January 27, 2025
We recently compiled a list of the 10 Stocks Hurting From DeepSeek AI News That Could Turn Into Multibaggers . In this article, we are going to take a look at where Credo Technology Group Holding Ltd (NASDAQ:CRDO) stands against the other stocks.
US semiconductor stocks are getting hammered after the Chinese launched an AI model that has many questioning United States dominance in the AI space. China is currently facing restrictions on importing state-of-the-art semiconductor equipment needed for AI training. The launch of DeepSeek AI despite these restrictions is an eye-opener for Western tech companies, and the investor sentiment is reflecting it.
As market participants scamper to gather more information on China’s progress, we decided to look at stocks that are not only taking a hit from this news but also provide an attractive buy-the-dip opportunity. Against the backdrop of Project Stargate, a US government initiative to pump private sector investments into AI infrastructure, these companies also offer a potential multi-bagger opportunity.
Usually, it is the low market cap companies that become multibaggers. However, the failure rate when betting on these companies is quite high. We therefore chose companies with a market cap between $10 and $25 billion. In this way, our list contains businesses that are already established and will thrive on the boost provided by Project Stargate while successfully managing any headwinds. We believe the downside to these stocks is minimal because of the already sound fundamentals of these companies.
An engineer in a cleanroom testing and tweaking an integrated circuit.
Credo Technology Group Holding Ltd is a provider of high-speed semiconductor solutions for electrical and optical ethernet applications. The company produces low-power line card PHY, SerDEes IP, HiWire active electrical cables, and other products. The stock is getting hammered today and is down 17%.
Credo can be considered an undervalued stock even at these inflated levels. The company’s expected EPS growth should be further bolstered by improving margins down the line. Moreover, its TAM is likely to be as high as $1 trillion in 6 years time. This stock shouldn’t be ignored just because it is expensive, trading at 165 times forward earnings. There is a good reason the market is giving it that premium.
Investors shouldn’t be in a hurry to build a massive position in the stock though. It has run up 270% in a year so the current struggles on the back of DeepSeek AI developments could help bring the valuations to more reasonable levels.
Overall CRDO ranks 4th on our list of the stocks that are hurting from DeepSeek AI news that could turn into multibaggers. While we acknowledge the potential of CRDO as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as CRDO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock .
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Disclosure: None. This article was originally published at Insider Monkey .
