Credo Technology beat Wall Street's fiscal first-quarter estimates on both earnings and revenue, extending a streak of triple-digit annual growth. Investors sold the stock anyway, sending shares sharply lower in regular trading and again after hours as they weighed valuation and customer concentration against the company's fiscal 2027 growth targets.
Credo Technology reported fiscal first-quarter earnings of $1.20 a share on revenue of $479 million, beating Wall Street's estimates of $1.16 a share and $470.38 million. Investors sold the stock anyway: shares fell 8.65% to $206.63 in regular trading, then dropped another 9.02% to $188 after hours.
Growth streak meets valuation worries
Revenue climbed 115% from a year earlier and rose 10% from the prior quarter, marking Credo's seventh straight quarter of triple-digit annual growth. Non-GAAP net income reached a record $236.3 million, up 140% year over year, while gross margin held at 68%. The company's market capitalization stood at $42.18 billion.
But the beat itself was modest, about $8.62 million above the revenue forecast, for a company used to outsized surprises. Investors appeared to focus instead on valuation and the pace of future product ramps.
Optical business anchors the outlook
According to Investing.com, Chief Executive Bill Brennan said: "The first quarter was another strong quarter for Credo." Management pointed to fiscal 2027 revenue growth above 85%, with optical revenue expected to exceed $600 million as ZeroFlap Optics, silicon photonics chips and optical DSPs each contribute more than $100 million.
The company guided for second-quarter revenue of $525 million to $535 million, with non-GAAP gross margin of 67% to 69%.
Customer concentration remains a risk
Credo's largest customer accounted for 33% of revenue, and its top four customers made up 84% of sales, leaving the business exposed to a small number of accounts. Inventory rose to $313.1 million as the company built stock ahead of anticipated demand, adding supply-chain risk if the timing shifts.
The sharp post-earnings decline suggests the market may already price in much of that growth story.
Source: Investing.com
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