Credo Targets $600 Million Optical Revenue Growth Following Record Quarter
San Jose, Wednesday, 2 September 2026.
Credo Technology reported 115% year-over-year revenue growth to $479 million, leveraging its strategic shift toward high-speed optical connectivity to target over $600 million in optical sales.
Record Revenue and Earnings Beat Estimates
Credo Technology Group (NASDAQ: CRDO) reported fiscal first-quarter 2027 revenue of $479 million on August 31, 2026, surpassing analyst estimates of $470.38 million [4][5]. This performance marks a significant increase from the $223.07 million reported in the same quarter of the previous fiscal year, representing a year-over-year growth rate calculated as 114.731 [3][4]. The company achieved earnings per share (EPS) of $1.20, exceeding the consensus estimate of $1.16 [4][5]. Non-GAAP net income reached a record $236.3 million, reflecting a 68% non-GAAP gross margin [4][5].
Strategic Pivot to Optical Connectivity
Management highlighted a strategic pivot toward high-speed optical connectivity, projecting optical revenue to exceed $600 million in fiscal 2027 [1][2]. This growth is driven by demand for 50G and 100G-per-lane solutions and the integration of silicon photonics following the DustPhotonics acquisition closed in Q1 2027 [1][5]. The company expects ZeroFlap Optics, silicon photonics PICs, and optical DSPs to each contribute over $100 million to this target [1][5]. This transition aims to diversify the company from a single-product model to a broader platform covering copper and optical interconnects [4][5].
Market Reaction and Risk Factors
Despite beating estimates, shares fell 8.65% during regular trading on August 31, 2026, followed by a 9.02% decline in after-hours trading [4][5]. Investors cited valuation concerns and customer concentration risks, with the top four customers accounting for 84% of revenue in the reported quarter [4][5]. The largest customer contributed 33% of revenue, while the second, third, and fourth contributed 28%, 13%, and 10% respectively [4][5]. The company faces semiconductor supply chain constraints for advanced nodes as a primary risk to achieving revenue targets [5].
Future Guidance and Outlook
For the second quarter of fiscal 2027, Credo expects revenue between $525 million and $535 million [2][4]. Full-year revenue growth is anticipated to exceed 85%, supported by contributions from ZeroFlap Optics and optical DSPs [1][5]. Management expects an inflection in the second half of fiscal 2027, driven by the optical revenue ramp [4][5]. Design wins for Near Package Optics are expected to begin ramping in fiscal 2028, with additional revenue from OmniConnect solutions targeted for the same period [4][5].