Credo Technology Stock Falls on Margin Concerns Despite Earnings Beat

Credo Technology Group's stock fell sharply on Wednesday, September 2, 2026, declining over 8% in premarket trading despite reporting quarterly earnings that exceeded Wall Street estimates. The sell-off highlighted investor focus on margin compression and valuation rather than the company's strong revenue growth, which was fueled by continued demand for its AI data center connectivity products. The company reported fiscal first-quarter 2027 results on Tuesday evening, September 1. Revenue reached $479 million, a 114.7% increase year-over-year and a 9.6% rise from the prior quarter. Adjusted earnings per share came in at $1.20, beating the consensus estimate of $1.17. However, the market reacted negatively to a decline in profitability. The GAAP gross margin fell to 64.5% from 68.2% in the previous quarter. Additionally, while the company issued second-quarter revenue guidance of $525 million to $535 million, which was above analyst expectations, the outlook for gross margins was projected to remain in the 67% to 69% range, suggesting continued pressure. The stock, which had gained approximately 43.