Credo Technology climbs 11% postmarket after results

Credo Technology climbs 11% postmarket after results

Credo Technology Group Holding Ltd. (CRDO) saw its stock price surge by 11% post-market on September 2, 2025, following the company's release of its first-quarter fiscal 2026 earnings. The company reported robust growth numbers that exceeded market expectations. Historically, CRDO has demonstrated a tendency to deliver positive returns in the short term after earnings beats, with a 3-day win rate of 42.86%, a 10-day win rate of 57.14%, and a 30-day win rate of 42.86% since 2022. The maximum observed return in such scenarios was 14.24% over 58 days, underscoring the stock’s potential for short-term gains following strong earnings surprises.



The earnings report showed that Credo Technology's revenue for the first quarter of fiscal 2026 was $223.1 million, representing a 274% year-over-year increase and a 31% quarter-over-quarter increase. This strong revenue performance was driven by deep strategic partnerships with hyperscalers and key customers. The company's gross margin stood at 67.4% under GAAP and 67.6% on a non-GAAP basis. Operating expenses were $89.6 million under GAAP and $54.5 million on a non-GAAP basis, while net income was $63.4 million under GAAP and $98.3 million on a non-GAAP basis. The diluted net income per share was $0.34 under GAAP and $0.52 on a non-GAAP basis.





The company's President and Chief Executive Officer, Bill Brennan, stated, "During the first quarter of fiscal 2026, Credo continued a strong growth trajectory. First quarter revenue increased 31% sequentially, and 274% year over year, to $223.1 million. The Company’s growth has been driven by deep, strategic partnerships with hyperscalers and key customers. Given increasing market demand for reliable and power-efficient connectivity solutions, we expect continued revenue growth and diversification in terms of customers, protocols, and applications."



Analysts had anticipated a more conservative earnings report. The Zacks Consensus Estimate for the bottom line in the to-be-reported quarter was pegged at $0.36, an 800% year-over-year increase, while the revenue estimate was $190.63 million, up 219.3% year-over-year. The actual results exceeded these estimates, reflecting the company's strong performance.



Despite the positive earnings report, investors should be aware of several risks. Operating expenses surged 19% sequentially in the fiscal fourth quarter, primarily due to higher headcount, and are expected to be between $54 million and $56 million in the current quarter. Additionally, the company faces intense competition from semiconductor giants like Broadcom Inc. (AVGO) and Marvell Technology, Inc. (MRVL), and overreliance on a few clients for revenue growth presents a significant headwind.



Credo Technology's stock has surged 116.2% in the past three months, significantly outperforming its peers and the broader market. However, the company's valuation is considered stretched, with a forward 12-month Price/Sales ratio of 26.02, higher than the sector's multiple of 8.83.



References:
[1] https://www.barrons.com/articles/credo-technology-stock-price-earnings-d8db4e3d
[2] https://www.ainvest.com/news/credo-technology-set-announce-q1-2026-earnings-september-3rd-2509/
[3] https://www.ainvest.com/news/credo-technology-group-sees-bullish-activity-market-volatility-2508/
[4] https://www.marketscreener.com/news/credo-technology-group-holding-ltd-reports-first-quarter-of-fiscal-year-2026-financial-results-ce7d59dbdd89f126