Credo Technology Group Holding Limited CRDO is scheduled to report second quarter fiscal 2026 results on Monday, December 1, 2025, after the closing bell.
The Zacks Consensus Estimate for the bottom line for the reported quarter is pegged at 49 cents, indicating 600% growth year-over-year. The estimate has remained unchanged over the past 60 days. The consensus estimate for total revenues is pegged at $235.2 million, representing growth of 226.6%.
For the second quarter of the fiscal year, CRDO expects revenue between $230 million to $240 million, indicating 5% quarter-on-quarter growth at the midpoint.
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Credo beat the Zacks Consensus Estimate for earnings in each of the last four quarters, with the average earnings beat by 33.5%.
Our proven model does not conclusively predict CRDO’s earnings growth this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the likelihood of an earnings beat. But it is not so here. You can discover the best stocks to buy or sell before they report earnings with our ESP filters.
CRDO has an Earnings ESP of 0.00% and a Zacks Rank #3. you can see The full list of today’s Zacks #1 Rank stocks here.
Credo’s fiscal second quarter performance is likely to be driven by strong demand for its active electrical cables (AEC) and optical products as well as deeper engagement with hyperscalers. Its technology delivers top-tier connectivity performance, handling speeds up to 1.6 Tbps across a wide range of industry protocols. For the current quarter, CRDO expects non-GAAP gross margin to be between 64% to 66% and opex to be $56-$58 million.
Growing AI infrastructure investments from hyperscalers and data centers are driving demand for Credo’s high-performance, low-power connectivity solutions. As AI-powered infrastructure expands, the company is positioned to benefit from several growth trends, solidifying its role as a major player in next-generation data center networks. Credo reported fiscal first quarter revenue of $223.1 million, up 31% sequentially and 274% year over year, exceeding guidance. Product revenue increased 279% year over year to $217.1 million, driven by consecutive double-digit sequential profits at AEC reaching new record levels.
The strategic hyperscaler partnership is fueling Credo’s growth, supported by solutions covering the entire product development cycle. Its integrated innovation framework—Serdes, IC design and system-level engineering, along with robust software and firmware—enables customers to build faster and achieve higher performance and reliability.
Credo Technology Group Holding Ltd Price and EPS Surprise
Credo Technology Group Holding Ltd Price-EPS-Surprise | Credo Technology Group Holding Limited Quote
Credo’s optical segment is performing well, putting it on track to double optical revenues this financial year. Its advanced DSPs serve a growing base of customers and hyperscalers, and collaboration with them ensures strong performance, scalability, and energy efficiency. Credo is placing strong focus on optical products as the core strategy. With TAM’s expansion into copper and optical, the company aims to utilize its system-level strengths to grow its presence in optical.
Additionally, it is seeing solid momentum in Ethernet retimers, and its PCIE retimer family is attracting strong customer interest. The solutions provide long reach and ultra-low latency, and the company expects design wins in 2025 with revenues in 2026. This PCIe expansion boosts Credo’s TAM and positions it well to move into 200-Gig-per-lane AI networks.
However, the uncertain macro backdrop due to intense competition and impending tariff changes is creating challenges. Credo competes with giants like Semiconductor Broadcom Inc. AVGO and Marvell Technology, Inc.MRVL,
Additionally, heavy reliance on a few customers creates concentration risk, which could lead to a sharp revenue hit to the company if a large customer withdraws. In the first quarter of the fiscal year, each of its top three customers generated more than 10% of revenue. While the customer mix will change from quarter to quarter, the company continues to diversify. Credo still expects three to four customers to remain above 10% of revenue in the coming quarter as existing hyperscalers scale up and two new hyperscalers ramp up starting in fiscal 2026.
CRDO shares have gained 258.9% in the past year, outperforming its Electronics – Semiconductor industry, the Zacks Computer & Technology sector and the S&P 500 Composite with gains of 83%, 29.5% and 16.6%, respectively.
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The company has outperformed its competitors like Broadcom, Marvell and Astera Labs ALAB. AVGO and ALAB have gained 149% and 54.9% respectively, while MRVL has lost 2.6% in the same time frame.
From a valuation perspective, CRDO is trading at a premium relative to the industry and well above its average. According to the Price/Earnings ratio, the company’s shares are currently trading at 96.6 Forward Earnings, which is higher than the industry average of 39.22 and the stock average of 94.29.
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In comparison, Broadcom is trading at a trailing 12-month P/E multiple of 51.24, while Astera Labs and Marvell Technology are trading at multiples of 120.93 and 34.37 respectively.
Credo has grown rapidly on the back of AI investments and stands out for its ability to deliver high-speed servers. It anticipates multiple development waves in the future from emerging AI network architectures that will require advanced connectivity. The company is on track for continued expansion through fiscal year 2026 and beyond. Its state-of-the-art AEC optical solutions are gaining widespread popularity across the market.
However, key risks include heavy reliance on a few hyperscalers, which could quickly hurt revenues in case of a pullback, macro swings and tariff crises that could hurt revenues and margins, potential manufacturing ramp issues and hyperscaler vulnerability to changes in AI spending that could quickly impact orders. Moreover, stiff competition from Broadcom and Marvell and premium valuations may not bode well for investors. CRDO appears to be walking in the middle of the road, and investors may be better off if they trade cautiously.
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This article originally appeared on Zacks Investment Research (zacks.com).
