Credo Technology (CRDO) Slides Over 12% After Hours Despite Blowout Earnings and 157% Revenue Surge
Credo Technology Group Holding Ltd (CRDO) reported stronger-than-expected fiscal fourth-quarter results for 2026 after Monday’s close, but the stock took a sharp turn lower. Shares dropped nearly 12% in extended trading, after already losing 4.21% during the regular session.
Investors appeared to focus on margin compression rather than headline beats. The company’s GAAP operating margin slipped to 35.7% from 36.8% in the prior quarter, while non-GAAP operating margin held steady at 49.6%. That quarter-over-quarter decline — even if small — may be fueling concerns about near-term profitability amid rapid scaling.
Credo posted adjusted earnings per share of $1.16, beating the $1.03 consensus, with quarterly revenue of $437 million also topping the $433 million estimate, according to Koyfin. The top line surged 157% year-over-year from $170 million. GAAP net income came in at $169.1 million, while non-GAAP net income reached $226.7 million. On a per-share basis, GAAP diluted EPS was $0.88 and non-GAAP diluted EPS was $1.16.
Looking ahead, the company guided first-quarter fiscal 2027 revenue between $465 million and $475 million, slightly above the $465 million analyst consensus. Adjusted gross margins are expected in a range of 66.9% to 68.9%, with non-GAAP gross margins of 67.0% to 69.0%. Operating expenses (adjusted) are projected between $86 million and $90 million, while GAAP operating expenses are seen between $167.6 million and $171.6 million. Credo ended the quarter with $1.4 billion in cash and short-term investments.
CEO Bill Brennan called fiscal 2026 a “defining year,” noting revenue more than tripled to $1.3 billion and non-GAAP net income rose more than fivefold to $662 million. He added that the company expects continued momentum in fiscal 2027, driven by its vertically integrated AI connectivity solutions designed to boost GPU utilization, network reliability, and infrastructure efficiency. Credo’s products are increasingly central to the buildout of AI data centers, placing the company in a high-growth niche within the semiconductor ecosystem.
Despite those tailwinds, some market participants argued the stock was already priced for perfection after a massive run. CRDO has surged more than 275% over the past 12 months, and even with strong earnings and guidance, a high valuation leaves little room for error.
Retail sentiment on Stocktwits shifted from “neutral” a day earlier to “extremely bullish” on Monday, while message volume hit “extremely high” levels. One user highlighted that the stock is up nearly 60% year-to-date and said staying patient will likely be rewarded. Another trader acknowledged the strong numbers but said the stock’s lofty valuation makes near-term upside limited, prompting a wait-and-see approach for a better entry point.
The divergence between fundamental results and price action underscores a familiar theme in high-growth tech stocks: when expectations run high, even beats may not be enough.
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Aveek Bhowmik has no position in any of the stocks mentioned in this article. StockTwits' news team content is for informational purposes only and is not intended as investment advice. For more, see our editorial policy. This article was originally published on StockTwits.
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