- Insider Monkey’s “10 Must-Buy AI Stocks” highlights Credo Technology (CRDO) and Nebius Group (NBIS) with projected upside of roughly 50%–90%.
- Credo is riding AI interconnect demand, growing revenue ~126% YoY to ~$437M with FY26 guidance above $800M and strong ~65%+ gross margins, but it carries high valuation and hyperscaler customer concentration risk.
- Nebius is scaling AI compute infrastructure with large Microsoft and Meta contracts and ~355% YoY revenue growth, yet remains loss-making due to heavy capex and faces cash-burn and dilution risk.
- Key investor questions are whether growth-driven margins and capacity buildouts can stay on track amid intense competition, elevated multiples, and potential supply-chain or regulatory constraints.
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The Insider Monkey piece identifies CRDO and NBIS among its top AI stock picks citing upside projections of over 50%–90% for both. Examining both in depth reveals strong growth narratives, but also significant risks that potential investors must weigh.
Credo Technology (CRDO): CRDO has posted ~126% YoY revenue growth in FY2025, reaching ~$436–440M; management is guiding revenues above $800M for FY26. Margins are expanding: non-GAAP gross margin ~65% and net income growing steeply—non-GAAP net income reached ~$98M in Q1 FY26 on revenue of $223.1M, with net margin ~44%. Growth drivers include its AEC (Active Electrical Cable) solutions, high-performance optical DSPs & SerDes IP, and retimers. CRDO’s current valuation is high: forward-looking multiples P/S ~20-25×, P/E exceeding 90× in some analysis. Customer concentration is material—three major hyperscalers (Microsoft, Amazon, Tesla) each account for over 10% of revenue. Stakeholders should assess whether margins and scale can withstand both R&D ramp and competitive pressures from logical peers.
Nebius Group (NBIS): Nebius is growing infrastructure capacity in response to near-term demand: Q3 2025 revenue jumped ~355% YoY to ~$146.1M; contracts include major deals with Microsoft (≈$17.4B over 5 years) and Meta (≈$3B). Despite scale, company remains unprofitable, with net losses widening due to capex—for example, in Q3 capex was near $956M. Its market cap has multiplied (~4× to ~$27–30B) in the past year but dilution risk via equity offerings is present. Key execution risks: delivering capacity (land, power, GPUs), managing operating costs, and maintaining margin discipline.
Comparative & Strategic Implications: Both companies sit in distinct niches of AI infrastructure: CRDO in interconnectivity and internal server networking; Nebius in infrastructure-as-a-service for AI compute. This aligns with broader industry trends where demand is shifting not just to AI models, but to the heavy backend of compute power and high-speed interconnect. That said, valuation multiples are elevated—this assumes continued growth and execution, which is dependent on hyperscaler demand staying strong, power/water/real estate infrastructure being available, supply chain staying intact.
Open Questions:
- Can Credo maintain its margin expansion while scaling, given rising operating expenses and prospective cost pressures from materials, tariffs, or components?
- Will Nebius be able to reach cash-flow positivity or at least reduce losses significantly before dilution becomes a concern?
- How exposed are both to geopolitical & regulatory risks (e.g., export restrictions on chips, energy constraints, supply-chain disruptions)?
- How sustainable is the customer concentration risk, especially for CRDO where a few customers dominate revenue?
Supporting Notes
- Insider Monkey lists Credo (CRDO) and Nebius (NBIS) among its “10 Must-Buy AI Stocks” with upside of ~52.5% and ~96%, respectively.
- Credo’s FY2025 revenue rose ~126% YoY to ~$437M, with guidance expecting >$800M in FY26.
- Credo’s Q1 FY26 revenue = $223.1M (+274% YoY; +31% sequentially); non-GAAP net income ~$98.3M; non-GAAP gross margin ~67.6%; operating margin ~43.1%.
- Nebius’ Q3 2025 revenue was ~$146.1M, up ~355% YoY, with loss narrowing (net loss ~US$40M); signed $3B deal with Meta for infrastructure over 5 years, plus a prior ~$17.4B deal with Microsoft.
- CRDO trades at high valuations e.g. forward P/S ~20-25×, forward P/E over ~90× in some estimates; gross margins improving deeper into interconnect/treansceiver products.
- Nebius’ capex in Q3 2025 was ~$955.5M, increasing capacity; including GPU inventory, power & land; market cap ~US$27-30B; but equity dilution risk from planned programs.