Credo Technology Group Holding Ltd CRDO used the first-quarter fiscal 2027 call to frame optics as the next major leg of growth, while keeping AECs central to its connectivity portfolio.
Non-GAAP earnings per share of $1.20 topped the Zacks Consensus Estimate of $1.17. Revenues of $479 million also beat the consensus estimate of $475.7 million.
CRDO Sets a Higher Bar for Fiscal 2027
Chief financial officer Daniel Fleming guided fiscal second-quarter revenues to $525-$535 million, with non-GAAP gross margin of 67-69% and non-GAAP operating expenses of $100-$105 million.
Fleming said fiscal 2027 revenues are still expected to grow more than 85% year over year, supported by an inflection in the second half. He also maintained an outlook for non-GAAP net margin near 50%.
President, CEO and chairman William Brennan centered that growth case on optics, saying the optical portfolio remains on track to generate more than $600 million of fiscal 2027 revenues.
Credo Builds Out the Optical Growth Engine
Brennan said optical DSP revenues reached a record in the quarter, with 50-gig and 100-gig-per-lane products contributing. Initial 1.6T DSP revenues remain targeted for later in fiscal 2027.
CEO also highlighted the first silicon photonics PIC revenues following the DustPhotonics acquisition. Initial wins span 800-gig and 1.6T transceivers, with ramps expected through the year.
In Q&A, a Stifel analyst asked about the optical mix. Brennan said fiscal 2027 is a stepping stone for optics and noted two major next-generation design wins expected to ramp in fiscal 2028, with some ramps able to begin late in fiscal 2027.
CRDO Keeps AECs in the Growth Mix
Brennan stated that AECs remain Credo's largest business, supported by deeper penetration with five hyperscalers, expanding NeoCloud activity and the coming transition to 200-gig-per-lane 1.6T ports.
Responding to a Jefferies analyst, Brennan said 1.6T AECs should begin contributing in the second half of fiscal 2027 and become more meaningful in fiscal 2028.
A BofA Securities analyst pressed on longer-term AEC growth. Brennan said AECs should keep expanding but at a slower pace than optics, reflecting the cable business's much larger starting base.
Credo Balances Ramps, Supply and Customer Mix
Fleming said the top four end customers represented 33%, 28%, 13% and 10% of revenues, respectively. He expects three to four customers to remain above 10% in coming quarters while diversification continues.
Responding to a TD Cowen analyst, Fleming added that product usage is broadening within hyperscaler accounts and is not limited to AECs.
A Barclays analyst asked about scaling ZeroFlap volumes amid supply constraints. Brennan said Credo had been working on supply readiness for the past 18-24 months. Fleming reported inventory rose $62.2 million sequentially to $313.1 million.
CRDO Pushes Reliability as a System Advantage
Brennan described ZeroFlap Optics as a system-level effort combining optical hardware, PILOT software and switch-level integration. Production shipments are underway, with additional fiscal 2027 ramps expected across 800-gig and 1.6T.
A William Blair analyst asked whether PILOT telemetry could deepen Credo's moat. Brennan said the platform continuously monitors link-health indicators and can identify instability before failure, supporting faster cluster bring-up and higher network availability.
A ROTH Capital analyst asked about differentiation. Brennan said vertical integration across SerDes, DSPs and silicon photonics can improve system performance and costs, while differentiated features can support an ASP advantage over more standards-based solutions.
Credo Keeps the Focus on Execution
Brennan's closing message was that AECs continue to expand while optics grows faster, broadening Credo's opportunity from components to complete optical and near-package solutions.
Fleming reinforced that posture with continued heavy R&D investment as operating leverage remains a priority. The near-term focus is executing second-half ramps while funding products aimed at fiscal 2028 opportunities.
CRDO's Zacks Signals Remain Mixed
CRDO carries a Zacks Rank #3 (Hold). Its Growth Score of A is favorable, while the Value Score of F, Momentum Score of C and VGM Score of C leave a mixed Style Scores profile and do not match the top-ranked A or B-score combinations. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Rank and Style Scores are designed to assess near-term prospects, with higher Style Scores indicating better expected performance. The rank can change as analysts revise estimates after the just-reported results, so the current readings are not fixed.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Credo Technology Group Holding Ltd. (CRDO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
