CRDO Stock Forecast & Price Target

Credo Technology Group Holding Ltd demonstrated a robust financial position, concluding the second quarter of fiscal year 2026 with $814 million in cash and equivalents, a significant increase driven by proceeds from an ATM offering. The company has experienced substantial growth, with a remarkable 306% year-over-year increase in product revenue and a non-GAAP net income of $127.8 million, reflecting a 30% quarter-over-quarter rise. Additionally, gross margins have improved to 67.7%, exceeding consensus estimates, while operating margins have risen to 46.3%, underscoring the company's strong operational efficiency amid expanding revenue streams.

The negative outlook for Credo Technology Group's stock is underscored by a forecasted deceleration in revenue growth, which is expected to decline from approximately 120% in 4Q26 to 27% by 4Q27, suggesting possible market saturation. Additionally, reliance on key customers such as Amazon, which contributed 24% of revenue but has seen a decline from 33%, raises concerns about revenue volatility and the company's ability to maintain stability as customer dependency shifts. Furthermore, intensified competition from established players in the industry could lead to pricing pressures and reduced profitability, further complicating the company’s financial health and market position.