San Jose, June 1, 2026, 14:01 PDT
Credo Technology shares dropped over 10% in after-hours trading Monday. The company, which supplies AI data-center connectivity, topped Wall Street’s quarterly profit and revenue targets, but that wasn’t enough after the stock’s big rally. Credo ended regular trade off 4.2% at $226.10, then was quoted at $203.22 after hours by MarketBeat at 4:42 p.m. ET.
Credo is a high-expectation stock in the hardware space powering artificial intelligence systems. The company makes chips, active electrical cables and optical gear that help shift data between servers, switches and optical modules. That’s a behind-the-scenes job but important for making big GPU clusters work smoothly.
That helped drive the bigger move. Barron’s said Credo shares were up 58% for the year and 157% from late March before dropping after hours Monday, so investors had little patience for guidance or margins that looked just good instead of better.
Credo reported revenue of $437.0 million for the quarter ended May 2, up 157% from a year ago. GAAP net income came in at $169.1 million, or 88 cents a diluted share. Non-GAAP profit, which excludes items like stock compensation and acquisition expenses, was $226.7 million, or $1.16 a share.
FactSet analysts were looking for adjusted earnings of $1.02 a share and revenue of $431.8 million, according to Investor’s Business Daily. Credo guided to revenue of $465 million to $475 million for the current quarter, topping analyst estimates of $461.3 million. Shares dropped as the market zeroed in on gross margin trends.
Credo posted a non-GAAP gross margin of 68.3%, down a bit from 68.6% last quarter, and said it sees the coming quarter at 67.0% to 69.0%. The shift is tight, not dramatic, but for a stock banking on fast AI gains, even slight margin moves can matter.
Credo CEO Bill Brennan called fiscal 2026 a “defining year,” saying annual revenue jumped to $1.3 billion, more than triple the prior period. Non-GAAP net income hit $662 million, up five times. He said Credo’s vertically integrated model helps customers with cluster stability, GPU usage, network reliability and lower power costs. Business Wire
DustPhotonics is now a key part of the story. Credo wrapped up its purchase last week, bringing silicon photonics integrated circuits—optical chips using light for data transmission—into its lineup for 800G, 1.6T and 3.2T optical systems.
Credo’s VP of silicon photonics Ronnen Lovinger, previously with DustPhotonics, said silicon photonics will be “foundational” to optical connectivity for AI. Credo said it expects the combined ZeroFlap optical transceivers, optical digital signal processors, and silicon photonics to drive major growth in fiscal 2027. Business Wire
Sentiment was already positive before the results came out. Benzinga pointed to Goldman Sachs’ James Schneider, who kept a Buy and a $170 price target, Needham’s Quinn Bolton with a Buy and $220, and Rosenblatt’s Mike Genovese at Neutral with a $175 target. Seeking Alpha’s Oakoff Investments also called the stock a buy before earnings, mentioning AI demand and DustPhotonics.
Credo is trying to grab a bigger slice of the AI connectivity market, going up against big chipmakers like Broadcom and Marvell Technology, as well as niche players such as Astera Labs. The race has picked up as hyperscalers pour money into AI data centers. Reuters reported last week that Marvell sees custom-chip revenue climbing over $10 billion by fiscal 2029 with cloud firms boosting AI spend.
But Credo made the risks clear. The company flagged that future results will hinge on DustPhotonics integration, rivals in optical interconnects, the wider macro climate and the semiconductor cycle. If optical demand grows slower than expected or if margins get squeezed, there isn’t much buffer at the current valuation.
Next up is management’s conference call at 2 p.m. Pacific time, where investors want clarity on customer demand and how quickly the optical ramp is moving. They’ll also watch for comments about margins as the company integrates DustPhotonics and boosts production.
