Credo Technology Gains from Increasing Connectivity Challenge

Soumya Eswaran Tue, July 21, 2026 at 10:09 AM EDT 3 min read **

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Fred Alger Management**, an investment management company, released its "Alger Small Cap Focus Fund" second-quarter 2026 investor letter. A copy of the letter can be downloaded here. U.S. equities experienced a strong recovery in Q2 2026, with the S&P 500 Index gaining 15.2%, marking its best quarter since 2020. A ceasefire between the United States and Iran and accelerated investment in artificial intelligence (AI) fueled market optimism in the quarter, driving the Information Technology and Industrials sectors forward while Energy and Utilities lagged due to falling oil and gas prices. In June, the Federal Reserve maintained steady interest rates, but the meeting had a hawkish tone. As AI transitions into its agentic phase, opportunities are identified within sectors adopting the technology. The Alger Small Cap Focus Fund's Class A shares outperformed the Russell 2000 Growth Index in the quarter, driven by strong performances in the Industrials and Health Care sectors, while Financials and Consumer Discretionary detracted from the performance. In addition, please check the Fund's top five holdings to know its best picks in 2026.

In its Q2 2026 investor letter, Alger Small Cap Focus Fund highlighted Credo Technology Group Holding Ltd (NASDAQ:CRDO) as a notable performance contributor. Credo Technology Group Holding Ltd (NASDAQ:CRDO) is a US-based semiconductor company that provides high-speed connectivity solutions for optical and electrical Ethernet and PCIe applications. On July 20, 2026, Credo Technology Group Holding Ltd (NASDAQ:CRDO) closed at $212.07 per share. One-month return of Credo Technology Group Holding Ltd (NASDAQ:CRDO) was -20.23%, and its shares gained 133.50% over the past 52 weeks. Credo Technology Group Holding Ltd (NASDAQ:CRDO) has a market capitalization of $39.55 billion.

Alger Small Cap Focus Fund stated the following regarding Credo Technology Group Holding Ltd (NASDAQ:CRDO) in its Q2 2026 investor update:

** "Credo Technology Group Holding Ltd** (NASDAQ:CRDO) provides high-speed connectivity solutions used to move data across AI data centers and hyperscale networks, including active electrical cables, optical digital signal processors, and PCIe retimers. As AI systems become larger and more complex, the need to move data quickly and efficiently between servers, GPUs, and networking equipment has become increasingly important. We believe Credo benefits from this growing connectivity challenge, with an expanding product portfolio that gives the company multiple opportunities to support next-generation data center architectures. During the quarter, shares contributed positively to performance as investors responded favorably to the company's rapid revenue growth and rising demand from hyperscale customers. Investor sentiment was further supported by the view that Credo's expanding product portfolio and recent silicon photonics capabilities could help the company remain well aligned with the evolving connectivity needs of AI data centers."

** Story Continues Why Credo Technology Group Holding Ltd (CRDO) Skyrocketed On Tuesday Credo Technology Group Holding Ltd (NASDAQ:CRDO) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 59 hedge fund portfolios held Credo Technology Group Holding Ltd (NASDAQ:CRDO) at the end of the first quarter, compared to 69 in the previous quarter. While we acknowledge the potential of Credo Technology Group Holding Ltd (NASDAQ:CRDO) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on thebest short-term AI stock**.

In another article, we covered Credo Technology Group Holding Ltd (NASDAQ:CRDO) and shared Polen 5Perspectives Small Growth Strategy's insights on the company. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.