Second Quarter of Fiscal Year 2026 Financial Highlights
- Revenue of $268.0 million, grew by 20.2% QoQ and 272.1% YoY
- GAAP gross margin of 67.5% and non-GAAP gross margin of 67.7%
- GAAP operating expenses of $102.3 million and non-GAAP operating expenses of $57.3 million
- GAAP net income of $82.6 million and non-GAAP net income of $127.8 million
- GAAP diluted net income per share of $0.44 and non-GAAP diluted net income per share of $0.67
- Ending cash and short-term investment balance of $813.6 million
Guidance Third Quarter of Fiscal Year 2026
- Revenue 335 million to 345 million
- GAAP Gross Margin 63.8-65.8%
- GAAP operating Expense 116-120 Million
- non-GAAP operating Expenses 68-72 Million
Key Information from Conference Call
- 4 customers above 10% revenue and expect a 5th to join them
- ALC (Active LED Cables) TAM is twice as large as AEC (Active Electronic Cable) TAM [5-10B]
- 3 new product lines in optical space
- Omnionnect transports memory data and competes with HBM by allowing memory to be moved up to 10 inches away. This increases reliability as well as lift physical limitations on density.
- Most sales are in 50 gig per lane but seeing transition to 100 gig per lane product and future sales in 200 gig per lane.
“As a result, we expect our non-GAAP net margin to be approximately 45% for fiscal year '26. This should translate to net income more than quadrupling year-over-year.”
Thoughts
They are performing extremely well. They are guiding 28% QoQ growth at the high side and in the last year they have beat their high side guidance by an average of 9%. They do seem a little expensive with a P/E of 154 but their non-GAAP run rate P/E is 64. A 2.4 ratio is a very promising sign that the company has been accelerating its bottom line growth.
Drew
Long CRDO
24 Likes
I had Chat GPT do a comparative analysis of CRDO and ALAB’s results this quarter. Not sure why ALAB hasn’t had a similar response to its excellent earnings (maybe not as excellent as CRDO’s, but still splendid) and why it reversed hard this morning from 181 to 151 within a little over an hour. 
Comparative Strengths & Differences
| Metric / Feature |
CRDO (Credo) |
ALAB (Astera Labs) |
| Revenue (latest quarter) |
US$ 268.0M (higher) |
US$ 230.6M |
| YoY revenue growth |
+272% YoY (very strong) |
+104% YoY (strong) |
| Profitability |
GAAP net income of US$ 82.6M; non-GAAP EPS US$ 0.67 (turnaround from prior net loss) |
Net income US$ 91.1M; EPS US$ 0.49–0.50 (continuing profit) |
| Gross margin |
~67.5% (good margin) |
~76.2% (very high margin) |
| Business momentum |
Sharp inflection — scaling fast with AEC shipments to hyperscalers |
Steady growth — benefiting from demand for AI-connectivity chips, PCIe, fabric switches |
| Cash / Balance-sheet |
~US$ 813.6M cash + short-term investments — strong liquidity |
Reported ~$1.13B cash (most recent balance) and modest debt-to-equity — healthy position Yahoo Finance+2Yahoo Finance+2 |
Interpretation
-
CRDO shows a dramatic acceleration: massive revenue growth and a swing from loss to profit. That suggests it’s rapidly scaling its connectivity-hardware business — likely driven by surging demand from AI/hyperscale data centers.
-
ALAB, while growing less explosively, rests on strong margins and continues to deliver stable profitability, indicating mature product adoption and solid execution in delivering semiconductor-based connectivity solutions.
-
The higher gross margin for ALAB suggests its product mix (semiconductor connectivity, retimers, fabric switches) may carry higher margin than CRDO’s — which seems to rely heavily on volume of Active Electrical Cables (AEC).
-
CRDO appears more “high growth / rapid scale-up,” while ALAB appears more “high-margin, stable growth” — different value propositions in the AI infrastructure supply chain.
What This Means for Investors or Observers
-
If you are looking for fast growth and upside potential in AI-infrastructure demand, CRDO might appeal more — it’s rapidly scaling and benefiting from surging data center connectivity demand.
-
If you prefer high margin, proven execution, and steadier profitability, ALAB offers a more conservative but solid base, potentially less volatility and more consistent performance.
-
Both companies benefit from the broader AI / cloud-infrastructure boom — but they are playing different roles: CRDO as a high-volume cable/connectivity supplier; ALAB as a semiconductor-centric, margin-optimized connectivity solutions provider.
15 Likes
Alab pulled back on the AMD-Oracle announcement for a datacenter. It seems like AMD is doing a large portion of the datacenter.
I am not sure why that is pullback worthy because AMD doesn’t make retimers.
Drew
6 Likes
I guess TD Cowen lowered ALAB to a HOLD today and lowered price target from 225 to 170. I’ve been adding all day and doubled my position.
13 Likes
I have to say, CRDO’s collapse after an incredible ER seems to be presenting us with a great buying opportunity. Again, this company showed 272% YOY revenue growth, 20% sequential, 68% gross margins and a tight balance sheet with $813 in cash and ST investments. It hit $213 after earnings and is now $70 a share cheaper! I’ve been DCA’ing every $10 decline here as well as ALAB and IREN. I mean, CRDO is a perfect example of stock that this board should follow. Am I wrong?
14 Likes
Ive not followed Credo for a while, but all of my AI stocks (which is all of my stocks apart from 1) dropped a lot yesterday. It’s all related to the results of Broadcom and Oracle earlier this week. Personally I think the drop is overdone, but maybe after the incredible year we’ve had with these stocks it was to be expected. I’ve made no changes to my portfolio and I’m continuing to hold.
Jonathan
10 Likes
Hi,
Just want to add that Crdo is guiding ~28% QoQ growth next qtr.
Best,
Pablo Ahlers
4 Likes
The market is on edge for when the AI bubble will burst and at any signs investors are looking to hit the door running. Broadcom gave 2 signs that they will see profitability growth slow down. 1 they said non-AI revenue will slow down. 2 they announced that their AI revenue is lower margin than non-AI revenue. That was enough to spark the sell off on Friday.
Reasons I think this is just market overreaction. Broadcom said non-AI revenue is slowing, not AI-revenue is slowing. Broadcom predicts about a 1% drop in gross margin from 78%. Its not good news that the gross margin is dropping but its not like its a substantial change in gross margin.
Some of our AI companies have seen some gross margin contraction and others have seen some expansion as they deliver new products. I think its important to follow trends but understand that margins will defiantly fluctuate as this field matures.
Drew
20 Likes