Key Highlights
- Credo Technology (CRDO) is acquiring DustPhotonics in a deal valued at $750M cash plus approximately 920,000 CRDO shares.
- DustPhotonics specializes in Silicon Photonics Integrated Circuit (SiPho PIC) technology for optical transceivers.
- An additional 3.21 million shares could be issued if specific financial targets are achieved.
- Transaction expected to finalize in Q2 2026 and contribute positively to non-GAAP EPS in fiscal 2027.
- CRDO shares surged 15% in pre-market hours Tuesday, adding to Monday’s 12% rally after receiving a Jefferies Buy recommendation.
Credo Technology (CRDO) is experiencing a powerful two-day rally after unveiling plans to acquire DustPhotonics in a transaction worth $750 million in cash combined with approximately 920,000 shares of CRDO stock.
Credo Technology Group Holding Ltd, CRDO
The acquisition announcement propelled CRDO shares up 15% to $154.68 during pre-market activity on Tuesday. This follows Monday’s impressive 12% surge triggered by Jefferies launching coverage with a Buy recommendation and establishing a $175 price target.
Since the same point last year through Monday’s market close, the stock has skyrocketed 243%.
DustPhotonics specializes in Silicon Photonics Photonic Integrated Circuit technology — commonly referred to as SiPho PIC — utilized in optical transceivers. These advanced chips enable data transmission through light signals instead of traditional electrical pathways.
This acquisition strengthens Credo’s current portfolio, which encompasses copper cables for server connectivity and optical-networking solutions. Integrating SiPho circuits into the mix provides the company with enhanced capabilities to manage data flow throughout AI infrastructure.
Credo characterized the merged entity as a “vertically integrated connectivity stack” spanning SerDes, Digital Signal Processing, Silicon Photonics, and comprehensive system integration.
According to the company, it can now serve “both electrical and optical interconnects across the full AI infrastructure buildout” — effectively covering every aspect of server-to-server communication.
Performance-Driven Earnout Structure
Apart from the initial payment, the deal incorporates a performance-based component. Credo could distribute up to 3.21 million additional shares contingent upon DustPhotonics achieving predetermined financial benchmarks.
This arrangement links a significant portion of the overall transaction value to future results, minimizing immediate dilution for Credo while maintaining motivation for the selling parties.
Optical Division Revenue Projection for Fiscal 2027
Credo has established a goal of generating $500 million in revenue from its enhanced optical segment by fiscal 2027.
This provides investors with a measurable benchmark to monitor as the integration process unfolds.
The deal is anticipated to close during Q2 2026, subject to regulatory clearance and customary closing requirements.
Credo projects the acquisition will be accretive to non-GAAP earnings per share starting in fiscal 2027.
The consecutive rallies — Monday’s boost from the Jefferies coverage initiation coupled with Tuesday’s acquisition news — represent one of the stock’s most significant two-day performances in recent history.
CRDO was priced at $154.68 before Tuesday’s market opening, reflecting a combined gain of approximately 27% across both trading sessions.
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