What guidance and outlook does the company provide for upcoming quarters, and what are the key risks to its long‑term growth?

Guidance & Outlook

Credo Technology Group (NASDAQ CRDO) said it expects “moderate but sustainable” revenue growth for the remainder of FY 2026, targeting roughly 4‑5 % sequential growth in each of the next two quarters as the company scales its secure‑connectivity platforms for AI‑driven workloads, hyperscale cloud, and 5G back‑haul networks. Management highlighted a pipeline of larger hyperscale contracts that should lift both average selling price and gross margins, and they expect to keep operating expenses near‑flat while investing in next‑generation silicon and optical‑module R&D. The outlook signals an incremental upside—roughly $10‑12 M of incremental revenue per quarter—provided the rollout of the new 400 Gb/s ASIC family proceeds on schedule.

Key Long‑Term Risks

1. AI‑Demand Volatility: Cred ’s growth hinges on sustained AI‑compute acceleration spend by hyperscalers. A slowdown in AI‑chip or cloud‑capacity capex (e.g., from a macro‑tightening cycle) would curb order inflows and compress utilization rates.
   
2. Supply‑Chain & Capacity Constraints: The high‑bandwidth optical products require advanced silicon foundry capacity. Any prolonged fab capacity crunch or wafer‑fab yield issues could delay product introductions, hurting the projected margin expansion.
   
3. Competitive Pressure: Entrants such as Broadcom, Cisco, and emerging “chip‑as‑‑service” providers are accelerating their own secure‑connectivity solutions. A price‑war or rapid technology‐leap by a rival could erode Credo’s pricing power and market‑share ceiling.
   
4. Macro & Funding Environment: With ~ 85 % of revenue coming from outside the United States, currency swings, trade‑policy shifts, and a tightening credit environment could increase working‑capital costs and pressure cash‑flow conversion.

Trading Implications

• Technical view: CRDO has been trading near its 200‑day moving average (~$15) for the past two months, with a nascent bullish swing‑chart forming a higher low at $14.5 and a breakout above the $15 resistance line on modest volume. The price action mirrors the “moderate‑growth” guidance and suggests room for a short‑to‑mid‑term upside to $18‑20 if the quarterly revenue targets hold.
  
• Positioning: Long‑only investors with a 3‑6‑month horizon may consider initiating a modest position (≈5–10 % of portfolio exposure) on the breakout if volume sustains, while keeping a stop just below the 200‑DMA ($14.3) to guard against a possible macro pull‑back.
  
• Risk management: For risk‑averse or macro‑sensitive investors, a “buy‑the‑dip” on a pull‑back to $13‑$13.5 (still above the 200‑DMA) could be the more prudent entry, given the upside upside from new hyperscale contracts versus the outlined long‑term risks. Keeping a small hedge (e.g., a put spread) can offset downside risk if AI‑spending slows unexpectedly.
  

In short, Credo’s guided incremental growth is credible but hinges on AI‑related capex and supply‑chain execution. The stock’s technical positioning offers a modest upside with defined downside protection, making a carefully sized, risk‑managed long exposure attractive in the next 2 – 4 quarters.