Issue #124

Analyzing the infrastructure plays powering the AI and satellite revolution.

The next frontier of global connectivity isn’t being won on the ground—it’s being decided in the vacuum of space and the high-speed "nervous systems" of massive data centers. As the world moves toward a future of 100% cellular coverage and 800G data processing, the traditional boundaries of telecommunications are being erased.

This shift represents a transition from local networks to a truly borderless, high-speed "AI fabric." To capture this growth, investors must look at the companies building the invisible infrastructure that makes it possible to connect a smartphone in the middle of the ocean or move petabytes of data in the blink of an eye.

👉 One company is becoming the essential high-speed "bridge" for AI data centers, providing the power-efficient connectivity that prevents the world’s most advanced chips from hitting a bandwidth bottleneck.

👉 The other is building the world’s first space-based cellular broadband network, turning every standard smartphone on Earth into a satellite-connected device without the need for additional hardware.

👉 Both are backed by the world's largest telecom giants, hold massive patent moats, and are sitting at the absolute center of the next decade of digital transformation.

In this edition, we break down the silicon speed and the orbital reach powering the new telecommunications economy—and why these two stocks are the bedrock of a hyper-connected world.

Credo Technology Group (NASDAQ: CRDO)

Credo Technology Group Holding Ltd (NASDAQ: CRDO) is a high-performance connectivity leader providing essential semiconductor solutions for the data center and telecommunications markets. As artificial intelligence (AI) and hyperscale cloud infrastructure demand faster, more efficient data movement, Credo's specialized high-speed serial connectivity (SerDes) technology has become a cornerstone of the modern "AI fabric."

Business Model and Revenue Streams 📦

Credo’s business model revolves around solving the "bandwidth bottleneck" in data centers. As data speeds climb toward 800G and 1.6T, traditional copper and optical connections face physical limitations. Credo addresses this through a diversified revenue model focused on power-efficient, high-speed data transmission:

• Product Revenue (Active Electrical Cables - AECs): This is Credo's flagship growth driver. AECs are specialized cables that use Credo’s chips to boost signals, allowing data centers to use thinner, longer, and more flexible copper connections instead of expensive optics.
• Integrated Circuits (ICs): Credo sells standalone chips, including Line Card PHYs and Optical DSPs (Digital Signal Processors), which are integrated into the hardware of major switch and router manufacturers.
• IP Licensing: Credo licenses its proprietary SerDes intellectual property to other semiconductor firms and hyperscalers who want to integrate Credo’s high-speed tech into their own custom chips (ASICs).

Macroeconomic Impact:

Credo is uniquely positioned at the intersection of fiscal policy and the "AI Arms Race." Current macro trends—specifically the aggressive capital expenditure (CapEx) from "Hyperscale" giants like Microsoft, Meta, and Google—directly fuel Credo's top line. While high interest rates typically dampen the broader tech sector, the non-discretionary nature of AI infrastructure spending has acted as a buffer. However, because Credo relies heavily on a small number of massive customers, its revenue can be lumpy; shifts in trade policy or supply chain constraints in the broader semiconductor ecosystem remain its primary external risks.

Recent Performance and Corporate Developments 📈

Credo has transitioned from a niche player to a primary beneficiary of the AI infrastructure boom, as evidenced by its explosive recent quarters.

Q3 2026 Financial Highlights (Reporting Mar 3, 2026): 💰

• Total Revenue: The company reported a record $407.0 million, representing a staggering 201.5% increase year-over-year. This massive leap was driven by the rapid adoption of 800G connectivity in AI clusters.
• Net Profit: Credo posted a non-GAAP net income of $208.8 million, or $1.07 per diluted share, crushing the analyst consensus estimate of $0.84.
• Gross Margin: Non-GAAP gross margins expanded to 66.0%, reflecting the high-value nature of its proprietary 1.6T-ready chipsets.

Strategic Initiatives and Mergers: 🤝

The last 60 days have been transformative for Credo’s corporate footprint.

• DustPhotonics Acquisition (April 13, 2026): Credo announced a landmark $750 million deal to acquire DustPhotonics. This move integrates advanced Silicon Photonics into Credo’s portfolio, allowing them to compete more directly in the optical transceiver market and significantly expanding their total addressable market (TAM).
• CoMira Solutions Acquisition (March 2, 2026): Credo also acquired CoMira to bolster its custom silicon and IP capabilities, ensuring it can provide end-to-end solutions for customers building proprietary AI chips.
• Legal Settlements: In March 2026, Credo successfully settled long-standing patent disputes with TE Connectivity and Molex, clearing a major legal overhang that had previously worried investors.

Profitability and Fair Value 🎯

Credo has successfully crossed the bridge into sustained profitability. The company's "operating leverage"—the ability to grow revenue much faster than costs—is now fully on display.

• Path to Profitability: By shifting its mix toward higher-margin AECs and 1.6T Optical DSPs (like the recently launched Cardinal family), Credo has reached a level of profitability that outpaces many of its larger peers.
• Fair Value Analysis: As of mid-April 2026, the stock has seen a significant "AI-premium" rally. While its P/E ratio (approx. 58x) is higher than the semiconductor industry average (39x), many analysts argue this is justified by its 200%+ revenue growth.
• Price Targets: Market consensus currently pegs "Fair Value" around $130.00, but following the DustPhotonics deal, some top-tier analysts (including Jefferies) have issued aggressive targets as high as $175.00, suggesting the market is still underestimating the dominance Credo has in the AEC market.

Analyst Estimates and Ratings 📊

• Consensus Rating: Credo currently holds a "Strong Buy" consensus. In the last 30 days, it has been one of the most frequently upgraded stocks in the semiconductor sector.
• Recent Momentum: Following the April 14th surge of 20% on the back of M&A news, analysts have pointed to Credo's 70% market share in the AEC space as a "moat" that is difficult for competitors like Marvell to breach in the near term.

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

Credo is the "picks and shovels" play for the AI era. While it doesn't build the AI models (like OpenAI) or the GPUs (like NVIDIA), it provides the "high-speed pipes" that allow those components to talk to each other.

What to Watch in the Near Term: 📈

• Integration Risk: The DustPhotonics acquisition is large; investors should watch how quickly Credo can integrate this photonics tech into its existing product lines.
• Customer Concentration: Because a few "Hyperscalers" make up the bulk of orders, any delay in a single major AI data center build-out could cause temporary stock volatility.
• Next-Gen Tech: Look for updates on the 1.6T Cardinal DSP adoption, which will be the next major revenue catalyst as data centers upgrade from the current 800G standard.

Recommendation:

For investors seeking high-growth exposure to AI infrastructure with a company that has proven it can generate real cash, Credo (CRDO) remains a top-tier candidate. Despite the recent price surge, its technological lead in power-efficient connectivity makes it a robust long-term hold.

AST SpaceMobile (NASDAQ: ASTS)

AST SpaceMobile Inc (NASDAQ: ASTS) is a pioneer in the telecommunications space, building the first and only space-based cellular broadband network designed to be accessible directly by standard, unmodified smartphones. By bypassing the need for specialized satellite phones or ground-based "dishes," AST SpaceMobile aims to eliminate global connectivity gaps, effectively turning every cell phone into a satellite-capable device.

Business Model and Revenue Streams 📦

AST SpaceMobile operates a high-leverage B2B2C (Business-to-Business-to-Consumer) model. Rather than competing with traditional cellular providers, it acts as a "wholesale" space-based extension for existing Mobile Network Operators (MNOs).

• Wholesale Connectivity Agreements: The primary revenue driver is partnership deals with over 45 MNOs worldwide, including giants like AT&T, Verizon, and Vodafone. These carriers pay AST SpaceMobile to provide coverage in "dead zones," allowing them to offer a premium "space-roaming" service to their combined base of over 2.8 billion subscribers.
• Revenue Sharing: AST typically employs a 50/50 revenue-share model with its MNO partners for every subscriber who opts into the satellite service, creating a highly scalable recurring revenue stream without the cost of customer acquisition.
• Government and Defense (AST SpaceMobile SHIELD): A growing segment focused on high-margin government contracts. In early 2026, the company secured a $30 million prime contract from the U.S. Space Development Agency, marking a significant move into the defense sector for tactical communications.
• Manufacturing and Prepayments: The company also generates liquidity through commercial prepayments from partners (such as the recent $175 million from stc Group) and gateway equipment deliveries.

Macroeconomic Impact:

As a capital-intensive "pre-revenue to growth" company, AST SpaceMobile is highly sensitive to the cost of capital. However, its strategic importance to national infrastructure and digital equity has allowed it to secure non-dilutive funding even in wobbly markets. Recent macro-trends toward "sovereign AI" and secure communications have bolstered interest in its defense-related offerings, providing a secondary growth engine that is less reliant on consumer spending.

Recent Performance and Corporate Developments 📈

The company has transitioned from the "proof-of-concept" phase into active industrialization, with its Texas-based manufacturing facilities now reaching massive scale.

FY 2025 and Early 2026 Performance: 💰

• Full-Year 2025 Revenue: Reported at $70.9 million, a massive jump from just $4 million in 2024, as gateway deliveries and government milestones began to hit the books.
• Q4 2025 Revenue: Surpassed expectations by 30%, coming in at $54.3 million, signaling a rapid acceleration in its commercial and government segments.
• 2026 Guidance: Management projects 2026 revenue between $150 million and $200 million, driven by further gateway rollouts and the start of partial commercial services in late 2026.

Strategic Initiatives and Recent News: 🤝

• BlueBird Constellation Progress: In December 2025, AST successfully launched its sixth BlueBird satellite. It is currently stacking satellites for "multi-launches" (3-8 units at a time) with a target of 45–60 satellites in orbit by the end of 2026.
• TELUS Partnership (April 2026): Just days ago, AST announced a definitive commercial agreement with TELUS to provide satellite-powered cellular service across Canada, expanding its footprint in North America.
• Balance Sheet Strength: The company ended 2025 with $2.8 billion in cash and equivalents, providing a substantial "runway" to complete its first full constellation without needing immediate equity raises.

Profitability and Fair Value 🎯

While AST SpaceMobile is not yet profitable on a GAAP basis, the "inflection point" is drawing closer as economies of scale begin to take hold.

• Path to Profitability: Analysts expect adjusted EBITDA to turn positive in 2027, with revenue potentially ramping toward $1 billion as full commercial service matures.
• Fair Value Analysis: The stock has seen a meteoric 350%+ rise over the past year, leading to a market cap of approximately $35 billion. Some conservative analysts suggest a fair value around $71.51, implying the stock may be slightly overextended after its recent rally. However, bulls point to the long-term potential of the $15 billion D2C (Direct-to-Cell) market as justification for a higher premium.
• Capital Efficiency: Unlike legacy satellite firms, AST’s "Block 2" satellites process 10x more data, which significantly lowers the cost per gigabyte and accelerates the timeline to high-margin operations.

Analyst Estimates and Ratings 📊

• Consensus Rating: The general consensus remains a "Buy" among specialized tech analysts, though some broad-market firms have moved to "Hold" following the recent price surge.
• Price Targets: Recent targets are highly divergent, reflecting the "high-risk, high-reward" nature of the stock.
  • High Target: $145.00 (reflecting a "flawless execution" scenario).
  • Average Target: $95.23 (near current trading levels).
  • Recent Updates: Barclays recently raised its target to $65.00 on improved funding clarity, while UBS boosted its target to $85.00 in March 2026.

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

AST SpaceMobile is a "conviction play" on the future of global connectivity. It is a classic high-beta stock: it moves significantly more than the broader market, offering the potential for massive gains alongside the risk of volatility.

What to Watch in the Near Term: 📈

• Launch Cadence: Flawless execution of the 45-60 satellite rollout by the end of 2026 is critical. Any launch delays (like the recent shift to an April 10, 2026, window) are the primary source of short-term price swings.
• Commercial Activation: Watch for the first "revenue-generating" pings from ordinary smartphones in late 2026; this will be the ultimate validation of the business model.
• Government Scaling: Continued wins in the defense sector could provide a floor for the valuation, as government contracts often come with long-term stability.

Recommendation:

ASTS is best suited for growth-oriented investors who can stomach high volatility. Its "first-mover" advantage and massive patent moat (over 3,450 patents/pending) make it the dominant horse in the space-based broadband race, even as it navigates the final hurdles of its constellation rollout.

Final Take: The Silicon Speed and Orbital Reach Powering Connectivity

The next phase of the digital economy isn't just about faster speeds—it’s about universal access and the elimination of data bottlenecks. To achieve this, the world requires two critical pillars: hardware that moves data within the data center at lightning speed and a network that reaches every corner of the planet.

That’s where Credo Technology (CRDO) and AST SpaceMobile (ASTS) stand apart.

🚀 Credo Technology (CRDO) — The High-Speed "Nervous System" of AI

• ✔ Dominant 70% market share in Active Electrical Cables (AECs) for AI clusters.
• ✔ Massive 200%+ revenue growth driven by the transition to 800G and 1.6T speeds.
• ✔ Strategic expansion into Silicon Photonics with the DustPhotonics acquisition.
• ➤ Best for: Investors seeking high-conviction exposure to the "picks and shovels" of AI infrastructure with proven profitability and operating leverage.

🛰️ AST SpaceMobile (ASTS) — The Universal Backbone of Global Telecom

• ✔ First-mover advantage with the only space-based cellular broadband network.
• ✔ Massive commercial moat with 45+ global MNO partners including AT&T and Verizon.
• ✔ Strong $2.8 billion cash position to fuel the launch of the full BlueBird constellation.
• ➤ Best for: Growth-oriented investors looking for a "category-killer" stock with the potential to monopolize the $15 billion direct-to-cell market.

Investor Insight

🧩 Want the specialized hardware enabling the AI "Arms Race" in data centers? → CRDO

⚙️ Want a disruptive satellite play with massive scaling potential and a global user base? → ASTS

Bottom Line:

The telecommunications sector is being redefined by those who can solve the hardest physical challenges—whether that is signal degradation in a server rack or connectivity "dead zones" in the mountains.

Credo Technology provides the speed, while AST SpaceMobile provides the reach. As the world becomes hyper-connected, these two aren’t just stocks—they are the foundational infrastructure of the next decade.

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Happy Trading
​— Team Premium Stock Alerts