Key Takeaways
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Credo Technology (CRDO) stock has fallen approximately 26% over the past year, despite fiscal 2026 revenue more than tripling to $1.3 billion.
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MaxLinear (MXL) is targeting 20% to 30% of the next-generation 1.6T active electrical cable market, challenging Credo's leadership.
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Broadcom (AVGO) could compete with Credo in next-generation cable connectivity, while Marvell Technology (MRVL) is expanding its optical networking business through its proposed acquisition of Lumentum.
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Credo's earnings growth and lower historical valuation support a cautiously bullish outlook, although customer concentration and competition remain significant risks.
Credo Technology (CRDO) closed at approximately $121 on November 6, down 26% over the past year and 61% from its June high near $309, according to historical stock-price data .
Yet its underlying business continues expanding rapidly. Fiscal 2026 revenue more than tripled to $1.3 billion, while first-quarter fiscal 2027 revenue increased 115% to $479 million.
The concern is whether Credo can defend its leadership in active electrical cables (AECs) as competing technologies emerge.
What Happened?
Credo's sell-off accelerated following its September 1 earnings announcement, despite stronger-than-expected results.
According to its first-quarter fiscal 2027 earnings release , revenue reached $479 million, up 115% year over year, while adjusted EPS of $1.20 exceeded the $1.17 consensus estimate.
Management also projected second-quarter revenue between $525 million and $535 million, above the $516.5 million analysts expected.
However, Credo maintained its fiscal 2027 optical revenue outlook above $600 million rather than raising it, disappointing investors anticipating stronger guidance.
CEO Bill Brennan explained the opportunity during the company's June earnings call :
"In total, we are expecting more than $600 million of revenue contribution."
Despite the earnings beat, shares fell approximately 20% the following day. Concerns about AI infrastructure spending and intensifying competition added further pressure.
During MaxLinear's October 22 earnings call , CEO Kishore Seendripu estimated Credo's AEC market share at 93% to 99%. MaxLinear aims to capture 20% to 30% of the next-generation 1.6T market over the next several years.
MaxLinear plans to supply chips to cable manufacturers rather than sell complete cables, creating a different competitive approach to the next-generation AEC market.
The threat matters because AEC products accounted for more than 90% of Credo's first-quarter year-over-year revenue increase.
Meanwhile, Marvell's proposed acquisition of Lumentum , valued at $115 billion on an enterprise-value basis, highlights growing investment in optical connectivity and stronger potential competition with Broadcom.
Credo is pursuing optical expansion too. Management expects optical DSPs, silicon photonics chips, and ZeroFlap optical transceivers to each contribute more than $100 million in fiscal 2027 revenue.
Is Credo Technology Stock Undervalued or Overvalued?
Credo appears potentially undervalued relative to its historical earnings multiple, although its discount reflects uncertainty about sustaining growth and defending market share.
According to TIKR consensus estimates dated October 21, normalized EPS is projected to increase from $3.46 in fiscal 2026 to $9.71 in fiscal 2028, representing approximately 181% cumulative growth.
Meanwhile, Credo traded at approximately 21x forward earnings on October 30, compared with 44x on June 30 and its three-year historical average of 63x, according to TIKR's historical valuation data.
However, the historical valuation discount does not guarantee upside. Four customers accounted for 84% of first-quarter revenue, creating concentration risk if spending patterns or supplier relationships change.
Management's fiscal 2027 revenue growth target above 85% also requires substantial second-half sales growth, while competition in next-generation cables could pressure market share.
For investors comfortable with volatility, cautiously accumulating Credo looks more attractive than selling solely because of its decline. However, that bullish outlook depends on management delivering its ambitious growth targets.
The next earnings report, expected in early December, will be an important test of revenue guidance, optical adoption, and Credo's competitive position.
Credo's sharp decline creates a potential opportunity for long-term investors, but sustained earnings growth and successful optical expansion will ultimately determine whether its valuation is justified.
So what is Credo Technology stock actually worth?
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