Credo Technology shares dropped sharply over five sessions while remaining far higher than a year ago. The latest results showed strong Q3 FY2026 performance with revenue and non-GAAP earnings above consensus and a high non-GAAP operating margin. The decline followed Q4 guidance that projected lower non-GAAP gross margin than Q3, alongside higher inventory levels and insider selling activity. Despite the selloff, analyst ratings are heavily positive and consensus price targets remain well above the current level. Management highlighted multiple new multi-billion-dollar market expansions tied to ZeroFlap optics, ALCs, and OmniConnect, supporting continued growth expectations and additional optionality for hyperscaler connectivity demand.
"CEO Bill Brennan flagged "three new multi-billion dollar TAM expansions through ZeroFlap optics, ALCs, and OmniConnect", layering optionality on top of Active Electrical Cables that already drive hyperscaler revenue. Q4 revenue guidance of $425 to $435 million implies continued sequential growth, and the balance sheet holds $1.22 bil"
#ai-connectivity #revenue-growth #gross-margin-guidance #hyperscaler-infrastructure #valuation-and-price-targets
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