Key Takeaways:
Credo Technology slid 12% on Sept. 2 as its fiscal 2027 optical revenue outlook disappointed investors despite a record quarter.
"Fiscal '27, I think, is just a stepping stone for where we're going with our optical business," Chief Executive Officer Bill Brennan said on the earnings call, pointing to a pluggable optical transceiver market he expects to grow from 60 million units in 2026 to 175 million by 2030.
The Santa Clara, California-based maker of high-speed connectivity chips reported fiscal first-quarter revenue of $479 million, up 115% from a year earlier and above the $440.7 million consensus. Non-GAAP earnings of $1.20 a share beat the $1.05 estimate, while net income rose 140% to $236.3 million. Gross margin came in at 68%.
The selloff came even as management maintained its fiscal 2027 target of more than 85% revenue growth and more than $600 million in optical revenue, with ZeroFlap Optics, silicon photonics PICs and optical DSPs each expected to contribute more than $100 million. Investors focused instead on the back-half-loaded optical ramp and heavy customer concentration — the top four customers accounted for roughly one-third, 28%, 13% and 10% of quarterly revenue, respectively.
The optical guidance disappointment raises questions about near-term demand across the AI networking supply chain, where Credo competes with Marvell Technology and Broadcom for data center connectivity sockets. Credo's Active Electrical Cables business remains its largest, supported by relationships with five hyperscalers including Microsoft, its first AEC customer.
For fiscal second quarter, Credo guided revenue of $525 million to $535 million, implying continued sequential growth. The company's next catalyst is the fiscal Q2 report, expected in early December, when investors will look for evidence the optical ramp is on track.
The decline pressures a stock that analysts still rate overwhelmingly bullish — 16 buy ratings versus two holds, with no sells. Whether Credo can deliver on its $600 million optical commitment will determine if the selloff extends or reverses into the second half.
This article is for informational purposes only and does not constitute investment advice.
