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 for optical transceiver applications.
- An additional payout of up to 3.21 million CRDO stock may be issued contingent on achieving specific financial performance targets.
- The transaction is anticipated to finalize in Q2 2026 and contribute positively to non-GAAP EPS by fiscal 2027.
- Shares of CRDO surged 15% in pre-market hours on Tuesday, building on Monday’s 12% rally following a Buy rating from Jefferies.
Credo Technology (CRDO) is experiencing a strong two-day rally after revealing its plans to acquire DustPhotonics in a transaction valued at $750 million in cash combined with approximately 920,000 shares of CRDO stock.
Credo Technology Group Holding Ltd, CRDO
The announcement propelled CRDO shares up 15% to $154.68 during pre-market hours on Tuesday. This surge follows Monday’s impressive 12% gain, which was triggered by Jefferies launching coverage with a Buy recommendation and setting a $175 price target.
Through Monday’s market close, the stock has delivered a remarkable 243% gain over the trailing twelve months.
DustPhotonics specializes in developing Silicon Photonics Photonic Integrated Circuit technology — commonly referred to as SiPho PIC — which powers optical transceivers. These advanced chips enable data transmission through light signals instead of traditional electrical currents.
This acquisition broadens Credo’s current product portfolio, which encompasses copper cable solutions for server connectivity and optical networking components. By incorporating SiPho circuit technology, the company gains enhanced capabilities to address data transfer requirements within AI infrastructure environments.
Credo characterized the merged entity as offering a “vertically integrated connectivity stack” that encompasses SerDes, Digital Signal Processing, Silicon Photonics, and complete system integration.
According to the company, it can now serve “both electrical and optical interconnects across the full AI infrastructure buildout” — essentially covering every aspect of inter-server communication.
Performance-Based Stock Issuance Structure
In addition to the initial payment terms, the agreement features a performance-based component. Credo could issue as many as 3.21 million additional shares if DustPhotonics achieves designated financial milestones.
This arrangement links a significant portion of the overall transaction value to future results, reducing immediate shareholder dilution while maintaining strong incentives for the selling parties.
Optical Revenue Goals for Fiscal 2027
Credo has established an ambitious target of generating $500 million in revenue from its enhanced optical business segment by fiscal year 2027.
This specific benchmark provides investors with a measurable metric to monitor as the integration process unfolds.
The deal is projected to close during Q2 2026, subject to regulatory clearances and customary closing requirements.
Credo indicated that the transaction is expected to enhance non-GAAP earnings per share starting in fiscal 2027.
The consecutive trading gains — driven by Monday’s Jefferies endorsement and Tuesday’s acquisition news — represent one of the stock’s most impressive two-day performances in recent trading history.
CRDO was priced at $154.68 before Tuesday’s market opening, reflecting an approximate 27% increase across both sessions.
