Why Credo Technology Stock Was a Winner This Week

Key Points

• The data center equipment supplier delivers a lesson on how to crush analyst estimates.

• It easily beat on both the top and bottom lines in the opening quarter of its fiscal 2026, while posting powerful growth figures.

• 10 stocks we like better than Credo Technology Group ›

Next-generation data center equipment specialist Credo Technology Group (NASDAQ: CRDO) had an excellent week on the market with its stock. According to data compiled by S&P Global Market Intelligence, it surged by over 14% over the period after posting quite an impressive set of quarterly results.

Massive improvements

Arguably the most impressive facet of Credo's fiscal first quarter of 2026 was its revenue line. This ballooned nearly fourfold year over year to over $233 million for the period. Both of its main top-line sources saw notable improvements with the larger one -- product sales -- zooming to over $217 million from the $57 million of 2025's Q1. IP licensing brought in $6 million from the year-ago $2.4 million.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

Compounding that, the top-line figure trounced the average analyst estimate. Collectively, pundits tracking Credo stock were expecting the company to book less than $191 million.

These dynamics were similar for non-GAAP (adjusted) profitability. In the quarter, Credo netted $98.3 million ($0.52 per share), easily bettering the $65.3 million in the same period of fiscal 2025.

We're in something of a data center arms race, with many operators of such facilities eager to build them out to accommodate artificial intelligence (AI) functionalities. So this is something of a boom time for data center equipment companies, and Credo is clearly taking good advantage of the opportunity.

A beat on guidance too

Credo also proffered guidance for its current (second) quarter, forecasting that its revenue will come in at $230 million to $240 million. That's well above the analyst consensus of $199 million. The company's adjusted gross margin should range from 64% to 66%. It did not provide any bottom-line projections.

Should you invest $1,000 in Credo Technology Group right now?

Before you buy stock in Credo Technology Group, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Credo Technology Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $678,148!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,052,193!*

Now, it’s worth noting Stock Advisor’s total average return is 1,065% — a market-crushing outperformance compared to 186% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 25, 2025

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.