Credo Technology (CRDO) Tops Estimates With Record Q4, but Shares Plunge 12% on Lofty Expectations

Credo Technology (NASDAQ: CRDO) delivered record fiscal fourth-quarter results after Monday's close on June 1, 2026, but investors hit the sell button anyway, sending the AI connectivity specialist's shares down about 12% in after-hours trading despite a clean beat on both revenue and earnings. For the quarter ended in early June, Credo reported revenue of $437.0 million, up a blistering 157% year over year and 7.4% sequentially, comfortably ahead of consensus. Non-GAAP diluted EPS came in at $1.16, topping the roughly $1.02 analysts expected — a beat of more than 13%. GAAP gross margin held at a healthy 68.2%, with non-GAAP gross margin near 68.3%, while non-GAAP operating margin reached about 49.6%. For full fiscal 2026, revenue surged past $1.3 billion, up roughly 206% year over year, with non-GAAP net income up more than 500%. The company closed the year with about $1.4 billion in cash. The results were powered by surging demand for Credo's high-speed connectivity products — active electrical cables (AECs), SerDes, and optical DSPs — used to wire up AI data centers. Management guided fiscal Q1 2027 revenue to $465–$475 million and projected full-year fiscal 2027 growth of more than 80%, with the optical portfolio expected to contribute over $600 million. So why the sell-off? After a monster run, expectations had simply outpaced reality. When a stock prices in flawless execution, an ordinary beat-and-raise can disappoint. Several factors weighed on sentiment: - **Customer concentration:** Four customers each accounted for more than 10% of Q4 revenue, with the largest at roughly 34%. Credo expects three to four 10%-plus customers going forward, a dependence that makes investors uneasy even as the company courts neo-cloud providers to diversify. - **Margin scrutiny:** Gross margin, while strong, showed little upside expansion, raising questions about sustainability as the mix shifts. - **Valuation and profit-taking:** With shares having climbed sharply into the print, the in-line guidance gave momentum traders a reason to lock in gains. The takeaway: Credo's fundamentals remain among the strongest in the AI infrastructure supply chain, with triple-digit growth and a credible path to another year of 80%-plus expansion. The post-earnings drop reflects positioning and expectations more than any deterioration in the business — a classic case of a great quarter colliding with a priced-for-perfection stock.