Issue #43

Big growth. Big tailwinds. Big demand. Meet the market’s newest Strong Buys.

The next wave of technological transformation isn’t happening on the screen — it’s happening in the infrastructure beneath it. As AI models grow larger, faster, and more power-hungry, the world is scrambling to rebuild the physical backbone that connects GPUs, secures borders, powers automation, and moves data at unprecedented speed. A new class of infrastructure companies is emerging — not the flashy AI brands, but the mission-critical enablers shaping the future of compute, defense, and autonomy.

👉 One company is building the ultra-fast, high-efficiency connectivity that keeps AI clusters alive — the hidden silicon link between every GPU.
​ 👉 The other is deploying autonomous drones, robotics, and counter-UAS systems at global scale — transforming battlefield intelligence and national security.
​ 👉 Both are riding multi-billion-dollar secular tailwinds and delivering explosive revenue growth — far ahead of Wall Street’s expectations.

In this edition, we spotlight two high-conviction innovators powering the AI revolution and the autonomous defense surge — one in data-center connectivity, the other in mission-critical robotics. These aren’t just growth stories. They’re the infrastructure behind the next decade of technological dominance.

Credo Technology (NASDAQ: CRDO)

Credo Technology Group Holding Ltd. is a leading provider of high-performance, high-speed connectivity solutions essential for the next generation of data centers, particularly those fueling Artificial Intelligence (AI), cloud computing, and hyperscale networks. The company's technology is critical for overcoming bandwidth and power efficiency bottlenecks in the massively scaling AI infrastructure.

Business Model and Revenue Streams 📦

Credo's business model is centered on its highly differentiated and proprietary SerDes (Serializer/Deserializer) and Digital Signal Processing (DSP) technology, which forms the foundation of its product offerings. It operates a capital-light, fabless semiconductor model, designing chips and contracting fabrication to third-party foundries.

The company generates revenue from two main segments:

• Product Revenue: This is the primary and fastest-growing revenue stream. It comes from the sale of its high-speed connectivity products, which include Active Electrical Cables (AECs), Optical Digital Signal Processors (DSPs) for optical transceivers, and PCIe Retimers. These products are crucial for linking GPUs, CPUs, and memory within and across data center racks, a key requirement for AI training and inference clusters. AECs, in particular, are seeing massive adoption as an energy-efficient and reliable alternative to traditional copper cables and some optical solutions for shorter distances.
• IP Licensing Revenue: This involves licensing its core high-speed SerDes intellectual property (IP) to customers who integrate the technology into their own chips, such as custom ASICs (Application-Specific Integrated Circuits) for network and computing applications. This stream provides a high-margin, recurring element to the business.

Macroeconomic Impact 🌍

Credo is currently experiencing a massive tail-wind from the AI infrastructure boom. The unprecedented demand from hyperscale data center operators for high-speed, low-latency, and power-efficient connectivity solutions has dramatically accelerated the company's growth.

However, the company's financial results are highly sensitive to two key factors:

1. Customer Concentration Risk: A significant portion of Credo's revenue (as high as 86% in Q3 FY2025, though diversifying with recent reports showing a new hyperscaler joining the top customers) is tied to a small number of hyperscale customers—the biggest tech companies building the AI cloud. Any change in the purchasing patterns or design wins from these key customers could instantly and materially impact Credo's top line.
2. Global Semiconductor Supply Chain: While operating a fabless model, Credo is still reliant on the global semiconductor supply chain and manufacturing capacity, which can be subject to geopolitical trade tensions and general macroeconomic uncertainties. However, the current demand driven by AI is outweighing broader electronics market softness.

Recent Performance and Corporate Developments 📈

Credo has delivered a string of outstanding earnings reports, consistently beating analyst expectations and demonstrating a sharp inflection point in its business driven by AI-related demand.

Q2 Fiscal Year 2026 (Ended November 1, 2025) Financial Highlights: 💰

Revenue: $268 million, marking an approximately 272% increase year-over-year and exceeding analyst estimates by 14%.

Adjusted EPS: $0.67, which was significantly higher than the prior year and surpassed analyst estimates by 36.7%.

Non-GAAP Gross Margin: 66%, which was improved compared to the prior year and represented a strong result against expectations.

Guidance: For Q3 FY2026, the company projected revenues between $335 million and $345 million, dramatically exceeding prior consensus estimates of around $247 million, signaling strong continued momentum.

• Customer Expansion: Management has highlighted a key development: the addition of a fourth hyperscaler customer contributing over 10% of revenue, which helps mitigate the customer concentration risk.
• Innovation: Credo continues to invest heavily in R&D and has recently showcased new products like ZeroFlap Optical Transceivers and the BlueBird 1.6T Optical DSP to address the increasing performance, reliability, and power efficiency needs of next-gen AI networks.

Strategic Initiatives and Mergers: 🤝

• Acquisition: In September 2025, Credo completed the acquisition of Hyperlume Inc., a developer of Micro-LED-based optical interconnect technology. This strategic move is intended to bolster Credo's IP portfolio and expand its reach into next-generation chip-to-chip communications.
• Licensing: Credo also entered a patent license agreement with The Siemon Company, licensing its proprietary AEC technology patents, which validates the strength of its core IP.

Path to Profitability and Fair Value 🎯

Credo is already a highly profitable company on both a GAAP and non-GAAP basis, achieving a significant net profit of $52.18 million for the full fiscal year 2025 (FY2025) and a substantial net income turnaround in the first half of FY2026.

• Path to Sustained Profitability: The future path is secured by leveraging its proprietary technology in a high-demand market, allowing for consistently high gross margins (above 60%). The company's massive projected revenue growth (around 170% YoY for FY2026) is expected to continue improving its operating leverage.
• Fair Value Assessment (Valuation): Given the stock's massive surge (up over 180% YTD), valuation ratios are exceptionally high. The trailing 12-month Price-to-Earnings (P/E) ratio is in the high double-digits/low triple-digits, and the Price-to-Sales (P/S) is also high compared to industry peers. This indicates that the stock is not priced for value, but rather for its phenomenal and accelerating growth potential in the AI market, where it is a clear "picks-and-shovels" beneficiary. Its premium valuation is justified by its differentiated technology, high gross margin, and leading position in a massive, expanding market.

Analyst Estimates and Ratings 📊

Analyst sentiment is overwhelmingly bullish, with all recent ratings falling into the "Buy" or "Strong Buy" category, fulfilling the criteria of your prompt.

• Consensus Rating: The consensus rating from analysts is a "Strong Buy", with 100% of the analysts tracked giving a Buy/Strong Buy rating in the past three months.
• Price Target: The average 12-month price target is approximately $208.93 (as of early December 2025), with some firms, like Roth/MKM, raising targets as high as $250.00. This suggests a double-digit upside potential from the current price in the low $180s.

Investor-Focused Takeaway: Is CRDO Right for Your Portfolio?

Credo Technology is one of the most compelling pure-play AI infrastructure stocks on the market. Its proprietary SerDes and DSP technology, particularly its AECs, places it at the critical choke point of next-generation data center interconnectivity.

What to Watch in the Near Term: 📈

• Hyperscaler Ramps: Monitor the continued ramp-up of its Active Electrical Cable (AEC) program and the successful integration of its newer hyperscale customers to mitigate concentration risk.
• Execution: Keep a close eye on management's ability to execute on its aggressive revenue forecasts (e.g., $335M–$345M for Q3 FY2026) while maintaining high gross margins.
• Product Diversification: Look for traction in newer product lines like the 1.6T BlueBird DSPs and the integration benefits from the Hyperlume acquisition.

Recommendation:

Credo (CRDO) is a high-growth, high-conviction Strong Buy for investors looking for exposure to the foundational building blocks of the AI revolution. While its valuation is demanding, its explosive growth, accelerating guidance, widening customer base, and unanimous analyst support confirm its status as a market leader in high-speed connectivity. Short-term volatility is likely, but the long-term trend, supported by the secular growth of AI, remains firmly positive.

Final Take: Two High-Conviction Tech Stocks with Breakout Potential

Ondas Holdings Inc. operates as a technology and service provider focused on two high-growth, mission-critical sectors: Autonomous Systems and Private Industrial Wireless Networks. The company is rapidly pivoting to become a dominant, globally-scaled platform for integrated, multi-domain autonomous solutions—from aerial drones to ground robotics—primarily for defense, security, and critical infrastructure clients.

Business Model and Revenue Streams 📦

Ondas's business is structured into two main segments, though revenue is currently dominated by the Autonomous Systems division:

1. Ondas Autonomous Systems (OAS): This is the high-growth engine, focused on designing, developing, manufacturing, and supporting integrated autonomous systems (like the Optimus and Iron Drone Raider platforms), sensors, counter-UAS (C-UAS) technology, and ground robotics.
   • Revenue: Generated primarily from the sales of autonomous platforms (hardware and integrated software) and related services, maintenance, and support contracts. The demand is currently driven by a global shift towards sophisticated, multi-domain defense and security solutions.
2. Ondas Networks: This segment focuses on providing the FullMAX Software Defined Radio (SDR) technology and other wireless connectivity solutions that support Mission-Critical Internet of Things (MC-IoT) applications.
   • Revenue: Derived from the sale of its patented wireless radio systems, which enable private, secure, and wide-area networks for clients in critical industries like Class 1 Rail (using the IEEE 802.16t "dot16" standard adoption) and energy. This is a foundational, long-term revenue stream with high barriers to entry.

Macroeconomic Impact 🌍

Ondas is subject to two primary, yet contrasting, macroeconomic forces:

• Defense Spending Tailwinds (Positive): The company's exponential growth is almost entirely driven by accelerating global defense, security, and homeland security budgets. Geopolitical instability and the need for counter-drone and autonomous capabilities have created a massive, urgent demand cycle, providing a significant tailwind for the OAS segment.
• Industrial Capital Cycles (Mixed): The Ondas Networks segment, focused on rail and utility modernization, is tied to large-scale, multi-year capital expenditure cycles. While this provides long-term revenue visibility (especially with the recent adoption of the dot16 standard by the Association of American Railroads), delays in customer CapEx or broader economic uncertainty can slow the pace of contract fulfillment.

Recent Performance and Corporate Developments 📈

Ondas has demonstrated a powerful transformation in its financial profile, marked by aggressive revenue growth and an acquisition-fueled strategy.

Q3 Fiscal Year 2025 (Ended September 30, 2025) Financial Highlights: 💰

• Total Revenue: $10.1 million, representing an approximately 582% increase year-over-year, driven overwhelmingly by the Ondas Autonomous Systems (OAS) segment.
• OAS Revenue: $10.0 million, marking an approximately 800% increase year-over-year, reflecting surging global defense demand for autonomous systems.
• Consolidated Backlog: $23.3 million, which is up both quarter-over-quarter (QoQ) and year-over-year (YoY), providing strong near-term revenue visibility.
• Gross Margin: 26%, showing significant fluctuation primarily due to a shift in the product/service mix during the quarter.
• Cash Position (Pro Forma): Approximately $840.4 million, representing a massive increase due to significant equity raises conducted in 2025.

Guidance: The company has raised its full-year 2025 revenue target to at least $36 million (up from earlier estimates) and has established a preliminary 2026 revenue target of at least $110 million, indicating an expected further triple-digit percentage growth.

Strategic Initiatives and Mergers: 🤝

Ondas is executing a rapid "Systems of Systems" expansion, which is primarily driven by M&A:

• Acquisitions: The company has been highly acquisitive, using its strengthened balance sheet to integrate complementary technologies. Recent notable acquisitions/investments include:
  • Sentrycs: A developer of Cyber-over-RF Counter-UAS (C-UAS) technology.
  • Apeiro Motion: An innovator in unmanned ground vehicles (UGVs) and fiber-optic communication spools for robotics.
  • SPO Smart Precision Optics and Insight Intelligent Sensors: Expanding its core capabilities in high-end electro-optics and AI-powered sensor fusion.
• Ondas Capital: Launched as an advisory and investment platform to deploy capital to advance battle-tested, dual-use autonomous technologies from allied nations (like Ukraine) into U.S. and European production.
• Major Contracts: Secured a strategic government contract to develop and deploy an autonomous border-protection system involving thousands of drones and secured an $8.2 million repeat order for advanced C-UAS systems in Europe.

Path to Profitability and Fair Value 🎯

Ondas is currently in a hyper-growth, "invest-to-scale" phase, prioritizing market capture and platform development over near-term net income.

• Path to Profitability: The company is currently unprofitable (reporting a net loss of $7.5 million in Q3 FY2025). The path to profitability hinges on two factors:
  • Scaling Revenue and Operating Leverage: Converting its massive, growing backlog and large contract wins into sustained, high-margin revenue. Management has projected achieving EBITDA positivity in the second half of 2026.
  • M&A Integration: Successfully integrating the numerous recent acquisitions and rationalizing the corresponding high operating expenses (which nearly doubled in Q3 FY2025) to achieve operational efficiencies.
• Fair Value Assessment: As a high-growth, pre-profit company with massive revenue acceleration (582% YoY) and significant recent dilution from equity raises, traditional valuation metrics like P/E are irrelevant (N/A). The stock trades at a very high Price-to-Sales (P/S) ratio (trailing 12-month P/S $\sim$55.40), indicating that its current price is almost entirely based on:
  • The realization of its $110 million+ 2026 revenue target.
  • The strength of its $840 million+ pro forma cash position, giving it the capital to execute its ambitious M&A and growth plan.
  • Its position in the secular growth markets of autonomous defense and rail modernization.

Analyst Estimates and Ratings 📊

Analyst coverage is highly bullish, focusing on the company's clear growth narrative and massive market opportunity.

• Consensus Rating: The consensus rating from analysts is a "Strong Buy". Recent reports show 100% of tracked analysts providing a Buy or Strong Buy rating in the past 30-90 days.
• Price Target: The average 12-month price target is approximately $10.67, with a high estimate of $12.00, suggesting significant upside from its current trading price in the single digits.

Investor-Focused Takeaway: Is ONDS Right for Your Portfolio?

Ondas Holdings is a high-risk, high-reward bet on the autonomous systems and critical infrastructure markets. The company is undergoing a complete business transformation, transitioning from a niche wireless provider to an integrated autonomous platform leader.

What to Watch in the Near Term: 📈

• Execution Risk: The key risk is the company's ability to execute on its massive projected revenue and backlog, while simultaneously integrating numerous acquisitions. Any major contract delays or operational missteps could severely impact investor confidence.
• Cash Burn and Dilution: While the company has a massive cash position, investors must monitor the cash burn rate and any future equity offerings, which could further dilute shareholder value.
• Network Progress: Watch for concrete news and purchase orders related to the Ondas Networks dot16 standard adoption by Class 1 railroads, which will provide a necessary diversification from the defense-heavy OAS segmen

Recommendation:

Ondas (ONDS) is a High-Conviction Buy for aggressive, growth-focused investors comfortable with risk. Its valuation is high because the market is pricing in the success of its multi-hundred-million-dollar opportunity in autonomous defense and security. The confluence of a massive cash reserve, a clear strategic roadmap, an accelerating revenue trajectory, and unanimous analyst support makes it a compelling, albeit speculative, pure-play growth stock.

Final Take: Two High-Conviction Tech Stocks with Breakout Potential

As the global financial ecosystem shifts — toward hard assets, rate sensitivity, and digital transformation — two under-the-radar players are emerging with serious upside. Sprott (SII) and Bank of New York Mellon (BK) represent fundamentally different strategies, but both are riding powerful, long-term trends reshaping how capital flows and grows in 2026.

One is a pure play on gold, uranium, and critical materials, thriving on macro volatility. The other is a core financial infrastructure stock with $58T+ in custody and rising operating leverage from fee-based income and AI.

🟡 Sprott (SII) – The Go-To Platform for Gold, Uranium, and Critical Materials
✔ $50B+ in AUM with 56% YTD growth
✔ Management fees up 30% YoY; Adjusted EBITDA +54%
✔ Raised dividend 33%; ETF AUM 10x in 3 years
➤ Best for: Investors seeking a pure-play inflation hedge with exposure to the energy transition and hard-asset demand.

🟢 BNY Mellon (BK) – The Silent Infrastructure Powering $58 Trillion in Assets
✔ Record EPS growth (+25%) and 493 bps of operating leverage
✔ 18% Net Interest Income growth in high-rate environment
✔ Massive AI + digital push with strong dividend and buybacks
➤ Best for: Core portfolio builders looking for a defensive, scalable financial engine with deep moat and compelling valuation.

Investor Insight:

🔒 Want to hedge against fiat debasement and bet on uranium? → SII
​ 🔗 Want a global financial backbone with steady income and digital upside? → BK

These aren’t just financial stocks — they’re systems-level operators. And in a world where safety, trust, and transformation are everything, SII and BK are built to lead.

​
Happy Trading
​— Team Premium Stock Alerts