CRDO — Q4 FY2026 Earnings Breakdown

Q4 FY2026 Headline Numbers

Credo Technology posted a mixed Q4 FY2026 — strong EPS but a narrow revenue miss on a stock already priced at stratospheric multiples. Here are the numbers that matter.

• Q4 Revenue: $437M — up 157% YoY, up 7.4% QoQ. Consensus was $440.7M → slight miss of $3.7M (-0.8%)
• Non-GAAP EPS: $1.16 — beat estimate of $1.03–$1.05 by $0.11 (10% upside)
• GAAP EPS: $0.88
• GAAP Gross Margin: 68.2% | Non-GAAP: 68.3%
• Cash + short-term investments: $1.4B
• Full FY2026: $1.33B revenue (+205% YoY)
• Operating income FY2026: $626.59M | Net income: $458.31M

The Stock Reaction

The market's response was swift and significant. CRDO entered earnings near its all-time high — a setup that demands perfection.

• Close: $226.10 (-4.21% on the day)
• After-hours: ~$204 (-9.8% AH)
• Total drawdown from prior close ($236): ~-14%
• 52-week range: $59.88 – $243.21 (entered earnings near all-time high)
• Beta: 3.23

The stock had priced in perfection. It beat on EPS by 10% but the small revenue miss on a 124x trailing P/E stock was enough to trigger the reset. The -14% AH move implies the Q1 FY2027 guidance disappointed the street (earnings call was live at 5PM ET when this was written).

The Red Flag: Insider Selling

In the past 6 months: 0 insider purchases. 292 insider sales.

• CTO (Chi Fung Cheng): sold $89M worth
• COO (Yat Tung Lam): sold $57M worth
• CEO (William Brennan): sold $31M worth

That’s $177M+ of selling with zero buying. Worth noting — but common when stock comp vesting drives a large portion of executive income at these valuations.

The Business

Credo makes high-speed connectivity chips (SerDes, Active Electrical Cables) that connect AI accelerators inside hyperscale data centers. Their technology sits inside the AI infrastructure being built at massive scale. It’s picks-and-shovels for the GPU era — the more AI clusters get built, the more Credo’s interconnects are needed.

This is why the numbers are extraordinary:

• FY2026 revenue: $1.33B (up from $437M the prior year — +205% growth)
• Gross margin expanding to 68% at scale
• EPS went from $0.29 in FY2025 to $2.40 in FY2026
• Free cash flow: $362M in FY2026

The company went from pre-profitability ($-28M net income in FY2024) to $458M net income in two years. That’s not organic maturation — that’s a demand wave from AI capex.

The Valuation

At after-hours prices, the multiple still demands respect:

• Current (AH): ~$204
• Market Cap at $204: ~$37.6B
• FY2026 Revenue: $1.33B → P/S ~28x TTM
• PE: 124x trailing | 47x forward

Analyst Targets (as of earnings week)

• Mizuho: Buy, $260 PT (raised from $225 on May 31)
• Stifel: Buy, $250 PT (raised from $200 on May 29)
• Barclays: Buy, $260 PT
• Average across 18 analysts: $214.09 — Strong Buy consensus

At $204 AH, the stock is now trading below the analyst average price target. That’s either a buying opportunity or a signal that estimates are about to get cut.

The Guidance Question

Beating on EPS by $0.11 matters. But the market doesn’t price the quarter — it prices the next 4 quarters. The -14% reaction implies the Q1 FY2027 revenue guidance came in below the $440M+ street expectation.

Three Scenarios

• Guidance $430M+: The selloff is overdone. $195–205 is a gift entry.
• Guidance $400–420M: Makes sense. Deceleration from $437M would represent the first real growth slowdown. Needs time to base.
• Guidance below $400M: The thesis is cracking. Don’t catch the knife — wait for $175–185.

Watch for guidance confirmation in the call transcript and subsequent analyst notes.

Key Risk: Customer Concentration

Credo’s hypergrowth is tied to AI data center buildout. If a single hyperscaler (or a small number of them) drives the majority of revenue, any pause in capex spending or order delay hits disproportionately hard. The revenue miss — even small — hints at this dynamic.

Position Framework

This is an AI infrastructure growth stock at a growth multiple. It deserves a premium — but the current price requires continued acceleration.

Wait for Q1 guidance to fully land before acting.

• Starter zone: $195–$205 (if Q1 guidance holds at $430M+)
• Full conviction add: $185–$195 (on any further pullback with intact thesis)
• Trim: $240+ (approaching prior ATH)
• Target: $260 (Mizuho/Barclays PT, ~28% from AH price)
• Invalidation: Weekly close below $175 (signals real demand concerns, not just valuation reset)
• Max size: 2–3% of portfolio — beta 3.23, no dividend, pure growth

The Bottom Line

The business is elite. $1.33B revenue at 68% gross margins growing 200%+ annually is rare. The balance sheet is clean at $1.4B cash. This isn’t a business in trouble.

The issue is the multiple and what guidance implies about the growth trajectory. At $226 it was priced for perfection. At $204 AH it’s approaching analyst consensus. The dip creates a real entry conversation — but only after the Q1 guide is confirmed.

If the growth thesis holds, this is a reset. If guidance shows deceleration, $200 is not the bottom.

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Key Stats

• Price (AH): ~$204 | Market Cap: ~$37.6B
• Q4 Revenue: $437M (+157% YoY) | Full FY: $1.33B
• Gross Margin: 68.2% | Non-GAAP EPS: $1.16
• Cash: $1.4B | Beta: 3.23 | Forward PE: 47x
• Analyst Avg PT: $214 | Consensus: Strong Buy
• Starter: $195–205 | Add: $185–195 | Target: $260
• Invalidation: Weekly close <$175