NEW YORK, September 6, 2026, 3:20 a.m. EDT — Credo Technology Group Holding Ltd NASDAQ:CRDO recovered 3.9% Friday to $170.57. The bounce capped a bruising week despite quarterly revenue more than doubling.
The harder question sits below that growth headline. Credo issued $87.98 million of stock compensation last quarter. That sum equaled 68% of GAAP net income.
Wall Street wiped an estimated $7.8 billion from Credo’s value on Wednesday. Shares fell 20.0% after Tuesday’s results, then stabilized Thursday before Friday’s rebound.
The selloff was about earnings quality. Revenue reached $479.0 million, up 114.7% from a year earlier. Yet sequential GAAP gross margin lost 3.7 percentage points.
Growth accelerated. GAAP economics went the other way.
First-quarter fiscal 2027 compared with the immediately preceding quarter.
Source: Credo’s September 1 earnings release. Changes use unrounded company figures.
Operating costs moved much faster than sales. GAAP expenses rose 32.5% from the prior quarter, while operating income fell 22.5%. The business remained solidly profitable.
The adjusted account looks much richer. Non-GAAP net income was $236.3 million against $129.4 million under GAAP. Stock compensation explains $87.98 million of that $106.9 million gap.
This is a live valuation issue.
The rebound barely dented a 40% retreat
Credo daily closes across the latest 25 U.S. trading sessions.
Last market close at . Source: Yahoo Finance historical data. Prices are rounded.
Friday’s close still stood 39.7% below the August 17 peak. It was 44.7% under the 52-week high reported by Nasdaq.
At $32.1 billion, Credo trades near 15.1 times annualized next-quarter revenue guidance. That valuation makes each margin point expensive. It also raises the cost of customer concentration.
Two customers supplied 71% of first-quarter revenue, according to the quarterly filing. The same two represented 85% of receivables at quarter-end.
Active electrical cables drove the surge. Credo said higher AEC shipment volume contributed over 90% of the year-on-year revenue increase. Hyperscale data-center customers powered that ramp.
Next quarter asks for more revenue and more stock pay
Company guidance, concentration disclosures and a midpoint operating model.
Fiscal Q2 guide
Concentration and expectations
Sources: Credo’s outlook, its customer disclosure and Nasdaq analyst research. The operating model is an estimate, not company guidance.
Management expects second-quarter revenue of $525 million to $535 million. The midpoint represents another 10.6% sequential gain. GAAP gross margin guidance centers at 63.9%.
The company also assumes $97 million of share compensation inside operating expense. A separate gross-margin adjustment adds about $6.9 million at midpoint revenue. Together, those assumptions approach $104 million.
A simple midpoint model produces about $137 million of GAAP operating income. That would put operating margin near 25.9%, slightly above the first quarter’s 25.2%.
Chief Executive Bill Brennan framed the breadth case in the earnings release. “Our portfolio now spans connectivity from millimeters to kilometers,” he said. Credo sells across copper and optical links.
Analysts still see a powerful recovery. Nasdaq reports a mean Buy rating from nine firms and a $287.50 target. That target implies 68.6% upside from Friday’s close.
The next clean signal arrives through the GAAP line. Credo must convert its cable ramp into stable gross margin while operating costs normalize. Tuesday’s holiday-delayed reopening will test whether buyers accept that timetable.
Risks: Two customers control most sales, leaving results exposed to purchasing pauses. AEC competition could pressure price and margin. Rich valuation and continued share issuance may amplify any forecast miss.
U.S. cash markets remain closed Monday for Labor Day, according to the Nasdaq calendar. Credo’s next regular session begins Tuesday at 9:30 a.m. EDT.
