BNP Paribas Sets $275 Price Target for Credo Technology, Total Addressable Market Expands to $10 Billion
N.R. Finch
BNP Paribas initiated Credo Technology (CRDO) with a $275 price target, calling the copper-and-optical interconnect maker a prime beneficiary of the AI infrastructure buildout — its addressable market has tripled in 18 months to over $10 billion.
Why is BNP Paribas bullish on Credo?
Credo's core business is copper and optical-cable interconnects — the "plumbing" that links servers inside data centers. The bigger AI workloads get, the more plumbing you need.
Analyst Karl Ackerman argues hyperscale data centers are upgrading both back-end networks (server-to-server links) and front-end networks (driven by agentic AI deployment) — Credo serves both.
This means → Credo is not a single-theme bet; it captures both scale-out and scale-up demand.
How did the addressable market triple overnight?
Ackerman points to four product lines opening new territory: active electrical cables, ZF optical modules, active LED cables (ALC), and OmniConnect gearbox products.
Together they push Credo's total addressable market past $10 billion — three times where it stood 18 months ago.
In plain terms = Credo used to sell one type of pipe; now it sells four, for more use cases — so the total pie tripled.
Is the customer base strong enough?
Credo works with five of the six hyperscale cloud providers; BNP Paribas identifies them as Amazon, Meta, Microsoft, xAI, and Oracle.
Ackerman expects 3–4 new 10%-of-revenue hyperscale customers in fiscal 2027, with new cloud sales eventually approaching 20% of total revenue.
This reflects a shift from reliance on a few large buyers toward genuine diversification — single-customer risk is declining.
Why does supply-chain "visibility" matter here?
Credo's hyperscale customers provide demand forecasts spanning 12–36 months and typically place firm orders 3–6 months ahead.
Products ship first to logistics partners, then to ODMs for rack assembly before reaching data centers — this chain gives Credo high visibility into inventory status.
This means → unlike many chip companies that only see demand when orders land, Credo can read the pipeline more than half a year out, making earnings forecasts far more predictable.
How should we read the gap between price and target?
Credo closed Monday at $302.52, up 11.29% on the day and 110% year-to-date.
BNP's target is $275 — below the current price. In plain terms = the market has already run past BNP's valuation.
BNP also flags that Credo's optical DSP portfolio is expected to top $100 million in fiscal 2027 sales; whether new cloud customers land on schedule will be the key milestone to validate the growth thesis.
Content is for reference only, not financial advice.