CRDO's $750M DustPhotonics deal boosts silicon photonics capabilities, aiming to reshape AI data center connectivity and drive growth through 2027.
To capitalize on the rapid evolution of AI infrastructure, Credo Technology Group Holding Ltd. CRDO has agreed to acquire DustPhotonics, a leader in Silicon Photonics Photonic Integrated Circuit (SiPho PIC) technology. The deal, valued at $750 million in cash plus stock and performance-based incentives, is likely to transform the broader optical connectivity ecosystem powering next-generation AI workloads.
DustPhotonics strengthens CRDO’s optical roadmap and expands its market opportunity. DustPhotonics brings advanced SiPho PICs across 400G to 1.6T, with a path to 3.2T, integrating multiple optical functions onto a single chip. This reduces complexity, improves yields and lowers costs as speeds scale beyond 800G. The technology also enhances reliability in AI data centers and is already used in hyperscale deployments, with further applications in NPO and CPO under development.
By acquiring DustPhotonics, Credo is making a decisive push to become a vertically integrated connectivity powerhouse, spanning SerDes, DSP, SiPho PICs and system-level integration. This comprehensive stack positions Credo to compete more effectively in both scale-out networks and scale-up architectures. This acquisition goes beyond adding products as it enables deeper integration and control. By bringing silicon photonics in-house, Credo reduces supplier dependence, speeds innovation and lowers costs. Combined with its SerDes and DSP strengths, this allows end-to-end optimization of the signal chain and delivery of more integrated, high-performance solutions.
Through this acquisition, Credo expects its combined optical business, spanning transceivers, optical DSPs and silicon photonics, to exceed $500 million in revenue by fiscal 2027. The deal is projected to close by second-quarter fiscal 2026 and be accretive to non-GAAP EPS by fiscal 2027. Credo continues to acquire buys specialized tech companies to improve its products and stay competitive in fast-growing data center markets. In March, it acquired high-speed connectivity IP firm CoMira Solutions. This deal builds on its prior Hyperlume acquisition, announced in October 2025, enhancing next-gen connectivity amid surging AI and hyperscale demand.
Broadcom $AVGO Corporation AVGO has been aggressively pursuing acquisitions to diversify end markets beyond semiconductors and has been looking to strengthen its presence in the infrastructure software vertical, particularly. Acquisitions of CA and Symantec expanded AVGO’s addressable market, LSI enabled diversification into storage chips, Brocade strengthened its FC SAN presence and the VMware buyout enhanced its infrastructure software and private cloud adoption. Since closing the VMware acquisition, AVGO added more than 70% of its largest 10,000 customers to VMware Cloud Foundation, which enables enterprises to deploy private cloud environments on-prem. However, Broadcom’s frequent acquisitions have escalated integration risks and augmented its debt burden.
Marvell Technology MRVL, like CRDO and AVGO, has also been on an acquisition spree. Marvell’s Cavium acquisition in 2018 expanded it beyond HDD chips into networking and data centers, helping offset PC-driven demand declines and strengthening its competitive position. In February 2026, it completed the acquisition of XConn Technologies to expand its PCIe and CXL switching portfolio and strengthen AI data center connectivity capabilities. Marvell expects XConn to generate $50 million annualized revenue in the fourth quarter of fiscal 2027 and $100 million in fiscal 2028, while adding roughly $25 million in annual costs, reducing cash by $325 million, lowering interest income and increasing share count. It also completed its buyout of Celestial AI, strengthening its scale-up optical connectivity capabilities for large-scale AI deployments.
In response to the DustPhotonics acquisition announcement, CRDO’s shares jumped 12.3% in trading and closed the session at $134.36 yesterday. Shares also rallied 20% in pre-market today. Shares have gained 243% in the past year compared with the Electronics-Semiconductors industry’s growth of 110.3%.
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Regarding the forward 12-month Price/Sales ratio, CRDO is trading at 12.46, higher than the Electronic-Semiconductors sector’s multiple of 8.36.
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The Zacks Consensus Estimate for CRDO earnings for fiscal 2026 has been revised up over the past 60 days.
Image Source: Zacks Investment Research
CRDO currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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