Credo Technology Holding Q2 Beats Estimates and Raises Q1 2026 Guidance

Q2 2025 Highlights

Credo Technology Holding (NASDAQ: CRDO) delivered a strong second quarter, surpassing analyst expectations on both earnings and revenue:

• EPS: $0.35 vs. $0.27 consensus (beat by $0.08)

• Revenue: $170 million vs. $159.59 million consensus

Closing at $62.65, the stock is up 48.9% over the past three months and a remarkable 148.7% in the last year. In the past 90 days, Credo saw 9 positive EPS revisions and zero negative revisions, underscoring growing bullish sentiment.

Guidance and Forward Outlook

Credo sees continued momentum heading into 2026:

• Q1 2026 Revenue Guidance: $185 million - $195 million vs. $162 million consensus

  • This implies a 15%-20% year‑over‑year increase at the midpoint, highlighting strong end‑market demand.

Investors should monitor how these projections compare to historical trends—review Credo's historical beats with this historical earnings data to see how Q1 guidance stacks up against past quarters.

Key Drivers of outperformance

1. Product Mix and Market Demand

• High‑Performance Networking Chips: Growth in 5G infrastructure and data‑center upgrades has fueled demand for Credo's low‑latency optical interconnect solutions.

• Diversified Customer Base: The company's exposure to both cloud providers and telecom equipment vendors reduces concentration risk.

2. Operational Efficiency

• Expanded Gross Margins: Improved supply‑chain efficiencies and scale have pushed gross margins above historical averages—track Credo's evolving margins via these ratio metrics.

• R&D Investments: Continued investment in next‑gen IP solutions ensures Credo stays ahead of competitors while commanding premium pricing.

Valuation and Analyst Sentiment

• Current P/E: At $62.65 share price and $0.35 Q2 EPS, Credo trades near 180× trailing‑12‑month earnings, reflecting high growth expectations.

• EV/Revenue Multiple: Approximately 6×, versus a semiconductor‑interconnect peer average of 4×, suggesting room for multiple expansion if growth sustains.

Analyst coverage remains thin but positive: upward EPS revisions outnumber downgrades, and price targets are clustering in the $70-$75 range, indicating ~15% upside from today's levels.

Risks and Considerations

1. Supply‑Chain Disruptions: Any new constraints in chip fabrication or optical component sourcing could pressure margins and delivery timelines.

2. Competitive Pressure: Emerging rivals in the high‑speed interconnect space may force price concessions or slower share gains.

3. Macroeconomic Slowdown: A broader tech cyclical downturn could dampen data‑center spend, delaying Credo's revenue ramp.

Conclusion and Investor Takeaways

Credo Technology's Q2 beat and robust Q1 2026 revenue guidance underscore its leadership in networking semiconductors. With product demand tied to expanding 5G and cloud infrastructure, the company appears well‑positioned to sustain double‑digit growth. Investors should watch upcoming Q1 2026 earnings—scheduled in early August—to gauge if Credo can maintain this trajectory and justify its premium valuation.