Surges 15% After Hours! "Optical Connectivity Giant" Credo's Q3 revenue guidance crushes expectations,预计full-year growth exceeds 200%

Thanks to the explosive demand for high-speed connectivity products driven by AI infrastructure, connectivity solution provider Credo significantly raised its earnings guidance, with revenue expectations far exceeding Wall Street’s most optimistic estimates, causing the stock price to soar after hours.

On Monday, February 9, Credo released preliminary financial results for Q3 FY2026 (ending January 31, 2026) after the U.S. stock market close, and updated its full-year outlook.

The announcement shows that the company expects third-quarter revenue to be between $404 million and $408 million. This figure not only greatly exceeds the company’s previous guidance range of $335 million to $345 million but also far surpasses the Wall Street analyst consensus of approximately $341 million.

Beyond impressive quarterly data, Credo expressed strong confidence in its future growth prospects. The company explicitly stated in its statement:

“Looking into the end of FY2026 and into FY2027, Credo expects Q4 revenue to achieve mid-single-digit sequential growth, which will drive over 200% year-over-year growth for the fiscal year (FY2026).”

This guidance confirms that the company is in a rapid expansion phase. Data shows that analysts previously expected a 172% sales growth for FY2026, but the company’s latest official guidance not only meets but significantly exceeds expectations.

Stimulated by this news, Credo’s stock rose 10.91% during regular trading on Monday, closing at a high. After the earnings preview was released, the stock continued to surge in after-hours trading, with gains exceeding 15% at one point.

Not only surpassing guidance but also far exceeding consensus expectations

The core impact of Credo’s upward revision in this earnings forecast lies in the magnitude of the increase.

• Using the midpoint of the range, Q3 revenue is approximately $406 million; about 19% higher than the previous guidance midpoint of $340 million.
• Even compared to the previous upper guidance of $345 million, the lower end of this forecast ($404 million) is about 17% higher; compared to the previous lower guidance of $335 million, the upper end of this forecast ($408 million) is about 22% higher.
• Media data also shows that this range is clearly above market consensus (about $341 million).

For the market, such proactive disclosure of preliminary revenue figures “after the quarter ends and before the official financial report” generally indicates that the company has high confidence in recognizing revenue for the quarter, while also managing market expectations in advance: “showing the most solid numbers first.”

The announcement states that the company will release its full financial report after the market close on Monday, March 2, 2026, and hold a conference call at 2:00 PM Pacific Time on the same day to disclose more detailed financial data.

Currently, this announcement only provides revenue figures and guidance direction, without details on the income statement or cash flow. For the market, the subsequent official report and conference call will mainly focus on three areas:

• Profitability in line with scale expansion: After revenue greatly exceeds guidance, whether gross margin and expense ratios improve simultaneously will determine “growth quality.” Media data platform InvestingPro previously mentioned that the company’s gross margin is close to 67%.
• Sources of growth: The company’s business covers AEC active cables, optical transceivers, and high-speed interconnect products like DSP chips for Ethernet and PCIe. Investors will inquire which product lines contributed more to the quarterly outperformance, whether supply is constrained, and how prices and product mix are changing.
• Visibility into FY2027: The company extended its outlook into FY2027, and the market will want to hear more specific descriptions of order and delivery rhythms, rather than just the directional language of “mid-single-digit sequential growth.”

Explosive demand for connectivity under the AI wave

Credo’s explosive growth is mainly driven by the urgent demand for high-speed, energy-efficient connectivity products in AI data centers.

As a provider focused on innovative connectivity solutions with speeds up to 1.6T, Credo’s product portfolio includes AEC (Active Electrical Cables), optical transceivers, and DSP chips for Ethernet and PCIe.

Credo’s success largely stems from its absolute leadership in the AEC market. AEC is a copper-based connection technology invented by Credo, used to connect AI servers with network switches, and is a key component for high-speed data transfer within AI data centers. Compared to traditional optical cables, AEC is considered more reliable and consumes less power; compared to passive copper cables, it supports longer-distance transmission.

The company emphasized in the announcement: “Our high-speed copper and optical interconnect products can deliver industry-leading power and performance up to 1.6T to meet the growing data infrastructure needs of AI.”

These products are critical components for building large-scale AI clusters and supporting exponential growth in data infrastructure.

Currently, Credo’s market capitalization exceeds $20 billion. Although Investing.com analysts note that its stock is trading above fair value, in the context of the ongoing AI hardware arms race, investors seem to place more emphasis on its positioning advantages at frontier technology nodes like 1.6T and its up to 200% growth rate.

Credo’s solutions are favored by many industry giants. According to Needham, Amazon, Microsoft, and Elon Musk’s xAI are among Credo’s main customers. These tech giants’ massive investments in AI infrastructure directly translate into strong demand for Credo’s products.

Wall Street’s optimism about AI-driven growth

Market analysts point out that Credo currently maintains a high gross margin of nearly 67% and an return on assets exceeding 20%, demonstrating strong profitability.

Despite recent stock price volatility and high valuation (market cap over $20 billion), mainstream Wall Street investment banks remain bullish. Needham reaffirmed its “Buy” rating and named Credo as a 2026 “Top Pick,” with a target price raised to $220.

Analysts believe that as the adoption rate of AEC increases and new products (such as Blue Heron 224G retimer) are launched, the company’s performance will continue to outperform the market.

Rosenblatt Securities takes a more cautious stance, giving a “Neutral” rating with a target price of $170, warning investors to watch for valuation risks.

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