Shares of Credo Technology were falling late Monday after the electrical cable provider detailed sales guidance that came in a bit light, overshadowing the company's better-than-expected fiscal 2026 fourth-quarter earnings as it attempts to become the dominant player in artificial-intelligence connectivity.
Credo stock sank 11.6% in after-hours trade after ending regular trading down 4.2% to $226.10 on Monday, while the S&P 500 ended the day up 0.3%. Shares have ridden the AI wave, gaining 58% this year. Since bottoming on March 30, Credo stock has surged 157%.
Credo posted adjusted earnings of $1.16 a share in the quarter ended May 2, compared to 35 cents a share a year ago and above Wall Street's $1.02 a share expectation. Revenue rose 157% to $437 million, beating the analyst consensus call of $431.8 million, according to FactSet.
Looking ahead, Credo forecasts revenue between $465 million and $475 million in the fiscal 2027 first quarter. That's above Wall Street's $461.3 million expectation, but it appears that investors were looking for more.
For the full-fiscal year, the analyst consensus is for profit of $5.21 a share on sales totaling $2.23 billion, according to FactSet.
"As we enter into fiscal 2027, Credo expects to achieve continued strong financial performance with our innovative and vertically integrated approach that enables customers to accelerate cluster time-to-stability, maximize GPU utilization, improve network reliability, and reduce overall infrastructure power and operating costs," CEO Bill Brennan said in the earnings release.
Analysts believe Credo could potentially be a winner from the AI boom because the company makes the copper cables needed to connect servers.
Credo is a leader in high-speed data connections used in AI data centers. The company offers a variety of products, including optical devices and data networking chips, but its active electrical cables, or AECs, are the largest part of its business.
Credo invented the AEC, which is a copper-based cable used to attach AI servers to networking switches. AECs are more reliable and consume less power than optical cables and can be used for longer distances than traditional passive copper cables.
Credo's other offerings include optical-networking components.
Customers include Microsoft, Amazon.com, and Meta Platforms.
Last week, Credo completed its purchase of chip-maker DustPhotonics, which develops silicon photonics and photonic integrated circuit (SiPho PIC) technology, for $750 million in cash and 920,000 Credo shares. Buying DustPhotonics will expand its portfolio to include SiPho circuits, chips which transmit data using light.
Credo said the deal would give it "a vertically integrated connectivity stack" and enable it to address "both electrical and optical interconnects across the full AI infrastructure buildout."