Key Stats for Credo Stock
- Pre-market Price Change for Credo stock: 15%
- $CRDO Share Price as of Dec. 1: $171
- 52-Week High: $193
- $CRDO Stock Price Target: $163
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What Happened?
Credo (CRDO) stock is up over 15% in pre-market after the semiconductor company crushed expectations with its second-quarter earnings report.
The data center connectivity specialist posted adjusted earnings of $0.67 per share on revenue of $268 million, significantly beating analyst estimates of $0.50 per share on $235 million in revenue.
The results represent extraordinary growth for Credo stock, with revenue up 272% year over year and 20% from the previous quarter.
This marks the strongest quarterly performance in company history, driven by surging demand for active electrical cables (AECs) used to connect AI infrastructure.
CEO Bill Brennan highlighted that four different hyperscale customers each contributed more than 10% of total revenue during the quarter.
Credo’s largest customer accounted for 42% of revenue, while the second, third, and fourth-largest customers accounted for 24%, 16%, and 11%, respectively. A fifth hyperscale customer also started generating initial revenue, signaling continued customer diversification.
Credo’s AEC product line, which delivers connectivity for massive AI training clusters, remains the fastest-growing segment.
These cables have become essential for linking GPU racks in data centers, offering significantly better reliability and power efficiency than traditional optical solutions.
The company noted that AECs can deliver 1,000 times better reliability than laser-based optical modules while using roughly half the power.
Beyond the strong quarter, Credo stock got an additional boost from management’s aggressive growth guidance.
Credo expects third-quarter revenue between $335 million and $345 million, representing 27% sequential growth at the midpoint. For the full fiscal year 2026, Credo anticipates more than 170% year-over-year revenue growth.
CFO Dan Fleming also announced three entirely new product categories that significantly expand the company’s addressable market.
These include Zero Flap optics for improved network reliability, Active LED Cables (ALCs) that can reach up to 30 meters, and OmniConnect gearboxes that address memory-to-compute connectivity challenges.
Management believes these new pillars could push Credo’s total addressable market beyond $10 billion.
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What the Market Is Telling Us About Credo Stock
The sharp rally in Credo stock reflects investor enthusiasm about the company’s position in AI infrastructure buildouts. As hyperscalers race to deploy clusters with hundreds of thousands of GPUs, the demand for high-performance connectivity solutions continues to accelerate.
Credo posted a non-GAAP gross margin of 67.7% and generated $128 million in non-GAAP net income, translating to an operating margin of 46.3%. This demonstrates that Credo stock isn’t just growing revenue; it’s doing so with impressive profitability.
The diversification across multiple hyperscale customers also reduces concentration risk. While customer mix will fluctuate quarter to quarter, having four customers above the 10% threshold provides more stability than relying on one or two major buyers.
Investors should watch how Credo executes on its product roadmap, particularly the transition to 200 gig per lane connectivity and the launch of its new product categories.
Management expects PCIe design wins this fiscal year, with meaningful revenue starting in fiscal 2027, followed by Zero Flap optics and ALCs ramping in fiscal 2027 and 2028, respectively.
The main risk for Credo stock is potential supply constraints as advanced semiconductor capacity tightens across the industry.
However, management noted the company uses older 12-nanometer processes rather than cutting-edge nodes, which should provide better supply availability than competitors using 3-nanometer or 5-nanometer technology.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
