Goldman Sachs believes that demand for high-speed, short-range connectivity in artificial intelligence data centers could support further gains for Credo Technology Group . The bank initiated the company, which produces cables and chips to connect powerful AI computers, at a buy rating. Analyst James Schneider set a 12-month price target of $165, which signals 29% upside from Wednesday’s close. Schneider expects Credo to sustain its competitive advantage due to its vertically integrated business model. The analyst also sees the company delivering better price and performance versus its competitors. CRDO 1Y mountain CRDO 1Y chart “Credo manufactures high-speed, short-range wired connectivity products for the datacenter market, and is the pioneer of a technology called Active Electrical Cables (AECs) — copper-based cables with signal boosting components,” he wrote. “AECs provide lower cost, high bandwidth connections with high reliability (no ‘link flaps’ or intermittent failures) relative to competing technologies for short-range datacenter connections, and we expect this technology to continue proliferating.” Data center demand has surged in recent months due to the rising use cases of artificial intelligence. Schneider acknowledged that debates around copper versus optical networking solutions have arisen, but he expects copper solutions to remain mainstream for at least the next five years. Still, he wrote that he is “encouraged by Credo’s diversification efforts into optical solutions for datacenters that can help sustain long-term growth.” The analyst also applauded Credo’s “carefully managed guidance and investor messaging.” He sees a favorable risk-reward setup for the stock. Shares of Credo have surged 78% in the past 12 months.
