Shares of Credo Technology climbed 27% after the company's outlook for the current quarter and results from last quarter exceeded Wall Street's expectations.

• Credo Technology delivered strong Q4 FY25 results, beating expectations and demonstrating robust top-line and bottom-line growth.

• The company is successfully expanding its hyperscaler customer base beyond Amazon's AWS, with multiple new hyperscaler program wins driving future revenue visibility on an NTM basis.

• The company's product portfolio is diversifying beyond AEC copper cables, with optical DSPs, retimers, and IP licensing fueling additional growth engines.

• Management's bullish FY26 guidance of 85% revenue growth, margin expansion, and attractive valuation support my reiterated Buy rating on CRDO stock and a higher price target.

Credo Technology, a networking vendor of high-speed AI connectivity solutions, reported strong Q4 FY25 earnings last night.

The San Jose, CA-based connectivity company reported robust top-line and bottom-line beats, positively surprising markets. More importantly, Credo's management seemed to have understood the deliverable from their Q3 earnings report of widening their customer base beyond their largest customer, Amazon's AWS (AMZN). In the latest earnings report, management revealed more hyperscalers were ramping up connectivity programs with Credo, with at least two additional hyperscalers expected to ramp up spending through FY26.

At the same time, Credo's results showed the company's growth engines are expanding beyond their bread winning products like AEC copper cables. Optical DSPs, retimers, and IP licensing are reportedly firing on growth cylinders, indicating two things. First, Credo does not have to rely on AEC cable products anymore. Second, the company is possibly winning market share against incumbents such as Marvell in the optical market.

Even better was management's better-than-expected outlook for FY26, which supports the growth drivers.