CRDO Plunges Despite Q1 Beat: Retail Feels Stock Will Recover ‘Strongly’

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Credo posted 115% revenue growth and issued strong fiscal Q2 revenue guidanceManagement expects an inflection in the second half of fiscal 2027, with optical revenue topping $600 million and full-year revenue growth exceeding 85%.Retail traders on Stocktwits turned ‘extremely bullish.’Credo Technology Holding shares plunged on Tuesday despite the AI connectivity company beating Wall Street expectations for its fiscal first quarter, with investors appearing more focused on the pace of future growth and the stock’s lofty valuation.CRDO stock fell 8.65% in regular trading and dropped another 9% in the overnight session. The company issued its results after the market closed.Credo reported adjusted earnings of $1.20 per share for the quarter ended Aug. 1, ahead of analyst estimates of $1.17. Revenue rose 115% to $479 million, topping estimates of $473 million and exceeding the high end of Credo’s own $475 million forecast.The company also delivered record net income of $236.3 million, up 140% from a year earlier, while gross margin came in at 68% and operating margin reached 48.2%.Credo makes high-speed connectivity products used to move data between AI servers and networking equipment. Its active electrical cables, or AECs, use chips to boost electrical signals, allowing data to travel over copper with lower power consumption and less copper than traditional solutions. The company is also expanding into optical DSPs, silicon photonics and other optical interconnect products. Its competitors include Broadcom, Marvell Technology and Astera Labs, among other companies targeting the rapidly growing AI networking and connectivity market.Credo Issues Strong ForecastFor the fiscal second quarter, Credo expects revenue of $525 million to $535 million. That implies roughly 9%-12% sequential growth, but the guidance appears to have disappointed investors accustomed to larger beats and stronger outlooks.Mizuho analyst Jordan Klein described the results as “solid and good,” but said the revenue beat and guidance “seems a bit skinnier” than in previous quarters, according to a report in Barron’s.Management remained bullish on the longer-term opportunity. CFO Mark Fleming said Credo expects an inflection in the second half of fiscal 2027, with more than $600 million in optical revenue and total revenue growth of more than 85% for the full year.Retail View ON CRDODespite Tuesday’s selloff, retail sentiment on Stocktwits appeared notably optimistic, suggesting some traders view the drop as a buying opportunity rather than a sign that Credo’s AI growth story is losing momentum.The sentiment moved up to ‘extremely bullish’ from ‘bullish’ the previous day. Message volume rose by over 680% in the last 24 hours with CRDO trending among the top five tickers on Stocktwits at the time of writing.“$CRDO Nothing but great news, more developing business partnerships and products, and bright future ahead for them,” said a trader. “Price action is ridiculous and will reverse strongly with all that was discussed in the earnings call and the question-and-answer session. There is nothing bearish about Credo financially or otherwise.”Year to date, CRDO stock is up 44%.For updates and corrections, email newsroom[at]stocktwits[dot]com.Read Next: ORCL Stock Extends Fall Overnight After Analyst Cuts Price Target, Flags Analyst Day As Key Catalyst: Retail Watches Cautiously

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