that growth. This is a watch, not yet a deep-value long.
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 sells the plumbing of AI and cloud data-center networks — ZeroFlap Active Electrical Cables, optical PAM4 DSPs and ZeroFlap transceivers, PCIe retimers, SerDes chiplets, OmniConnect/Weaver memory fanout and SerDes IP — built on its own SerDes/DSP designs and manufactured fabless. Revenue went $58.7M (FY2021), $106.5M (FY2022), $184.2M (FY2023), $193.0M (FY2024), $436.8M (FY2025) and $1.34B (FY2026), with operating income turning from a $37.1M loss in FY2024 to $445.0M of income in FY2026. The FY2022 company was IP-license heavy (23% of revenue from IP licenses, 37% in FY2021) and loss-making; the FY2026 company is product-led, highly concentrated (top 10 customers ~90% of FY2026 revenue, two above 10%) and strongly cash-generative (+$464.3M operating cash flow).
- ✓ 2. Competitive advantage
The 10-K claims a breadth advantage ("the only company in our industry offering a complete suite of high-performance connectivity solutions"), but the only hard evidence of advantage is the margin ramp: FY2026 gross profit of $908.3M on revenue of $1.34B (≈68%, up from ≈62% in FY2024) and operating income of $445.0M versus $37.1M in FY2025. That profitability is genuinely operating, not one-off — FY2026 pre-tax income of $475.4M is only ~$30M above operating income. Against that, it is a recent convert from losses (FY2021–FY2024 all net losses, accumulated deficit $83.2M at May 3, 2025), sells ~90% of FY2026 revenue to its top 10 customers on cancelable purchase orders, and names Broadcom, Marvell and Astera Labs — "substantially larger" rivals with better brand recognition and broader product offerings — as its principal competitors.
- ✓ 3. 10-Q takeaways
Quarter ended August 1, 2026: revenue was $479.0 million, up 114.7% from $223.1 million, driven by AEC shipments; gross margin fell to 64.5% from 67.4% on acquired-intangible amortization. Net income was $129.4 million, but cash flow shows $88.0 million share-based compensation and $11.6 million acquired-intangible amortization; operating income was 25.2% of revenue vs 27.2%. Cash fell to $466.9 million from $1.2 billion after the $735.6 million DustPhotonics payment, while inventory rose $61.5 million for backlog. The 10-Q gives liquidity outlook only and no new risk factors.
- ✓ 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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