Earnings call transcript: Credo Technology Q4 2026 earnings beat forecasts

Credo Technology Group Holding Ltd reported robust fourth-quarter results for fiscal year 2026, surpassing analyst expectations with an earnings per share (EPS) of $1.16, compared to the forecasted $1.02. Revenue also exceeded projections, coming in at $437 million against a forecast of $431.79 million. Following the announcement, Credo’s stock price increased by 1.13% in aftermarket trading, reflecting positive investor sentiment despite a broader market decline.

Credo Technology’s performance in the fourth quarter of fiscal year 2026 highlights its ability to outperform market expectations. The company’s strong results are indicative of its strategic positioning within the growing AI infrastructure market, with revenue growth reaching an impressive 226% over the last twelve months. With a market capitalization of $43.54 billion, the company has demonstrated remarkable expansion. Compared to previous quarters, this performance underscores a consistent trend of exceeding financial targets, which could be attributed to effective management and market demand.

Credo Technology’s actual EPS of $1.16 exceeded the forecast of $1.02, marking a 13.73% surprise. The revenue of $437 million also surpassed expectations, beating the forecast by 1.21%. These results demonstrate the company’s ability to deliver strong financial performance and suggest effective cost management and revenue generation strategies.

Post-earnings, Credo’s stock rose by 1.13% in aftermarket trading, reaching $238.69. This increase reflects investor confidence in the company’s financial health, which InvestingPro rates as "EXCELLENT." The stock has delivered a remarkable 271% return over the past year and trades near its 52-week high. Yet according to InvestingPro’s Fair Value analysis, the stock appears overvalued at current levels, placing it among the most overvalued stocks in the market. Investors seeking deeper insights can access Credo’s comprehensive Pro Research Report, one of 1,400+ available on InvestingPro, which transforms complex Wall Street data into clear, actionable intelligence. The stock remains 4.21% below its previous close, indicating some market volatility and potential profit-taking activities.

Credo Technology’s future guidance suggests continued growth, with projected EPS and revenue increases in upcoming quarters. The company anticipates EPS of $1.16 in Q1 FY2027 and $1.94 by Q4 FY2027, alongside revenue growth to $727.2 million in the same period. These projections align with the positive trends in the AI infrastructure market.

Executives highlighted the company’s strategic focus on expanding its AI infrastructure capabilities, noting a fundamental shift in market dynamics as AI clusters scale significantly. This strategic direction is expected to drive future growth and enhance Credo’s competitive position.

During the earnings call, analysts inquired about the company’s strategies to mitigate supply chain risks and its plans to capitalize on AI market opportunities. Executives emphasized their proactive approach to managing supply chain issues and their commitment to innovation and market expansion.

Operator: Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session where we request that you please limit yourselves to one question only. At that time, if you have a question, you will need to press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star and then the number one again. I would now like to turn the conference over to Dan O’Neil. Please go ahead, sir.

Dan O’Neil, Investor Relations, Credo: Good afternoon. Thank you all for joining our fourth quarter fiscal 2026 earnings call. Today, I am joined by Bill Brennan, Credo’s Chief Executive Officer, and Dan Fleming, Credo’s Chief Financial Officer. During this call, we will make certain forward-looking statements. These forward-looking statements are subject to risks and uncertainties discussed in detail in our documents filed with the SEC. These documents can be found in the investor relations portion of the company’s website. It is not possible for the company’s management to predict all risks, nor can the company assess the impact of all factors on its business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statement.

Given these risks, uncertainties, and assumptions, the forward-looking events discussed during this call may not occur, and actual results could differ materially and adversely from those anticipated, implied, or inferred. The company undertakes no obligation to publicly update forward-looking statements for any reason after the date of this call to conform these statements to changes in the company’s expectations or to actual results, except as required by law. During this call, we will refer to certain non-GAAP financial measures, which we consider to be important measures of the company’s performance. These non-GAAP financial measures are provided in addition to, and not as a substitute for or superior to, financial performance prepared in accordance with the US GAAP.

A discussion of why we use non-GAAP financial measures and reconciliations between our GAAP and non-GAAP financial measures is available in the earnings release we issued today, which can be accessed using the investor relations portion of our website. I will now turn the call over to our CEO. Bill?

Bill Brennan, Chief Executive Officer, Credo: Thanks, Dan, and thank you all for joining our fourth quarter and full fiscal year 2026 earnings call. I’ll begin with a review of our fiscal 2026 performance, discuss the major developments across our business, and share our perspective on the opportunities ahead. Dan Fleming, our Chief Financial Officer, will then provide additional detail on our Q4 and fiscal year 2026 results, along with guidance for the first quarter of our fiscal 2027. We’ll then open the call for questions. Fiscal 2026 marked another defining year for Credo. Revenue exceeded $1.3 billion, more than tripling year-over-year, while non-GAAP net income increased more than five times to $662 million. Very few semiconductor companies have scaled at this pace while sustaining product leadership, strong margins, and operational execution. In the fourth quarter of fiscal 2026, revenue reached a record $437 million.

Notably, our revenue in the quarter exceeded our entire fiscal 2025 revenue. Q4 non-GAAP gross margin was 68.3%. Non-GAAP net income grew to $227 million and was more than 30% greater than our revenue in the year-ago quarter. Producing these results required incredible effort and expertise, and I want to sincerely thank team Credo for their continued stellar performance. These results reflect Credo’s ability to capitalize on a fundamental shift occurring across AI infrastructure. As AI clusters scale from tens of thousands to hundreds of thousands of GPUs, connectivity is no longer just about bandwidth. Reliability, power efficiency, signal integrity, and telemetry have become critical architectural requirements. Today’s AI infrastructure is increasingly constrained not by compute, but by the reliability and efficiency of the connectivity fabric tying these systems together. Over the past several years, AI network reliability has become Credo’s North Star.

Our roadmap, our product investments, our software architecture, and our system-level approach have all been built around helping customers accelerate cluster bring up, maximize GPU utilization, and maintain stable operation at unprecedented scale. Credo was purpose-built for this transition. Our strategy is centered on delivering connectivity solutions across the full spectrum of AI infrastructure, from die-to-die and chip-to-chip connectivity to multi-rack scale copper, and to row-scale and facility-wide optical interconnect. By extending both inward toward the silicon and outward across the data center, we’ve positioned Credo to become a foundational network architecture partner for our customers. Importantly, hyperscale and neo cloud operators increasingly want partners capable of delivering multiple generations of connectivity solutions with deep system-level integration. This is where Credo differentiates itself through our vertically integrated approach, spanning core SerDes technology, silicon and system-level solutions, firmware and telemetry software, and operational execution. I’ll now discuss our businesses in more detail.

First, regarding Active Electrical Cables, our AEC business remains a core growth engine for the company, and we continue to see substantial long-term opportunity ahead. As AI clusters scale, reliability and power efficiency have become primary design constraints. AECs have become the preferred solution for in-rack connectivity and for many multi-rack deployments up to seven meters. Credo ZeroFlap AECs deliver up to 1,000 times greater reliability than commodity laser-based optical modules, while consuming much less power. In environments where cluster downtime can cost millions of dollars and delay AI deployment schedules, network reliability matters more than ever. We continue to see strong customer adoption across hyperscaler and neo cloud operators, both at 100G per lane and emerging 200G per lane deployments. Our vertically integrated model positions us well for continued leadership as both lane speeds and cluster complexity increase.

We also remain on track with our PCIe 6.0 AEC family, where customer engagement and design activity continue to strengthen. Turning to optics. We believe fiscal 2027 represents an inflection point for Credo’s optical business. First, at an optical DSP component level, we see momentum in both design wins and revenue contribution. We’re looking forward to continued growth in t