TLDR
- CRDO dropped roughly 30% after its full-year optical products guidance of $600m+ disappointed investors
- Q1 FY27 revenue hit $479m, up 115% year over year, beating analyst estimates
- CalSTRS boosted its stake by 28,062.9%, now owning about 36.38% of the company
- Wall Street consensus is “Moderate Buy” with an average price target of $267.39
- CRDO trades around $170, nearly 50% below its 52-week high of $308.67
Credo Technology stock opened at $170.57 on Tuesday, roughly 45% below its 52-week high of $308.67, after a brutal two-session selloff that wiped out around 30% of its value following its latest earnings report.
Credo Technology Group Holding Ltd, CRDO
The numbers themselves were not the problem. For the quarter ended August 1, CRDO posted revenue of $479m, up 114.7% year over year and above the analyst estimate of $473.3m. Earnings per share came in at $1.20, topping the consensus of $1.17.
What rattled investors was the full-year guidance for optical products, set at $600m or more. The market had been pricing in something more aggressive, and the stock paid the price.
Despite the selloff, one major institution was busy loading up. California State Teachers Retirement System increased its CRDO position by 28,062.9% in Q2, picking up 67.6 million additional shares. CalSTRS now holds about 67.84 million shares, worth roughly $18.45 billion, representing 36.38% of the company.
Institutional investors as a group own 80.46% of CRDO. Several smaller funds also added to positions during the second quarter, including Greenland Capital Management, Ameritas Advisory Services, and HB Wealth Management.
Analyst Targets Remain High
Wall Street has not abandoned the stock. The consensus rating sits at “Moderate Buy,” with an average 12-month price target of $267.39, implying upside of around 57% from current levels. Some targets are even higher, with TD Cowen and Barclays both setting $300 targets after recent updates.
Evercore set a $292 price target on September 2, the day after earnings. Mizuho rates the stock “outperform” with a $290 target. Zacks did cut its rating from “strong buy” to “hold” in August, but it remains the outlier.
The P/E ratio stands at 60.70 based on current pricing. Using forward estimates, the picture looks more reasonable. Analysts forecast EPS of $6.25 for FY27 and $9.56 for FY28, putting forward P/E ratios at roughly 27 and 18. The PEG ratio sits at 0.68.
Insider Activity Worth Watching
On the insider front, CFO Daniel Fleming sold 7,580 shares at $245.88 on July 8, and COO Yat Lam sold 55,441 shares at $213.02 on July 31. Both transactions were executed under pre-arranged Rule 10b5-1 trading plans.
In total, insiders sold 376,784 shares worth approximately $88.3m over the past three months. Insiders collectively own 9.06% of the stock.
Revenue for FY26, the year ended April 30, came in at $1.3bn, up from $59m five years prior. Analysts project revenue of $2.5bn this year and $3.8bn next, reflecting continued AI data centre demand.
CRDO’s 50-day moving average is $228.81. Its 200-day moving average is $189.80. The stock’s beta sits at 3.22, a reminder that this one moves fast in both directions.
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