New York, March 3, 2026, 14:21 EST — Regular session
- Credo Technology (CRDO) dropped roughly 14% in U.S. trading after its latest outlook called for slimmer gross margins this quarter.
- The chipmaker notched a record $407 million in fiscal Q3 revenue, and now sees current-quarter revenue coming in between $425 million and $435 million.
- Traders are eyeing margins to see if they stick close to the company’s historical range for the quarter that wraps up on May 2
Shares of Credo Technology Group Holding Ltd (CRDO) dropped 14.3% to $97.87 in afternoon trading Tuesday. The selloff followed company guidance that flagged shrinking margins, despite ongoing sales growth. CRDO had finished Monday’s session at $114.22.
Credo, based in San Jose, California, reported fiscal third-quarter revenue climbed to $407.0 million, ending that stretch with $1.3 billion in cash and short-term investments. Looking ahead, the company put out a revenue forecast of $425.0 million to $435.0 million for the current quarter, with GAAP gross margin seen dropping to between 63.9% and 65.9% from the prior quarter’s 68.5%.
Traders keep circling that margin line. Gross margin—the slice of revenue left after covering direct product costs—can shift with whatever’s selling. On the call, CFO Daniel Fleming cautioned, “gross margin expansion will not always be linear,” but stuck with the broader target: a long-term range of 63% to 65%. Management also flagged that the company’s three largest customers each topped 10% of revenue for the quarter. The biggest one? 39%. The Motley Fool
Credo moved higher up the stack on Monday, announcing it has acquired connectivity IP company CoMira Solutions. According to the company, CoMira adds link layer, error correction, and security IP geared for “scale-up and scale-out” AI architectures. “CoMira’s IP building blocks will help us to further transform connectivity at scale,” CEO Bill Brennan said. Credo Technology Group
Some analysts chalked up the selloff to valuation and margin dynamics, not weak demand. Rosenblatt Securities’ Mike Genovese saw the margin beat coming from “mix shift to 800G AECs from 400G,” and called the Q4 outlook “solid, yet conservative.” Over at Needham, Quinn Bolton called it “another beat and raise quarter”—he flagged strong demand for active electrical cables, plus a broader customer base. Benzinga
Some of Tuesday’s action likely stems from information the market had in hand. Back in early February, Credo put out a current report outlining preliminary third-quarter revenue numbers well before the full earnings drop.
Credo makes high-speed connectivity chips and cable gear for AI data centers. Its active electrical cables use copper and built-in electronics to move data quickly over short runs, sidestepping the power and reliability issues of short-reach optics. Lately, the company’s been touting newer bets—optical modules and memory interconnects—as its next growth drivers.
But there’s another scenario on the table. Credo’s sales are still heavily dependent on just a handful of major clients, and spending on large-scale projects can freeze up fast if AI infrastructure priorities get shuffled or one of the hyperscalers tweaks its approach. Fleming pointed out that the forecast also banks on tariffs staying where they are, calling the situation “fluid.” Investing.com
Looking ahead, attention stays fixed on Credo and whether it can hit that fourth-quarter revenue target — and keep gross margins hovering within the usual range. The quarter wraps up May 2. Management’s latest margin guidance has become the immediate threshold investors are watching.
