Key Highlights
- Credo Technology (CRDO) has entered into an agreement to purchase DustPhotonics for $750 million in cash alongside approximately 920,000 shares of CRDO stock.
- DustPhotonics specializes in Silicon Photonics Integrated Circuit (SiPho PIC) technology used in optical transceiver solutions.
- An additional earn-out of up to 3.21 million shares could be paid contingent on achieving specific financial performance targets.
- The transaction is anticipated to finalize in Q2 2026 and enhance non-GAAP EPS starting in fiscal year 2027.
- CRDO shares rallied 15% during pre-market hours on Tuesday, building on a 12% advance from Monday after receiving a Buy rating from Jefferies.
Credo Technology (CRDO) is experiencing a powerful two-session rally after revealing plans to acquire DustPhotonics in a transaction valued at $750 million in cash combined with roughly 920,000 shares of Credo stock.
Credo Technology Group Holding Ltd, CRDO
The acquisition announcement propelled CRDO shares up 15% to $154.68 during Tuesday’s pre-market session. This momentum follows Monday’s 12% surge after Jefferies launched coverage on the stock with a Buy recommendation and set a $175 price objective.
Since this time last year through Monday’s closing bell, the stock has rocketed 243%.
DustPhotonics specializes in Silicon Photonics Photonic Integrated Circuit technology — commonly referred to as SiPho PIC — which powers optical transceivers. These advanced components enable data transmission via light signals instead of traditional electrical methods.
The acquisition strengthens Credo’s current portfolio, which encompasses copper cable solutions for server connectivity and optical networking products. By integrating SiPho circuit technology, the company gains enhanced capabilities to support data movement throughout AI infrastructure environments.
Credo characterized the merged entity as a “vertically integrated connectivity stack” spanning SerDes, Digital Signal Processing, Silicon Photonics, and complete system integration.
According to the company, this combination enables them to serve “both electrical and optical interconnects across the full AI infrastructure buildout” — covering the complete spectrum of server-to-server communication technologies.
Performance-Based Compensation Structure Includes Additional Shares
Apart from the initial payment, the acquisition agreement features a performance-based component. Credo could distribute up to 3.21 million extra shares contingent upon DustPhotonics achieving designated financial benchmarks.
This arrangement connects a portion of the overall transaction value to future results, reducing immediate shareholder dilution while maintaining strong motivation for the selling parties.
Optical Division Revenue Goal Established for FY2027
Credo has established an ambitious target of generating $500 million in revenue from its enlarged optical business segment by fiscal year 2027.
This specific financial objective provides investors with a measurable benchmark to monitor throughout the integration process.
The deal is projected to reach completion during Q2 2026, subject to receiving regulatory clearances and satisfying customary closing requirements.
Credo indicated the transaction should contribute positively to non-GAAP earnings per share beginning in fiscal 2027.
The consecutive trading gains — driven by Monday’s positive Jefferies coverage followed by Tuesday’s strategic acquisition news — represent one of the stock’s most impressive two-day performances in recent trading history.
CRDO was quoted at $154.68 before Tuesday’s market opening, reflecting a combined increase of approximately 27% across both sessions.
