On September 1, Credo Technology Group Holding Ltd declined 9.79% overnight, trading at $186.40/share, with turnover of $69.22 million. The stock had already dropped over 5% during regular trading before extending losses after hours following its fiscal Q1 earnings release.

Credo reported fiscal Q1 adjusted EPS of $1.20, beating the consensus estimate of $1.17, up from $0.52 a year earlier. Revenue rose to $479.0 million from $223.1 million year-over-year, surpassing the $471.8 million estimate. The company guided fiscal Q2 revenue to $525-$535 million, also above the $519.8 million analyst consensus. Despite the across-the-board beat, the stock sold off sharply.

The decline was driven by broader optical communications sector pressure. Coherent, a sector bellwether, had previously tumbled over 8% post-earnings, dampening sentiment across the optical interconnect space. An independent research report pushed CPO mass production timelines out to 2028-2029, further weighing on valuations. Combined with Credo's substantial year-to-date gain of over 60% and elevated valuation at roughly 86x trailing earnings, the results triggered aggressive profit-taking amid a risk-off market environment where chip stocks broadly declined and bond yields surged.

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