TLDR
- Credo Technology (CRDO) delivered Q1 EPS of $0.52 versus $0.36 consensus, beating estimates by 44%
- Revenue soared 274% year-over-year to $223.1 million, crushing $190.6 million Wall Street forecast
- Current quarter guidance of $235 million midpoint exceeds analyst expectations of $201.9 million
- Company projects fiscal 2026 revenue growth of 120% to approximately $964 million
- Multiple price target increases from analysts, with BofA raising target to $165 from $120
Credo Technology posted exceptional first-quarter results that showcased the company’s dominant position in AI infrastructure. The semiconductor specialist reported adjusted earnings of $0.52 per share, crushing Wall Street’s $0.36 consensus estimate.
Revenue exploded 274% year-over-year to $223.1 million, easily surpassing the $190.6 million analyst forecast. This growth reflects surging demand for the company’s connectivity solutions in AI data centers.
The company’s Active Electrical Cables represent the crown jewel of its product lineup. These copper-based cables connect AI servers to networking switches with superior reliability and power efficiency compared to optical alternatives.
Credo invented AECs and now controls 73% of this specialized market according to 650 Group research. The cables have become essential as data centers transition to rack-based servers with higher GPU density.
Guidance Beats Expectations
Management delivered strong forward-looking guidance that exceeded Wall Street projections. The company forecast current quarter revenue of $235 million at the midpoint, well above the $201.9 million consensus.
For fiscal 2026, Credo projects revenue growth of approximately 120% year-over-year to around $964 million. This outlook reflects continued momentum from cloud service provider partnerships.
A fourth major hyperscaler customer is ramping up operations and should represent over 10% of fiscal 2026 revenue. Amazon, Microsoft, and Elon Musk’s xAI rank among the company’s top clients according to Needham research.
CEO Bill Brennan emphasized the strategic nature of these partnerships. “The Company’s growth has been driven by deep, strategic partnerships with hyperscalers and key customers,” he stated.
Wall Street Response
Analysts responded enthusiastically to the results with multiple price target increases. BofA Securities raised its target to $165 from $120 while maintaining a Buy rating.
Mizuho lifted its price target from $135 to $155, keeping an Outperform rating. The firm highlighted Credo’s market opportunity in the expanding AEC space.
Needham also boosted its target dramatically from $85 to $150, citing strong performance and raised guidance. BofA positioned Credo among its top four AI-leveraged stocks alongside NVIDIA, Broadcom, and AMD.
Gross margin reached 67.6% in the quarter, though management expects normalization toward the 63-65% long-term range due to product mix changes. The Optical DSP business is positioned to double revenues in fiscal 2026.
Credo stock has gained 86% year-to-date, vastly outperforming the Nasdaq Composite’s 11% advance. The company’s fiscal first-quarter results exceeded all key metrics while management provided optimistic guidance for continued growth.
