Credo Technology reported third quarter fiscal 2026 results that exceeded analyst expectations, yet shares fell 7.6% as investors appeared to focus on other factors beyond the quarterly beat.

The connectivity solutions provider posted adjusted earnings per share of $1.07, surpassing the analyst consensus of $0.89 by $0.18. Revenue reached $407 million, beating the estimate of $379.33 million and representing a 201.5% increase YoY from $135 million in the same quarter last year. Revenue also grew 51.9% sequentially from the second quarter.

The stock decline came despite the company’s fourth quarter revenue guidance exceeding expectations. Credo projected fourth quarter revenue between $425 million and $435 million, with a midpoint of $430 million above the analyst consensus of $411 million.

"In the third quarter Credo once again delivered record results with revenue of $407.0 million, an increase of more than 50% sequentially and 200% year over year," stated Bill Brennan, President and Chief Executive Officer.

For the third quarter, the company reported adjusted gross margin of 68.6% and adjusted operating expenses of $77.4 million. Adjusted net income totaled $208.8 million, compared to $45.4 million in the year-ago quarter.

The company ended the quarter with cash and short-term investments of $1.3 billion. For the fourth quarter, Credo expects adjusted gross margin between 64.0% and 66.0%, with adjusted operating expenses ranging from $76 million to $80 million.

Credo provides connectivity solutions for AI infrastructure, with products including active electrical cables, optical transceivers, and memory solutions serving data center applications.