Key Takeaways
- Credo Technology (CRDO) has struck a deal to purchase DustPhotonics for $750 million in cash alongside approximately 920,000 CRDO shares.
- DustPhotonics specializes in Silicon Photonics Integrated Circuit (SiPho PIC) technology used in optical transceivers.
- An additional contingent payment of up to 3.21 million shares may be issued if specific financial benchmarks are achieved.
- The acquisition is slated to finalize in Q2 2026 and is projected to boost non-GAAP EPS in fiscal 2027.
- CRDO shares climbed 15% in pre-market hours on Tuesday, building on Monday’s 12% rally following a Jefferies Buy rating.
Credo Technology (CRDO) is riding a strong two-day momentum wave after revealing plans to acquire DustPhotonics in a transaction valued at $750 million in cash plus approximately 920,000 CRDO shares.
Credo Technology Group Holding Ltd, CRDO
The announcement propelled CRDO shares up 15% to $154.68 during pre-market hours on Tuesday. This followed Monday’s impressive 12% surge after Jefferies launched coverage on the stock with a Buy recommendation and set a $175 price target.
Looking at the broader picture, CRDO has soared 243% over the past year through Monday’s market close.
DustPhotonics focuses on developing Silicon Photonics Photonic Integrated Circuit technology — referred to as SiPho PIC — which powers optical transceivers. These specialized chips enable data transmission through light signals instead of traditional electrical pathways.
This acquisition broadens Credo’s current product portfolio, which encompasses copper cables for server connectivity and various optical-networking solutions. By incorporating SiPho circuits, the company gains enhanced capabilities to serve the data transmission needs within AI infrastructure environments.
Credo characterized the merged entity as creating a “vertically integrated connectivity stack” spanning SerDes, Digital Signal Processing, Silicon Photonics, and comprehensive system integration.
According to the company, this combination enables them to handle “both electrical and optical interconnects across the full AI infrastructure buildout” — covering essentially every method by which servers communicate with one another.
Performance-Linked Additional Compensation Structure
In addition to the initial transaction value, the agreement incorporates a performance-based component. Credo could distribute up to 3.21 million more shares contingent upon DustPhotonics achieving specific financial milestones.
This arrangement connects a significant portion of the overall deal consideration to future operational results, reducing immediate shareholder dilution while maintaining strong incentives for the sellers.
Ambitious Optical Revenue Goal for Fiscal 2027
Credo has established an ambitious target of generating $500 million in revenue from its enhanced optical business segment by fiscal 2027.
This specific benchmark provides investors with a measurable metric to monitor as the integration process unfolds.
The deal is anticipated to reach completion in Q2 2026, subject to regulatory clearances and customary closing requirements.
Credo has indicated that the transaction is expected to enhance non-GAAP earnings per share starting in fiscal 2027.
The consecutive rallies — Monday’s momentum from the Jefferies upgrade combined with Tuesday’s acquisition news — represent one of the most significant two-day advances for the stock in recent periods.
CRDO was changing hands at $154.68 in pre-market activity Tuesday morning, reflecting a combined gain of approximately 27% across both sessions.
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