The Credo Technology story

What drives the business

• Credo’s proprietary signal-processing technology underpins its ZeroFlap Active Electrical Cables, optical transceivers, connectivity chips and intellectual property licensing, serving cloud infrastructure providers that need faster, more reliable connections with lower power consumption.
• Credo developed ZeroFlap Optics with Oracle to address interruptions in optical links and collaborated with Microsoft on a switch cable architecture designed for network reliability.
• The April 2026 agreement to acquire DustPhotonics extends Credo’s optical strategy by bringing silicon photonics technology in-house, while its OmniConnect platform expands its reach into AI memory connectivity.
• Revenue rose from $436.8 million in fiscal 2025 to $1.3 billion in fiscal 2026 as Credo broadened a portfolio serving hyperscale data centers, emerging cloud providers and equipment manufacturers.
• In the quarter to August 2026, revenue reached $479.0 million and non-GAAP net income grew 140% from a year earlier, alongside an ending cash and short-term investment balance of $764.3 million.

What the price assumes

At $220.83, the reverse DCF implies that free cash flow after stock pay grows 40.8% a year for ten years, using a discount rate of 10.3%.

That is below the TenQ check’s 48.8% bar, which slows Credo’s 93.5% annual revenue growth record halfway toward 4%.

The check passes, but revenue stands in for the historical record rather than free cash flow after stock pay, so the comparison does not establish that Credo has delivered the assumed cash growth.

Value CRDO on your own assumptions

What could change the story

• Customer concentration makes spending decisions at a limited group important: Credo’s top 10 customers accounted for approximately 90% of fiscal 2026 revenue.
• Credo exclusively used Taiwan Semiconductor Manufacturing Company Limited for wafer production in fiscal 2026, leaving manufacturing dependent on an external supplier.
• GAAP operating margin fell to 25.2% in the quarter to August 2026 from 35.7% in the quarter to May 2026, despite sequential revenue growth.
• Shares increased 28.4% over three years, and the $235 million of stock-based pay over the last twelve months remains a substantial cost alongside reported free cash flow.
• The 1.1% free cash flow yield fails TenQ’s cash yield check, while the 1.3% earnings yield trails the 5.3% Treasury yield, showing how much of the valuation rests on continued growth.

What to watch next

• For the quarter to October 2026, Credo expects revenue between $525 million and $535 million, with GAAP gross margin between 62.9% and 64.9% and non-GAAP gross margin between 67.0% and 69.0%.
• Guided GAAP operating expenses of $199 million to $204 million, versus non-GAAP operating expenses of $100 million to $105 million, make the gap between reported and adjusted profitability an important measure.
• Further releases can show whether the optical expansion produces revenue alongside stronger cash generation, with stock compensation and share count indicating how much of that progress reaches each share.

Sources

• Credo Technology's earnings release, filed with the SEC
• Its latest 10-Q or 10-K, for the risk factors
• The CRDO stock report, for every figure and check