Credo Technology Stock (CRDO) Surges Ahead of Earnings: Is the Momentum Sustainable?

Credo Technology Group Holding Ltd (NASDAQ: CRDO) is riding high as it approaches its earnings release today, due after market close. The stock closed out Friday at $177.60, for an impressive 36.1% jump on the last week, fueled by a series of strategic moves and promising product announcements. But can this upward trajectory continue, or is a correction on the horizon?

Analysts currently project an EPS of about $0.50, a substantial improvement from last year’s $0.07 per share. That suggests the company is expected to deliver a major increase in profitability compared to a year ago. For revenue, the average estimate sits at roughly US$234.99 million, which if achieved would imply a very strong sales growth of 226% year-over-year.

Several factors have contributed to Credo's recent success. The introduction of Weaver, a memory fanout gearbox designed to alleviate AI inference memory bottlenecks, has been met with enthusiasm.

Weaver, the first product within the OmniConnect family, promises to enhance I/O density tenfold, supporting up to 6.4TB of memory and 16TB/s bandwidth with LPDDR5X. Expected availability in the second half of 2026, Weaver represents a significant step forward in addressing the growing demands of AI applications.

The strategic acquisition of Hyperlume, Inc., a company specializing in MicroLED-based optical interconnect technology, further strengthens Credo's position. This acquisition aims to address the increasing bandwidth demands in AI, cloud, and hyperscale data centers, enabling high-speed, energy-efficient, and low-latency data transmission.

Moreover, the introduction of ZeroFlap (ZF) optical transceivers, supporting 400G, 800G, and 1.6T speeds, underscores Credo's commitment to innovation. These transceivers, integrated with the PILOT diagnostics platform, aim to improve optical link reliability in AI backend networks.

Credo's robust financial performance provides a solid foundation for its stock's upward movement. In the fourth quarter of fiscal year 2025, the company reported revenue of $170.0 million, marking a 25.9% quarter-over-quarter and 179.7% year-over-year growth. The GAAP gross margin stood at an impressive 67.2%, with a net income of $36.6 million.

Management's commentary on the integration of Hyperlume and the adoption of Weaver and ZeroFlap products will be particularly important.