Why Credo Technology (CRDO) Stock Fell After a Record Quarter

TLDR

• Credo stock fell 14% after-hours before recovering to close down 4.2% at $226.10 on Monday
• Q4 revenue jumped 157% year-over-year to $437 million, beating the $431.8 million analyst estimate
• Adjusted EPS of $1.16 beat the $1.02 Wall Street expectation; full-year revenue topped $1.3 billion, up 206%
• Q1 fiscal 2027 guidance of $465M–$475M came in above consensus but investors wanted more
• Credo completed the $750 million acquisition of DustPhotonics to expand its optical connectivity portfolio

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Credo Technology stock dropped 14% after-hours on Monday before recovering to close down 4.2% at $226.10 after the company posted strong fiscal Q4 results but offered guidance that left investors wanting more.

Credo Technology Group Holding Ltd, CRDO

The stock was still down roughly 2% ahead of Tuesday’s open. Despite the selloff, CRDO is still up 58% year-to-date and has surged 157% since its March 30 low.

Q4 revenue hit a record $437 million, up 157% year-over-year and ahead of the $431.8 million analyst consensus. Adjusted earnings per share came in at $1.16, well above the $1.02 estimate and a big jump from $0.35 a year ago.

For the full fiscal year 2026, revenue reached $1.3 billion — up 206% year-over-year. Non-GAAP net income rose more than fivefold to $662 million. Free cash flow for the quarter was $177.5 million, with the company ending the period holding $1.4 billion in cash.

CEO Bill Brennan called fiscal 2026 “another defining year,” noting that Q4 revenue alone exceeded the company’s total revenue for all of fiscal 2025.

Guidance Disappoints Despite Beat

For Q1 fiscal 2027, Credo guided for revenue between $465 million and $475 million. That’s above the Wall Street consensus of $461.3 million — but the market had priced in something bigger.

Full-year fiscal 2027 revenue is expected to grow more than 80% year-over-year. Management said roughly half of that growth will come from its optical portfolio, with the other half from copper products like its Active Electrical Cables and retimers.

Non-GAAP net margin is expected to stay near 50% for the full year.

Top customers include Microsoft, Amazon, and Meta. The four largest customers each accounted for at least 10% of Q4 revenue, with the biggest contributing 34%.

DustPhotonics Deal Closes

Last week, Credo completed its acquisition of DustPhotonics for $750 million in cash and 920,000 CRDO stock. The deal adds silicon photonics and photonic integrated circuit technology to Credo’s lineup.

Management said DustPhotonics brings 800G and 1.6T design wins and a roadmap toward 3.2 terabits per second. Its architecture uses fewer lasers, which could lower costs and improve reliability.

Credo expects its optical portfolio — covering optical DSPs, silicon photonics PICs, and ZeroFlap Optics — to generate more than $600 million in revenue in fiscal 2027. Each of the three product lines is expected to contribute over $100 million individually.

ZeroFlap Optics is expected to be the largest optical contributor due to its higher average selling prices — three-digit ASPs versus two-digit for discrete components.

Brennan said mid-single-digit sequential growth is expected in the first half of fiscal 2027, with a stronger ramp in the second half driven by the optical portfolio.

For fiscal 2028, Credo expects production ramps for its AEC and OmniConnect product families, along with its Weaver gearbox product targeting next-generation inference memory challenges.

CFO Dan Fleming confirmed no plans for additional capital raises or buybacks following the DustPhotonics cash outlay.