Credo Acquires Hyperlume, Taps MicroLED Tech for AI Data Centers

Credo Technology Group Holding Ltd. CRDO recently acquired Hyperlume, Inc., a privately held developer of miniature light-emitting diode (microLED) technology-based optical interconnects for chip-to-chip communication. With this buyout, CRDO expects to boost its next-generation connectivity solutions as artificial intelligence ("AI"), cloud and hyperscale data centers place unprecedented demands on data infrastructure deployments.

MicroLED technology offers energy-efficient, high-speed and low-latency data transmission needed for scaling AI clusters. Hyperlume’s microLED technology leverages “specialized, ultra-fast microLEDs and ultra-low power circuitry” to address energy and bandwidth constraints as seen in traditional electronic interconnects, added CRDO. It highlighted that this buyout aligns with its mission to provide secure, reliable and energy-efficient connectivity solutions across multiple protocols, physical mediums and distances.

Acquisitions like this are valuable for companies as they accelerate access to latest technologies. These types of buyouts provide valuable tools, technologies and market access that accelerate and amplify organic growth. With Hyperlume, CRDO now has access to this innovative optical technology, which broadens the portfolio, positioning it to serve customers seeking to expand AI networks cost-effectively to handle escalating workloads from large datasets and parallel processing.

CRDO is already witnessing rapid momentum in its optical business, with management projecting that revenues from this business will double again in fiscal 2026 on the last earnings call. The buyout is expected to boost revenues from this business. The company also recently introduced its 224G PAM4 SerDes Intellectual Property, fabricated on TSMC’s industry-leading N3 technology.

Taking a Look at Acquisition Strategy for Peers

Marvell Technology MRVL has not acquired any companies recently. Some of its previous acquisitions include Innovium (2021), Inphi (2021) and Avera Sami (2019). Marvell recently completed the $2.5 billion all-cash divestiture of its Automotive Ethernet business, monetizing a non-core asset and plans to use proceeds for share repurchases and technology investments.

MRVL expects strong optics adoption going ahead, which is expected to drive demand for its interconnect products and technologies, including DSPs for AECs and active optical cables or AOCs, along with retimers for PCI, Ethernet and UALink and silicon photonics for near-packaged and co-packaged XPU optics. Strong demand for its 800-gig PAM DSPs bodes well, and the company has also started volume shipments of the next-generation 200-gig per lane 1.6T PAM DSPs. Marvell is pushing boundaries with 400G per lane PAM technology, enabling 3.2T optical interconnects.

Broadcom Corporation AVGO is a giant in the semiconductor space. Acquisitions have been Broadcom’s most favored mode for penetrating unexplored markets. Broadcom’s acquisition of VMware (2023) is proving to be a tailwind. Before that, the acquisitions of CA Technologies and Symantec’s enterprise security business have expanded its addressable market. Apart from its buyouts, Broadcom also focused on organic expansion.

AVGO sees massive opportunities in the AI space as its three hyperscaler customers have started to develop their own XPUs. Management highlighted that the company has secured more than $10 billion of orders for AI racks based on its XPUs. As a result, it now expects AI semiconductor revenues to increase 66% year over year to $6.2 billion for the fourth quarter of fiscal 2025.

CRDO’s Price Performance, Valuation and Estimates

Shares of CRDO gained 11.7% in the past month compared with the Electronics-Semiconductors industry’s growth of 12.9%.

In terms of the forward 12-month Price/Sales ratio, CRDO is trading at 23.92, higher than the Electronic-Semiconductors sector’s multiple of 9.27.

The Zacks Consensus Estimate for CRDO earnings for fiscal 2026 has been significantly revised upwards over the past 60 days.

CRDO currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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