Credo Technology (NASDAQ:CRDO) is looking beyond Amazon Web Services (NASDAQ:AMZN) 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 (NASDAQ:MRVL) and Broadcom (NASDAQ:AVGO) but said Credo’s expanding product mix could sustain its strong 63-65% gross margins as scale improves.
This article first appeared on GuruFocus.
