We recently compiled a list of 14 Best New Tech Stocks to Buy Right Now. In this article, we will look at where Credo Technology Group Holding Ltd. (NASDAQ:CRDO) is up against some of the best new technology money can buy.
Tech Stocks Shouldn’t Be Missed
Tech stocks have been attracting investors’ attention, with tech stocks helping the S&P 500 climb a staggering 400% from 2009 to 2022. The Nasdaq 100 index has done even better, up more than 700%. at the same time.
However, the first half of 2022 saw a brutal market correction, the worst in 50 years for Wall Street. National political conflicts, rising energy prices, and rising interest rates have all played a role. Technology stocks took a hit, with major tech companies down as much as 39% at the same time.
Tech stocks are risky investments. When money was cheap during the pandemic, people borrowed heavily and invested in technology and crypto. This caused prices to skyrocket, and overvalued the technology industry. But when central banks raised rates, people started selling technology, which caused prices to fall.
Earlier this week, we posted an article 10 Best Emerging Tech Stocks to Buy Nowwhere Mad Money host and former hedge fund manager Jim Cramer said that technology should not be misled. Here is an excerpt from that article:
“He (Cramer) believes that large technology firms, associated with fixed systems such as data centers and high-speed computers, should be considered good opportunities to buy when the market is weak, instead of a different opinion …. September is the weakest month in the history of the market, with a stable profit recession. He believes that the broader sales pressure in September is due to the combination of technology but not exceeding expectations.”
This is especially important to acknowledge when we see many analysts moving away from the prospect of a recession. Anastasia Amoroso, chief investment officer at iCapital, says that despite signs of a weakening labor market, such as rising unemployment and job growth, she does not foresee a recession. the economy is close. The market is expecting a 25 basis point rate cut from the Fed, possibly as much as a 50 basis point cut if economic indicators worsen.
The economy is still growing at a rate of 2%, although it is slower than before. Amoroso noted that the main economic indicators do not suggest a high probability of recession. Although the market is cautious, there is room for optimism. Lower rates and a slower economy could lead to a better market environment.
IPO Outlook
EY Global IPO Trends Q2 2024 reported that in the first half of 2024, global IPO activity experienced a slowdown, with volumes down 12% (551 listings raising a total of $52.2 billion) and the amount is down by 16% compared to the previous one. year.
For the first time in 16 years, the EMEIA region achieved the top spot in terms of global IPO market share by volume. Industrials emerged as the leading sector in terms of number of IPOs, while the technology sector raised the most capital through IPOs.
Earlier this year in May, Goldman Sachs Chairman and CEO David Solomon, at a conference in France, said he was concerned that fewer companies were going public but expected the IPO process to improve. will start in the second half of 2024.
Solomon shed light on the recent volatility in the equity markets and noted that billion dollar companies have experienced large swings of up to 10% in recent earnings. He acknowledged that such uncertainty could stimulate business, but expressed concern over a possible decline in public markets.
He believes that hyper-scalers have grown because of their competition and recent technological advances. Despite the volatility of the market, he believes in its success and the importance of public markets for the distribution of funds and transparency.
Solomon expressed concern over the dwindling number of public companies due to large private market capital and stressed the need for open markets, inclusive of the public. Although the IPO market has recently been restored, it expects a gradual increase in activity in the second half of 2024, entering 2025, although it is lower than in 2021. However, the trend of lik Companies that remain private for a long time contribute to the overall decline in publicly traded companies. organizations.
Recently, CNBC’s Deidre Bosa talked about the significant power needs of AI and the efforts of the tech giants to address this growing need. He pointed to recent large-scale technology investments in data centers and nuclear power plants to support his claim.
Jensen Huang acknowledged the high costs associated with energy but recognized the potential of AI to generate energy-saving solutions. Bosa and Huang agree that public-private partnerships are critical to tackling AI’s power consumption. While training AI models takes a lot of effort, the long-term benefits in areas such as healthcare, weather and network management outweigh the costs. Both believe that AI can revolutionize the energy industry with new solutions.
Amoroso’s comments suggest that the overall economic outlook does not indicate a recession, while Bosa and Huang foresee higher investment in technology due to growing demand for AI. So with awareness and adjustments in investment strategies, potential investment risks can be avoided in the technology sector.
Method
We used stock screeners to search for companies that went public in the last 3 years. We organized our screen by IPO date and market cap and looked at 30 stocks that went public in the last 3 years and sold more than $1 billion. We then selected the 14 stocks that were the most popular among elite hedge funds and that analysts were moving forward. The stocks are ranked in ascending order of the number of hedge funds that own shares in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds accumulate in? The reason is simple: our research has shown that we can outperform the market by mimicking the best hedge fund options. Our quarterly strategy picks 14 small and large stocks each quarter and has returned 275% since May 2014, outperforming its benchmark by 150 percent (syes more details here).
Description: Credo Technology Group Holding Ltd. (NASDAQ:CRDO)
Market Capitalization as of September 13: $4.61 billion
Number of Hedge Fund Holders: 36
Credo Technology Group Holding Ltd. (NASDAQ: CRDO) is a leading provider of high-speed, integrated semiconductor components used in data centers, communications equipment, and AI. It specializes in developing new solutions that enable high-speed data transmission and processing.
The company reported FQ1 2025 revenue of $59.71 million, a 70.15% year-over-year improvement. Product revenue of $57.3 million increased 30% compared to the previous quarter, driven by increased AI flow.
This is a high speed connection company. Its strong customer relationships position its AEC solutions as the top choice for in-rack connectivity at speeds of 50 gig per lane, with significant growth expected in fiscal year 2025.
In Optical DSP, Credo aims for at least 10% of the revenue of the year 2025, driven by the main victory in the design and concept of Linear Receive Optics (LRO) targeting 10 watts for 800 gig modules .
The Line Card PHY business is benefiting from the demand for 400-gig and 800-gig solutions in AI applications, while SerDes license units and chipsets are expanding, providing solutions up to speeds of -224 gigabytes across different operating geometries from 28 to 3 nanometers.
A 10% increase in customer demand is expected in Q2, and the company plans to enter the 64 gig PAM4 PCIe Gen 6 market. The AEC product line remains an important source of revenue, with solutions for 800 gig production and 3-nanometer products for the 1.6T port market expected by 2025. Investors’ outlook remains positive for the future, as it is currently held by 36 hedge funds, which the highest number is $121,097,060 per Driehaus Capital.
Credo Technology Group Holding Ltd. (NASDAQ:CRDO) is poised for significant growth as it continues to thrive in the dynamic data center market, particularly with increased demand from emerging hyper scalers and operators. following those who are passionate about using AI technology. This makes it a top new stock to check.
NCG Small Cap Strategy stated the following about Credo Technology Group Holding Ltd (NASDAQ:CRDO) in its Q2 2024. investor letter:
“Credo Technology Group Holding Ltd (NASDAQ: CRDO) is a semiconductor company focused on high-speed connectivity in the data equipment market, particularly the data center market. CRDO’s products provide high-speed data connectivity with improved energy efficiency, and CRDO is seeing rapid adoption as these products help enable next-generation AI data centers.
In general CRDO 5th level on our list of the best new tech gadgets you can buy. While we accept the potential of CRDO as an investment, our confidence lies in the belief that AI stocks have the greatest promise to bring high returns and do so in the short term. If you’re looking for an AI stock that’s more promising than the stock on our list but trades for less than 5 times its earnings, check out our report on low price of AI stock.
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Description: None. This article was originally published on Insider Monkey.
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