On September 2, Credo Technology Group Holding Ltd fell 9.25% in pre-market trading, trading at approximately $186.89/share, with turnover of $1.3454 million. The decline followed the company's Q1 fiscal earnings release, which beat consensus estimates but triggered selling pressure due to deteriorating profitability metrics and broader optical interconnect sector weakness.

Credo reported Q1 adjusted EPS of $1.20, topping the $1.17 estimate, while revenue surged to $479.0 million from $223.1 million a year earlier, also exceeding the $471.8 million consensus. However, GAAP gross margin declined 290 basis points year-over-year and 370 basis points sequentially to 64.5%. Non-GAAP operating margin fell 140 basis points quarter-over-quarter to 48.2%, while non-GAAP net margin dropped 260 basis points sequentially to 49.3%. The Q2 gross margin guidance of 63.9% signaled further compression ahead. GAAP operating expenses more than doubled year-over-year to $188.4 million.

Additionally, optical communications leader Coherent had previously dropped over 8% following its own earnings report, pressuring sentiment across the interconnect space and intensifying profit-taking in Credo shares despite revenue growth exceeding 100% year-over-year. The company guided Q2 revenue to $525–$535 million, above the $519.8 million consensus.

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