Is AMD Catching Up to Nvidia? Here’s What a Top Analyst Says
Advanced Micro Devices (NASDAQ:AMD) has long lagged behind Nvidia (NASDAQ:NVDA) in the AI chip sector, but its latest move suggests it’s ready to close the gap. With a bold acquisition and strategic hires, AMD is positioning itself for a stronger foothold in AI-driven computing.
AMD Completes $4.9 Billion Acquisition of ZT Systems
On Monday, AMD finalized its $4.9 billion acquisition of ZT Systems, a key supplier of AI infrastructure solutions for major hyperscalers.
- The company will retain 1,000 specialized engineers, focusing on rack-scale systems, validation, and testing—crucial for AI advancements.
- While AMD plans to sell ZT’s manufacturing assets, it will first find a suitable buyer to optimize its investment.
- The deal is being funded through a mix of stock and cash, reinforcing AMD’s commitment to expanding its AI capabilities.
Analyst Ruben Roy: Why This Deal Strengthens AMD
According to Stifel analyst Ruben Roy, ranked in the top 4% of Wall Street experts, this acquisition is a game-changer for AMD’s AI strategy.
- He believes the move enhances AMD’s position in the evolving multi-cluster, rack-scale compute market.
- AMD’s next-generation MI400-series accelerators are expected to benefit significantly from this shift.
- Frank Zhang, ZT’s Founder and CEO, will lead ZT Manufacturing under AMD’s umbrella, overseeing the divestiture of its production assets.
Talent Infusion and AI Expansion
AMD is not just acquiring infrastructure—it’s gaining key leadership talent.
- Doug Huang, former ZT Systems President, will take on the role of SVP of Data Center Platform Engineering at AMD.
- His focus will be on design, customer enablement, and AI development, working closely with AMD’s AI and Data Center teams.
- The acquisition helps AMD expand its networking capabilities, targeting 1.6T and 3.2T high-speed AI solutions.
AMD Stock Outlook: Strong Upside Potential
For investors, this acquisition signals strong growth potential in the AI sector.
- Roy has a Buy rating on AMD, with a price target of $162, implying 57.5% upside from current levels.
- The Street’s average price target of $146.87 suggests a 43% return over the next 12 months.
- Based on 24 Buys, 12 Holds, and 1 Sell, AMD holds a Moderate Buy consensus.
Final Thoughts
AMD’s aggressive AI push and strategic talent acquisitions suggest it’s serious about challenging Nvidia. While Nvidia remains dominant, AMD’s focus on AI accelerators and hyperscaler computing could turn it into a formidable competitor in the years ahead. Investors looking for long-term AI exposure may not want to overlook this dip in AMD stock.
