CRDO Up on Preliminary Q3 Revenue Beat: What it Signals for FY26 & FY27

Core Insights - Credo Technology Group Holding Ltd. (CRDO) reported preliminary revenue results for Q3 fiscal 2026 that significantly exceeded market expectations, highlighting its role as a key player in the demand for high-speed, energy-efficient connectivity solutions in data centers and AI infrastructure [2][3]. Revenue Performance - CRDO expects Q3 fiscal 2026 revenue to be between $404 million and $408 million, surpassing previous guidance of $335 million to $345 million, indicating a sharp increase in demand late in the quarter [3][9]. - The Zacks Consensus Estimate for CRDO's revenue is currently at $340 million, reflecting a 151.8% increase from the previous year's reported figure [4]. Growth Drivers - The company experienced a record fiscal second quarter with a 272% year-over-year revenue growth, driven by heightened demand for AI infrastructure and strong adoption of its products, including active electrical cables and high-speed SerDes ICs [4]. - CRDO anticipates over 200% year-over-year revenue growth for fiscal 2026, an increase from the prior estimate of 170%, indicating strong demand stability [5]. Customer and Market Dynamics - Management projected strong year-over-year growth from its top four customers, with one customer contributing over 10% of revenue, enhancing revenue diversification [6]. - The company is witnessing explosive momentum as hyperscale data centers expand AI capacity, leading to triple-digit revenue gains and improved profitability [4]. Future Outlook - CRDO expects mid-single-digit sequential revenue growth heading into fiscal 2027, reinforcing confidence in sustained expansion [5]. - The company will discuss detailed financial results for Q3 fiscal 2026 during its earnings call on March 2, 2026 [7]. Competitive Landscape - Competitors like Astera Labs and Broadcom are also experiencing strong demand in AI and data center infrastructure, indicating a robust market environment for connectivity solutions [8][10]. Stock Performance - Following the revenue announcement, CRDO's shares rose by 18% in pre-market trading, with a 60.1% increase over the past year compared to the Electronics-Semiconductors industry's growth of 38.1% [11]. - CRDO's forward 12-month Price/Sales ratio is 14.4, higher than the sector's average of 8.46, reflecting strong market positioning [12].