Credo Tech's $620M Volume Ranks 140th as Shares Drop 6.65% Before Q1 Earnings Outlook and Valuation Doubts

On August 29, 2025, Credo Technology (CRDO) saw a trading volume of $0.62 billion, ranking 140th on the day’s stock market. The stock closed with a 6.65% decline, reflecting heightened volatility ahead of its Q1 earnings release scheduled for September 3. The Zacks consensus anticipates earnings of $0.35 per share and $190 million in revenue for the quarter, marking a significant year-over-year increase in revenue expectations. However, the Zacks model does not currently predict an earnings beat, despite strong demand for Credo’s active electrical cables (AECs) and optical digital signal processors (DSPs), which are critical to AI infrastructure expansion.

Credo’s product portfolio, including AECs, optical DSPs, and PCIe retimers, is positioned to benefit from growing demand for high-speed, energy-efficient connectivity solutions. The company recently launched 100-gig per lane optical DSPs built on 5-nanometer technology, setting new benchmarks for power efficiency. Expansion into rack-to-rack use cases and the adoption of ZeroFlap AECs, which offer superior reliability compared to laser-based alternatives, are further solidifying Credo’s market position. However, the company faces challenges, including customer concentration risks, as three hyperscalers accounted for over 10% of total revenue in the last reported quarter.

Valuation concerns linger, with CRDO trading at a forward price-to-sales multiple of 26.02, significantly higher than the semiconductor sector average of 8.83. This elevated multiple raises questions about sustainability, particularly as operating expenses surged 19% sequentially to $52 million in the previous quarter. Analysts highlight the need for continued revenue growth to offset rising R&D costs and competitive pressures from larger players like Broadcom and Marvell. Additionally, technical indicators suggest short-term bearish positioning, with the RSI at 59.86 and heavy put activity observed at $120–$124 strike prices, reflecting investor caution ahead of earnings.

Backtest results for CRDO’s stock strategy from 2021–2025 show a total return of 356%, an annualized return of 65.5%, and a maximum drawdown of 71.3%. The strategy assumes a 6% price plunge as the entry signal and a 5-day holding period. These metrics highlight the stock’s high-risk, high-reward profile, though they do not guarantee future performance. Investors are advised to monitor the September 3 earnings report and key support levels, such as the $117 30-day moving average, to assess potential rebounds or further declines.