TLDR
- CRDO stock fell 21% to $163.83 despite beating Q1’27 earnings and revenue estimates.
- Adjusted EPS came in at $1.20, above the $1.17 estimate; revenue hit $479 million vs. $473 million expected.
- Q2 guidance of $525M-$535M was seen as underwhelming by several analysts.
- J.P. Morgan cut its price target from $335 to $310; BofA slashed its target from $340 to $275.
- Technically, the stock has fallen nearly 40% from its 2026 high of $308.30, with analysts flagging further downside risk.
Credo Technology Group stock dropped 21% on Wednesday, hitting $163.83 in afternoon trading, after Tuesday night’s earnings report drew mixed reactions from Wall Street despite the company clearing its numbers.
Credo Technology Group Holding Ltd, CRDO
For the fiscal first quarter ending August 1, Credo posted adjusted EPS of $1.20, topping estimates of $1.17. Revenue came in at $479 million, ahead of both the $473 million analyst consensus and the $475 million high end of the company’s own guidance range. On a year-over-year basis, revenue was up 114.7%.
GAAP gross margin rose to 64.5%, and GAAP net income climbed to $129.4 million, up from $64 million a year ago. However, net income was down from the $169 million the company posted in Q4 of fiscal 2026.
CEO Bill Brennan said the company’s “portfolio now spans connectivity from millimeters to kilometers,” with products across both optics and copper for AI data centers.
For the current quarter ending in October, Credo guided revenue of $525 million to $535 million.
Wall Street Reacts With Caution
That guidance range failed to impress. J.P. Morgan analyst Joseph Cardoso lowered his price target from $335 to $310, writing that the “raised outlook is likely to disappoint,” particularly for optical-related revenue. “Investors and we alike had been anticipating more material upside,” he said.
Bank of America maintained its Buy rating but cut its price target sharply from $340 to $275, pointing to slowing growth in Credo’s copper cable business even as the optics segment expands.
Mizuho kept its Outperform rating and told investors it was time to “buy the pullback,” but analyst Jordan Klein acknowledged that the revenue beat and guidance looked “a bit skinnier” compared to prior quarters.
The reaction reflects a stock that had been priced for perfection. CRDO had run up to a year-to-date high of $308.30 earlier in 2026 before Wednesday’s drop pushed it toward the $160s. That puts it down nearly 40% from its peak.
Valuation Concerns Add Pressure
Part of the selloff also comes down to valuation. Even after the drop, Credo trades at a forward price-to-earnings ratio of around 45 on a GAAP basis. The technology sector median sits at 29, and that puts CRDO well above peers like Dell and Nvidia on that measure.
Technically, the stock has broken below its 50-day and 100-day exponential moving averages. The chart shows a double-top pattern that formed near the June highs, a setup that typically signals further weakness. The next key level to watch is the 61.8% Fibonacci retracement at around $171.
Credo’s copper active electrical cables and optical digital signal processors are used to connect AI servers and networking switches inside data centers. Customers include Amazon, Microsoft, and SpaceX, all of which have pledged to increase data center spending.
In premarket trading Wednesday, CRDO had already dropped over 9%, reaching its lowest level since July 30.
Stop guessing and start investing with confidence. KnockoutStocks gives you the AI insights, market intelligence, and stock research you need to spot opportunities, cut through the noise, and make smarter investment decisions — all in one powerful platform.
Sign up today and get 50% OFF full access to our premium stock picks.
Simply use coupon code SPECIAL50 at checkout to claim your exclusive discount.
