Credo Technology (CRDO) Stock Surges 15% on $750M DustPhotonics Acquisition

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 Photonic Integrated Circuit (SiPho PIC) technology used in optical transceiver applications.
• An additional contingent payment of up to 3.21 million shares could be issued if specific financial performance targets are achieved.
• The acquisition is projected to finalize in Q2 2026 and contribute positively to non-GAAP EPS starting in fiscal year 2027.
• Pre-market trading saw CRDO shares spike 15% on Tuesday, building on Monday’s 12% rally following a Jefferies Buy rating announcement.

Credo Technology (CRDO) is experiencing a robust two-session rally after revealing its plans to acquire DustPhotonics in a transaction valued at $750 million in cash combined with roughly 920,000 shares of CRDO stock.

Credo Technology Group Holding Ltd, CRDO

The announcement propelled CRDO shares 15% higher to $154.68 during Tuesday’s pre-market session. This followed Monday’s impressive 12% advance, which was triggered by Jefferies initiating coverage on the stock with a Buy recommendation and establishing a $175 price objective.

Through Monday’s closing bell, the stock had already 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 is deployed in optical transceivers. This technology enables data transmission through light signals instead of traditional electrical currents.

The acquisition broadens Credo’s current product portfolio, which encompasses copper cabling solutions for server connectivity and optical-networking hardware. By incorporating SiPho circuits into its offerings, the company gains enhanced capabilities to support data movement throughout AI infrastructure environments.

Credo characterized the merged entity as creating a “vertically integrated connectivity stack” spanning SerDes, Digital Signal Processing, Silicon Photonics, and complete system integration capabilities.

According to the company’s statement, it can now serve “both electrical and optical interconnects across the full AI infrastructure buildout” — effectively covering all the ways servers communicate within data centers.

Performance-Based Stock Consideration Built Into Deal Structure

In addition to the initial purchase price, the agreement incorporates a performance-based component. Credo could distribute up to 3.21 million additional shares contingent upon DustPhotonics achieving designated financial milestones.

This arrangement connects a significant portion of the overall transaction value to future results, reducing immediate shareholder dilution while maintaining strong motivation for the selling stakeholders.

Company Establishes $500M Optical Revenue Goal for FY2027

Credo has established a $500 million revenue objective for its enhanced optical business segment by the conclusion of fiscal year 2027.

This specific benchmark provides investors with a measurable metric to monitor as the integration process advances.

The deal is anticipated to reach completion during Q2 2026, subject to regulatory clearances and customary closing requirements.

Management indicated the transaction is projected to boost non-GAAP earnings per share beginning in fiscal 2027.

The consecutive trading sessions of strong performance — Monday’s momentum from the Jefferies upgrade combined with Tuesday’s acquisition revelation — represent one of the most significant two-day advances for CRDO in recent quarters.

CRDO was changing hands at $154.68 before Tuesday’s market opening, representing an approximate 27% combined increase across both sessions.

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