To The Moon

$Credo Technology Group Holding Ltd(CRDO)$ is set to report its fiscal Q1 2026 earnings on September 3, 2025. Here is an analysis of what to watch for and potential short-term trading opportunities.

Revenue and EPS: The consensus analyst estimates for Q1 2026 are revenue of around $190 million and This represents a significant year-over-year increase, reflecting the strong demand for Credo's products. The company's own guidance for the quarter is a revenue range of $185 million to $195 million. Beating or missing these estimates will be a primary driver of stock movement post-earnings.

Summary of Credo Technology Group Holding Ltd (CRDO) Fiscal Q4 2025 Earnings

Credo Technology Group Holding Ltd. (CRDO) reported a strong finish to its fiscal year, with its Q4 2025 earnings and revenue significantly beating analyst expectations. The results underscore the company's pivotal role in providing high-speed connectivity solutions for the rapidly expanding AI and data center markets.

Financial Performance: CRDO reported non-GAAP earnings per share (EPS) of $0.35, which was well above the Zacks Consensus Estimate of $0.27. Revenue for the quarter came in at $170 million, a massive 179.7% increase year-over-year, also surpassing the consensus estimate.

Key Drivers: The exceptional performance was primarily fueled by surging demand for Credo's high-performance connectivity solutions, particularly from hyperscale customers building out AI infrastructure. Product sales, specifically, saw a monumental 303.3% year-over-year increase, accounting for the vast majority of total revenue.

Profitability and Efficiency: The company demonstrated strong profitability and operational efficiency. Non-GAAP gross margin expanded to 67.4%, exceeding the company's own guidance. This was achieved while also seeing an increase in R&D and operating expenses, reflecting a strategic investment in future growth.

Customer and Product Momentum: The earnings report highlighted a strengthening of Credo's market position, with three of its top customers each contributing over 10% of total revenue. The company also announced a significant win for a new 800-gig transceiver DSP, with initial deployments expected in fiscal year 2026. This indicates continued momentum beyond its core Active Electrical Cable (AEC) business.

Lessons Learned from the Guidance

The guidance provided by Credo for fiscal Q1 2026 and for the full fiscal year 2026 offers crucial insights into the company's strategy and the market's trajectory.

Sustained and Accelerating Growth: The guidance for fiscal Q1 2026 projects revenue between $185 million and $195 million. More significantly, the full fiscal year 2026 guidance anticipates revenues to exceed $800 million, implying an astonishing year-over-year growth rate of over 85%. The lesson here is that the demand for Credo's products is not just a short-term trend; management sees a long and robust runway for growth, driven by the persistent and expanding needs of AI and data center build-outs.

Focus on Operational Leverage: Despite the aggressive revenue growth, Credo's guidance indicates that non-GAAP operating expenses are expected to grow at less than half the revenue growth rate. This is a key lesson in capital efficiency. By managing the growth of its operating expenses, the company is aiming to achieve significant operating leverage, which should lead to improved profitability. The guidance suggests a path to a non-GAAP net margin of nearly 40% for the full fiscal year, a clear sign that the company's business model is becoming increasingly profitable as it scales.

Customer Diversification is a Key Goal: The guidance also mentioned the expectation of three to four customers exceeding 10% of revenues in the coming quarters and fiscal year, with the anticipated ramp-up of two new hyperscale customers in the second half of fiscal 2026. This indicates that while the company has a high customer concentration with its existing hyperscalers, it is actively working to diversify its revenue streams. The lesson is that management is aware of the risks associated with customer concentration and is taking proactive steps to mitigate them, which is a positive signal for long-term stability.

In summary, Credo's Q4 2025 earnings report was a testament to its strong execution and market position in the AI infrastructure space. The accompanying guidance provides a valuable lesson: the company is transitioning from a high-growth startup to a more mature and profitable business that is focused on both top-line expansion and bottom-line efficiency.

Key Metrics for CRDO's Fiscal Q1 2026 Earnings

Investors and analysts will be closely monitoring several key metrics to gauge the company's performance and future outlook.

Gross Margin: In the previous quarter, Credo's non-GAAP gross margin was 67.4%, exceeding their guidance. For Q1 2026, the company expects a non-GAAP gross margin between 64% and 66%. Any deviation from this range could signal changes in pricing power, cost of goods, or product mix.

Operating Expenses: The company has been increasing its non-GAAP operating expenses, primarily due to higher headcount for R&D and product innovation. In the last quarter, these expenses were around $52 million, and they are guided to be between $54 million and $56 million for Q1 2026. If revenue growth outpaces the increase in expenses, it will lead to strong operating leverage.

Product and Customer Momentum: The earnings call will likely provide color on the continued demand for Credo's core products, including Active Electrical Cables (AECs), optical DSPs, and PCIe retimers. The company's growth is heavily tied to the build-out of AI infrastructure by hyperscalers. Investors should listen for updates on:

Customer Concentration: In the last quarter, three hyperscalers each contributed more than 10% of total revenue, with one accounting for 61%. Diversifying the customer base is a key goal, so any progress on adding new hyperscale clients will be a positive indicator.

New Product Ramps: Management has previously highlighted the transition from 50 gigabit per lane to 100 gigabit per lane AECs, as well as the initial deployments of new 800-gig transceiver DSPs. Updates on the ramp-up of these new products will be critical to the long-term growth story.

Credo Technology Group Holding Ltd (CRDO) Price Target

Based on 12 analysts from Tiger Brokers offering 12 month price targets for Credo Technology Group Holding Ltd in the last 3 months. The average price target is $105.09 with a high forecast of $140.00 and a low forecast of $34.13. The average price target represents a -14.60% change from the last price of $123.06.

Analysis of Short-Term Trading Opportunities

The potential for short-term trading around CRDO's earnings report is high, but so is the risk. Here are a few factors to consider:

Valuation: CRDO's stock has surged significantly, more than doubling in the past three months. Its forward 12-month Price/Sales (P/S) ratio of over 26.02 is much higher than the semiconductor industry average. This high valuation means the stock is priced for perfection, and any disappointment in the earnings report or guidance could lead to a sharp sell-off.

Earnings Surprise Potential: The stock has a history of beating earnings estimates. However, the Zacks consensus model does not "conclusively predict" an earnings beat for Q1 2026, which may temper expectations. An earnings beat could still send the stock higher, but the magnitude of the move might be influenced by the already high valuation.

Implied Volatility (IV): Leading up to the earnings report, options on CRDO are likely to have high implied volatility. This makes options premiums expensive. Traders could consider strategies that profit from a sharp move (straddles, strangles) or those that sell premium (covered calls, iron condors) if they believe the market is overestimating the potential post-earnings move.

CRDO implied volatility (IV) is 99.4, which is in the 88% percentile rank. This means that 88% of the time the IV was lower in the last year than the current level. The current IV (99.4) is 7.4% above its 20 day moving average (92.6) indicating implied volatility is trending higher.

Post-Earnings Price Action: Given the stock's recent run-up and high valuation, a "buy the rumor, sell the news" event is a distinct possibility. If the company delivers strong results that are in line with or slightly above expectations, the stock may still face downward pressure as traders take profits. Conversely, a significant beat on key metrics (especially revenue and future guidance) could propel the stock even higher despite its rich valuation. A miss on any of the key metrics would almost certainly trigger a significant correction.

Option Setup For CRDO (Bull Put Spread)

Given CRDO’s recent pullback to ~$123.06 (down ~6.6%), a bull put spread could be a strategic way to express a neutral-to-bullish bias while harvesting elevated premium from post-volatility.

Bull Put Spread Setup – CRDO (Sept 12, 2025 Expiration)

• Max Profit: $240 per contract

• Max Loss: $760 per contract

• Breakeven: $112.60

• Probability of Profit: ~75%+ (based on IV and delta skew)

• IV Rank: Elevated (~50%+), ideal for credit spreads

Why This Setup Works for CRDO

Technical Context: CRDO is near short-term support after a sharp drop, offering a bounce/reversion setup

Premium Richness: IV remains elevated post-selloff, boosting credit received

Defined Risk: $10-wide spread limits downside while allowing theta decay to work in your favor

Macro Overlay: CRDO is part of the AI infra theme—if macro stabilizes, this sleeve could rebound

Summary

As Credo Technology (CRDO) prepares to release its fiscal Q1 2026 earnings, key metrics for investors to watch are revenue and EPS. Analysts expect revenue around $190 million, a significant year-over-year increase, and EPS of $0.35. The company's own guidance projects revenue between $185 million and $195 million.

Beyond the headline numbers, investors should scrutinize gross margin and operating expenses. The company's ability to demonstrate operating leverage—where revenue growth outpaces expense increases—is crucial. Additionally, updates on new product adoption, such as 100-gigabit AECs and new DSPs, will provide insight into the company's long-term growth trajectory and market diversification beyond its current heavy reliance on a few key hyperscale customers.

Given CRDO's recent stock rally and high valuation, the market is pricing in strong performance. This leaves little room for disappointment, making the stock vulnerable to a sharp correction if results or guidance fall short of elevated expectations.

Appreciate if you could share your thoughts in the comment section whether you think CRDO would provide an earnings surprise which could create a small rally after its earnings release.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.