It has been about a month since the last earnings report for Credo Technology Group Holding Ltd. (CRDO Quick QuoteCRDO - Free Report) . Shares have added about 17.9% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Credo Technology Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.

Credo Tops Q1 Earnings & Sales Estimates

Credo Technology reported first-quarter fiscal 2027 revenues of $479 million, up 114.7% year over year and 9.6% sequentially. The company has now delivered seven consecutive quarters of triple-digit year-over-year revenue growth.

The revenue base remains concentrated among large AI infrastructure customers. In the fiscal first quarter, the top four customers each contributed at least 10% of revenues, with the largest customer at 33%, the second-largest at 28%, the third at 13% and the fourth at 10%. Management continues to expect three to four customers to account for more than 10% of revenues in upcoming quarters.

AECs Anchor Growth, Optical Accelerates

AECs remained the company’s largest business unit in the fiscal first quarter and continued to benefit from deeper penetration at hyperscale customers and adoption of higher data rates. Management highlighted strong relationships with five hyperscalers and expanding traction among NeoCloud providers.

Credo continues to see higher AEC penetration within existing customers as deployments scale, while the shift toward 200-gig-per-lane 1.6T ports provides another growth opportunity.

Optical revenues continued to scale across optical DSPs, silicon photonics PICs and ZeroFlap optics. Credo added that its optical DSP business generated “record revenues” in the fiscal first quarter, while the first 1.6T DSP revenues remain on track for later in fiscal 2027.

Credo also recognized initial silicon photonics PIC revenues following the DustPhotonics acquisition. The company has initial wins at 800G and 1.6T, and management expects the business to ramp through fiscal 2027. ZF optics are in production shipments, with customer ramps expected through the year at both 800G and 1.6T.

Margins Show Operating Leverage

Non-GAAP gross profit was $325.8 million, while non-GAAP gross margin was 68%. GAAP gross margin was 64.5%, compared with 67.4% in the year-ago period and 68.2% in the prior quarter. 

Non-GAAP operating expenses were $95.2 million in the fiscal first quarter. GAAP operating expenses were $188.4 million, up 110% year over year from $89.6 million, reflecting higher R&D investment, increased SG&A and sharply higher share-based compensation.

Non-GAAP operating income was $230.6 million, with a non-GAAP operating margin of 48.2%. GAAP operating income was $120.7 million, up 98.7% year over year, while GAAP operating margin was 25.2%.

Non-GAAP net income was $236.3 million in the fiscal first quarter, representing a non-GAAP net margin of 49.3%.

Cash Flow and Balance Sheet Trends

Cash flow from operations was $90.2 million, down nearly $92 million sequentially, primarily due to working-capital changes. Capital expenditures were $7.3 million, resulting in free cash flow of $82.9 million.

Cash and cash equivalents and short-term investments stood at $764.3 million, a decrease of $679 million from the previous quarter due to the cash outlay for the DustPhotonics acquisition.

DustPhotonics Expands Optical Stack

The DustPhotonics acquisition strengthened Credo’s optical connectivity portfolio and supports the company’s full-stack strategy across electrical and optical interconnects. 

The deal also expanded Credo’s exposure to 800G and 1.6T optical opportunities. Management expects ZeroFlap optics, silicon photonics PICs and optical DSPs to each contribute more than $100 million in fiscal 2027 revenues, supporting a target of more than $600 million in optical revenues for the year.

Outlook Points to Continued Expansion

For the fiscal second quarter, Credo expects revenues of $525 million to $535 million. GAAP gross margin is projected between 62.9% and 64.9%, while non-GAAP gross margin is expected between 67% and 69%.

GAAP operating expenses are expected to be between $199 million and $204 million. Non-GAAP operating expenses are projected between $100 million and $105 million.  For fiscal 2027, management expects total revenues to grow more than 85% year over year. Non-GAAP gross margin is expected to remain broadly consistent with fiscal 2026 levels, while non-GAAP operating expenses are projected to rise approximately 55%, well below the expected revenue growth rate.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a upward trend in estimates revision.

The consensus estimate has shifted 6.82% due to these changes.

VGM Scores

Currently, Credo Technology Group has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Credo Technology Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Credo Technology Group belongs to the Zacks Electronics - Semiconductors industry. Another stock from the same industry, Marvell Technology (MRVL Quick QuoteMRVL - Free Report) , has gained 28% over the past month. More than a month has passed since the company reported results for the quarter ended July 2026.

Marvell reported revenues of $2.74 billion in the last reported quarter, representing a year-over-year change of +36.5%. EPS of $0.94 for the same period compares with $0.67 a year ago.

For the current quarter, Marvell is expected to post earnings of $1.10 per share, indicating a change of +44.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.1% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Marvell. Also, the stock has a VGM Score of D.