Credo Technology Group CRDO is scheduled to report its third-quarter fiscal 2025 results on March 4, 2025.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Credo Technology expects third-quarter fiscal 2025 revenues between $115 million and $125 million, which indicates growth of 67% sequentially at the mid-point.

The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $120 million, suggesting growth of 126.16% from the year-ago quarter’s reported figure.

The consensus mark for fiscal third-quarter earnings is currently pegged at 18 cents per share, unchanged over the past 30 days. This indicates growth of 350% on a year-over-year basis. 

CRDO earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 28.33%.

Let’s see how things have shaped up prior to this announcement.

Key Factors to Note for CRDO Q3 Earnings

CRDO’s fiscal third-quarter performance is expected to have benefited from strong AI-driven demand and increasing customer adoption across its high-speed connectivity solutions.

CRDO has seen substantial momentum in product shipments, especially in its key product lines, such as Active Electrical Cables (AECs), optical Digital Signal Processors, and line card retimers. These shipments are expected to have accelerated further, particularly with AI-driven demand for high-speed, reliable, and power-efficient connectivity solutions. 

The AEC product line, which saw strong growth in the fiscal second quarter of 2025, is expected to have continued its momentum in the to-be-reported quarter as well, benefiting from increased adoption in AI back-end networks and hyperscaler demand. CRDO is seeing growing demand for its AECs due to the performance, reliability, and power efficiency they offer, particularly in AI-driven data centers.

CRDO is continuing to diversify its customer base. In the fiscal second quarter of 2025, seven end customers each represented more than 5% of its revenues, underscoring the company’s growing customer traction. This customer diversification is expected to have provided a solid foundation for continued growth in the fiscal third quarter as well.

CRDO Underperformed Sector, Peers

CRDO shares have plunged 21.7% in the year-to-date period, underperforming the broader Zacks Computer & Technology sector’s decrease of 4.2% and the Zacks Electronics - Semiconductors industry’s decline of 9.1%.

Year-to-Date Performance

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Credo Technology has also underperformed its industry peers, such as Synopsys SNPS, Marvell Technology MRVL and Broadcom AVGO, in the year-to-date period.

SNPS, AVGO and MRVL shares have plunged 6.3%, 14.6% and 20.6%, respectively, in the year-to-date period.

CRDO Trading at a Premium

Credo Technology stock is also not so cheap, as its Value Style Score of F suggests a stretched valuation at this moment.

In terms of the forward 12-month Price/Sales ratio, CRDO is trading at 16.01, higher than the Zacks Computer & Technology sector’s 6.14.

Price/Sales (F12M)

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Robust Portfolio to Aid CRDO’s Prospects

Credo Technology’s strong portfolio caters to the rising demand for high-density interconnectivity in AI and ML infrastructure. Its Ethernet solutions enable multiple devices to handle the growing sizes of AI and ML models with high speed and low latency.  

The company’s Ethernet offerings include active electrical cables, optical Digital Signal Processors, line card retimers, SerDes chiplets and SerDes IP licenses, supporting port speeds from 100 gigabits per second to 1.6 terabits per second.

Credo Technology’s AECs ensure signal integrity and optimize power efficiency, delivering exceptional reliability as data speeds continue to rise. It also offers advantages over laser-based optics, including lower power consumption, reduced costs and greater flexibility. Credo Technology’s 800-gig ZeroFlaps AECs, designed for AI back-end networks, support cable lengths of up to 7 meters. 

CRDO’s DSP solutions are seeing strong demand for 50-gig and 100-gig per lane solutions, including active optical cables and transceivers, supporting speeds from 100-gig to 800-gig. In calendar year 2025, Credo Technology expects to deliver industry-leading full DSP solutions operating at approximately 10 watts alongside LRO solutions at half that power.

Credo Technology’s line card retimers are experiencing high demand for 400-gig and 800-gig applications. These retimers are being widely adopted for scaling AI networks and 100-gig-per-lane switching applications. 

Headwinds Hindering Credo Technology’s Growth Momentum

Despite Credo Technology’s strong performance and innovative solutions, several challenges pose headwinds to its prospects. The rapid evolution of AI cluster architectures is increasing the pressure on CRDO to address network disruptions, such as link lapses, which can lead to costly downtime and productivity loss. 

Credo Technology’s transition toward PCIe Gen 6 is also presenting competitive and developmental challenges as customers demand higher performance and robust support. These factors, along with increasing market competition and macroeconomic uncertainties, may impact CRDO’s growth trajectory.

Conclusion

Credo is benefiting from an innovative portfolio and expanding AI-driven market opportunities. 

However, competitive pressures and macroeconomic uncertainties pose risks.

Credo’s Growth Score of C suggests that the stock is unattractive for growth-oriented investors.

CRDO currently has a Zacks Rank #3 (Hold), suggesting that it may be wise for investors to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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