Bubble or no bubble, this is the best stock for AI exposure: analyst
Investing.com - BofA Securities raised its price target on Credo Technology Group Holding Ltd. (NASDAQ:CRDO) to $240.00 from $165.00 on Tuesday, while maintaining a Buy rating on the stock.
The firm identified Credo as a top small and mid-cap pick and one of its four AI-leveraged top selections, alongside NVIDIA, Broadcom, and AMD. BofA cited strong execution in new customer adoption and long-term product diversification as key factors supporting Credo’s sales outlook. NVIDIA, with its massive $4.37 trillion market cap and 65.22% revenue growth over the last twelve months, continues to be a dominant force in the semiconductor space. InvestingPro data shows NVIDIA enjoys a strong buy consensus among analysts, with 33 upward earnings revisions for the upcoming period.
BofA noted that Credo’s Active Electrical Cable (AEC) product is now ramping at four large hyperscalers, with a fifth customer in initial volume production. Management expects sales to grow at a mid-single-digit rate quarter-over-quarter throughout fiscal years 2026 and 2027, suggesting consistent AEC ramps despite modest competition concerns.
The company’s new growth pillars—including zero-flap optics family, active LED cables, and omni-connect gearboxes—are each expected to represent billion-dollar addressable markets, totaling approximately $10 billion in company total addressable market by the end of the decade.
BofA raised its fiscal 2026-2028 earnings per share estimates by 35-45% and maintained its price target multiple of 70x calendar year 2026 estimated price-to-earnings ratio, based on approximately 1.8x PEG ratio, which is at the higher end of the 1-2x range. Want deeper insights into semiconductor stocks like Credo and NVIDIA? InvestingPro offers comprehensive Pro Research Reports for over 1,400 US equities, transforming complex Wall Street data into clear, actionable intelligence.
In other recent news, Synopsys has received a reiterated Outperform rating from Mizuho, with a price target of $600.00. This comes as Synopsys announces an expanded partnership with NVIDIA, combining their engineering software with NVIDIA’s computing and AI technology to enhance design and analysis processes. Meanwhile, OpenAI has taken an ownership stake in Thrive Holdings to accelerate enterprise AI adoption, particularly in accounting and IT services. This collaboration aims to improve speed, accuracy, and cost efficiency by embedding OpenAI’s teams within Thrive Holdings.
Nvidia’s CEO, Jensen Huang, has described China as a "bonus opportunity" amid a surge in global demand for Nvidia’s products, indicating that while China could be a growth market, it is not essential to their current strategy. Additionally, Chinese tech companies Alibaba and ByteDance have shifted their AI training operations to Southeast Asia due to U.S. restrictions on sales of Nvidia’s H20 chips to China. Lastly, Bernstein has reiterated an Outperform rating for Nvidia, maintaining a price target of $275.00. This analysis follows a company memo addressing recent bearish viewpoints circulating in the media.
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