Credo Technology Group Holding Ltd CRDO is scheduled to report fourth-quarter fiscal 2026 results on June 1, after the closing bell.

The Zacks Consensus Estimate for the bottom line for the to-be-reported quarter stands at $1.03, indicating a 194.3% year-over-year surge. The estimate has remained unchanged in the past 30 days.

The Zacks Consensus Estimate for total revenues is pinned at $430.08 million, implying a 153% increase. For the fiscal fourth quarter, CRDO expects revenues to be between $425 million and $435 million.

Credo’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 31.6%.

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Let us see how CRDO is expected to fare in terms of revenues and earnings this time.

What Our Model Reveals

Our proven model does not conclusively predict an earnings beat for CRDO this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

CRDO has an Earnings ESP of 0.00% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors to Note Before CRDO’s Q4 Results

Credo’s fiscal fourth-quarter performance is likely to have been driven by strong demand for its active electrical cables (“AEC”) and optical products, along with deeper engagement with hyperscalers. On the last earnings call, management noted that revenues more than doubled from fiscal 2024 to 2025, and the company expects the metric to triple from fiscal 2025 to 2026, with management putting the number just north of $1.3 billion for fiscal 2026. This implies that Credo will have achieved more than six times the revenue growth within two years.

Three hyperscalers each contributed more than 10% of total revenues in the last reported quarter, reflecting strong adoption of Credo’s high-reliability AEC solutions. Credo has also secured a fifth hyperscaler customer, further strengthening its position within the global cloud ecosystem. Beyond the traditional hyperscalers, Credo is also seeing increasing demand from emerging Neocloud providers.

AECs remain Credo’s fastest-growing product line and the primary revenue driver as these now play an increasingly critical role in AI-driven networking deployments. According to Credo, adoption of zero-flap AECs is accelerating because they deliver up to 1,000x higher reliability while consuming roughly 50% less power compared with optical alternatives. These advantages are particularly valuable in large XPU clusters, where network failures can disrupt operations and lead to high costs.

Credo’s IC business, which includes retimers and optical DSPs, has also been witnessing increasing traction. The company’s PCIe retimer program remains on track for design wins in fiscal 2026 and revenue contributions in the next fiscal year. Also, PCIe Gen6 AECs are sampling now and slated for mass production in the first half of fiscal 2027.

Although the revenue contribution from optics in the fiscal fourth quarter is expected to have been limited, the strong customer interest and pulled-forward ramp timeline indicate that this segment will become a significant growth driver starting in fiscal 2027. Management expects a considerable production ramp of ZF optics beginning in the first quarter of fiscal 2027.

Credo Technology Group Holding Ltd. Price and EPS Surprise

Credo Technology Group Holding Ltd. price-eps-surprise | Credo Technology Group Holding Ltd. Quote

Further new product launches (Cardinal optical DSP, Robin optical DSP family and Blue Heron) are expected to aid CRDO in expanding its market share moving forward.

After acquiring high-speed connectivity IP innovator CoMira Solutions and microLED technology firm, Hyperlume, CRDO announced a deal to acquire DustPhotonics for $750 million (cash plus stock and performance-based incentives) in April 2026. The company will bring Silicon Photonics Photonic Integrated Circuit (SiPho PIC) capabilities or optical transceivers in-house. The deal accelerates the optical roadmap, reduces supply dependence, lowers costs at scale and broadens its footprint within the optical industry. This addition, coupled with ZF Optical Transceivers and optical DSPs, Credo expects optical revenues to exceed $500 million in fiscal 2027.

CRDO’s improving profitability is another thing investors need to watch for. In the last reported quarter, non-GAAP gross margin was 68.6% compared with 63.8% a year ago. Non-GAAP operating margin was 49.6% compared with 31.4% reported in the prior-year period. Non-GAAP net income hit $208.8 million, representing a 51.3% net margin. For the fiscal fourth quarter, CRDO expects non-GAAP gross margin to be 64-66%.

However, tougher competition and an uncertain macro backdrop due to fluid tariff situation continue to pose challenges. Credo competes with semiconductor bigshots like Broadcom Inc. AVGO and Marvell Technology, Inc. MRVL as well as newer entrants like Astera Labs ALAB.

Also, heavy reliance on a few customers creates concentration risks, leaving the company exposed to sharp revenue hits if any major client pulls back. Further, non-GAAP operating expenses are expected to be between $76 million and $80 million in the fiscal fourth quarter. This could pressure margins if revenue growth falters.

CRDO Stock vs. the Industry

CRDO’s shares have gained 29.3% in the past six months, underperforming its Electronics – Semiconductors industry (up 39.6%), but outperforming both the Zacks Computer and Technology (up 18.8%) and S&P 500 (up 11%).

Price Performance

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AVGO, ALAB and MRVL have gained 9.3%, 96.9%, and 118.1% respectively over the same time frame.

CRDO Trades at a Premium

Based on the price-to-earnings ratio, the company’s shares currently trade at 44.63X forward earnings, higher than the industry average of 37.03X but down from the stock’s mean of 53.48X. The premium valuation is justified to an extent, given the company’s strong long-term growth prospects amid the AI infrastructure buildout.

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In comparison, Broadcom trades at a forward 12-month P/E of 27.96, while Astera Labs and Marvell Technology trade at P/E multiples of 97.99 and 46.01, respectively.

Our Viewpoint: CRDO Is a Buy Before Q4 Earnings

Credo’s rapid AEC adoption and hyperscaler momentum and robust revenue trajectory position it well for another solid quarter despite near-term risks. With AI-driven networking demand as a key tailwind, the stock remains an attractive buy ahead of earnings for investors seeking high-growth semiconductor exposure.

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