Credo Technology Group Holding Ltd reported its fiscal second‑quarter 2026 results on December 1, 2025, showing revenue of $268.0 million, a 20.2% sequential increase and a 272.1% year‑over‑year jump from $72.0 million in Q2 FY2025. Diluted earnings per share rose to $0.67, beating the consensus estimate of $0.49 by $0.18, or 36.7%. Non‑GAAP net income of $127.8 million on the same revenue base translates to a net margin of roughly 47.7%, higher than the 45% target for FY2026 but lower than the 44.1% figure originally reported, reflecting a slight compression from the high‑margin mix in the quarter.
The company’s non‑GAAP gross margin of 67.7% and net margin of 47.7% were driven by a shift toward high‑margin AEC (advanced electrical connectivity) shipments and a strong demand for its active electrical cable and optical DSP products. The mix shift, combined with disciplined cost control, allowed Credo to maintain profitability even as component costs rose modestly. The margin expansion also reflects the company’s ability to price its high‑performance solutions in a market where hyperscalers are investing heavily in AI infrastructure.
Revenue growth was largely powered by the AEC segment, which saw a 278.6% increase in product sales, and by the optical DSP line, which benefited from a surge in AI training and inference workloads. The company’s core AEC business moved from intra‑rack to rack‑to‑rack deployments, expanding its addressable market and improving economies of scale. In contrast, legacy product lines saw modest growth, underscoring the company’s strategic focus on high‑margin, high‑growth segments.
Credo guided for fiscal third‑quarter 2026 revenue of $335 million to $345 million, well above the consensus estimate of $247.6 million to $252 million. The guidance beat signals management’s confidence in continued demand for AI‑centric connectivity solutions and the ramp‑up of new product lines such as ZeroFlap Optics, ALCs, and OmniConnect gearboxes. The company also reiterated its outlook for strong profitability, citing continued cost discipline and a favorable product mix.
Bill Brennan, Credo’s President and CEO, said the quarter represented “the strongest results in the company’s history,” attributing the performance to the rapid build‑out of AI training and inference clusters. He added that the company’s focus on high‑margin AEC and IC franchises, combined with the upcoming ramps of new optics and gearbox solutions, will sustain revenue growth and profitability through fiscal 2026 and beyond.
Investors reacted positively to the earnings, citing the significant earnings beat, the robust revenue growth, and the optimistic guidance for the next quarter. The market’s response underscores confidence in Credo’s execution and its strategic positioning in the expanding AI infrastructure market.
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