Credo Technology (CRDO, Financial) is looking beyond Amazon Web Services (AMZN, Financial) for growth, expecting more hyperscaler clients to contribute significantly to its revenue in the coming quarters.
Currently, AWS accounts for 86% of Credo's revenue, but Chief Financial Officer Dan Fleming said that is changing. “We had seven customers contributing over 5% of revenue last quarter,” he noted. “Going forward, we expect three to four of them to surpass 10%, as additional hyperscalers increase orders.”
Credo specializes in high-speed connectivity solutions for data centers, offering optical and electrical cables, integrated circuits, and networking tech. The company beat estimates with its Q3 results, initially sending shares higher in post-market trading Tuesday before they dropped Wednesday morning.
Bank of America Securities reiterated its Buy rating but cut its price target from $83 to $75. Analysts, led by Vivek Arya, highlighted growing competition from Marvell (MRVL, Financial) and Broadcom (AVGO, Financial) but said Credo's expanding product mix could sustain its strong 63-65% gross margins as scale improves.
