Credo Technology Group Holding Ltd. (CRDO) stock fell 21% on Wednesday to $163.83 in afternoon trading after Tuesday night’s earnings report drew mixed reactions from Wall Street, even though the company beat estimates for both earnings and revenue.

For the fiscal first quarter ended August 1, Credo reported adjusted earnings per share of $1.20, above the $1.17 estimate. Revenue reached $479 million, topping the $473 million analyst consensus and the high end of the company’s own guidance range of $475 million. Revenue rose 114.7% year over year.

GAAP gross margin increased to 64.5%, and GAAP net income rose to $129.4 million from $64 million a year earlier. Net income, however, was lower than the $169 million Credo reported in the fourth quarter of fiscal 2026.

CEO Bill Brennan said the company’s “portfolio now spans connectivity from millimeters to kilometers,” referring to products across both optics and copper for AI data centers. That mix matters because Credo sits in a part of the AI infrastructure buildout where both electrical and optical networking components are being used to connect servers and switches inside data centers.

For the quarter ending in October, Credo guided revenue to between $525 million and $535 million.

Wall Street reacts cautiously

The outlook did not satisfy several analysts.

J.P. Morgan analyst Joseph Cardoso lowered his price target from $335 to $310, writing that the “raised outlook is likely to disappoint,” especially for optical-related revenue. “Investors and we alike had been anticipating more material upside,” he said.

Bank of America kept its Buy rating but cut its price target from $340 to $275, citing slowing growth in Credo’s copper cable business even as the optics segment continues to expand.

Mizuho maintained its Outperform rating and told investors it was time to “buy the pullback,” though analyst Jordan Klein said the revenue beat and guidance looked “a bit skinnier” than in previous quarters.

The reaction came after CRDO had already been priced for strong results. The stock reached a year-to-date high of $308.30 earlier in 2026 before Wednesday’s decline pushed it into the $160s, leaving it down nearly 40% from that peak.

Valuation and technical pressure

The selloff also reflected valuation concerns. Even after the drop, Credo traded at a forward price-to-earnings ratio of around 45 on a GAAP basis, compared with a technology sector median of 29. That leaves CRDO above peers such as Dell and Nvidia on that measure.

From a technical standpoint, the stock has fallen below its 50-day and 100-day exponential moving averages. The chart also shows a double-top pattern that formed near the June highs, a setup that can signal additional weakness. The next key level to watch is the 61.8% Fibonacci retracement near $171.

Credo’s copper active electrical cables and optical digital signal processors are used to connect AI servers and networking switches inside data centers. Its customers include Amazon, Microsoft, and SpaceX, all of which have said they plan to increase data center spending. That customer backdrop helps explain why investors are paying close attention not just to the quarter’s beat, but to whether guidance and product mix can keep up with the pace of AI-related infrastructure demand.

In premarket trading Wednesday, CRDO had already fallen more than 9% and reached its lowest level since July 30.