Shares of Santa Clara, California-based AMD … I showed how AMD could use its high-priced stock profitably to buy a rival. AMD formally announced this week it intends to acquire FPGA maker Xilinx for $35 billion, not $30 billion as originally rumored. The deal is now official after rumors began swirling earlier this … NYC eateries beg Gov. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. I want to learn more about the financial structure of the deal, but my first pass is that AMD must be doing something right here. Moreover, he reports that AMD’s central processing units (CPUs) are more popular than CPUs from Intel (NASDAQ:INTC). AMD. Competing in the semiconductor industry is often a game of chess, placing long term bets several moves ahead that culminate for a winning strategy. Copyright © 2021 InvestorPlace Media, LLC. AMD will acquire Xilinx for $35 billion. AMD stock fell more than 4.0 percent yesterday to finish at $78.88 after the company announced its deal to acquire Xilinx. On the stock market today, AMD stock fell 4.1% to 78.88.Xilinx stock jumped 8.6% to 124.35. Do Not Sell My Personal Information, Your California Privacy Rights Xilinx, which was valued over $10B at that time, had the reputation as an industry powerhouse whereas AMD's reputation was that of a weakling. Since my last article on Oct. 15, where I pointed out that AMD stock was at 55x forward earnings, it has risen over 9% to nearly $92. AMD's Rumored $30 Billion Xilinx Acquisition Could Supercharge the Stock This deal could turn out to be a big catalyst in the long run. For example, Yelp (NYSE:YELP) uses machine learning to manage images, Pinterest (NYSE:PINS) uses it for content discovery, and Facebook (NASDAQ:FB) uses AI to screen out spam, etc. “Our acquisition of Xilinx marks the next leg in our journey to establish AMD as the industry’s high performance computing leader and partner of choice for the largest and most important technology companies in the world,” AMD president and CEO Lisa Su said in a statement. AMD stock … Chipmaker Advanced Micro Devices has bright prospects in its core businesses and from its pending acquisition of Xilinx (), a Wall Street analyst said Monday.Meanwhile, AMD stock … This morning, Advanced Micro Devices (AMD) announced that it has agreed to buy rival chipmaker Xilinx in a $35 billion all-stock deal—its largest acquisition to date.. Intel , one of AMD's longtime rivals, ended trading down more than 2%. Sitemap Advanced Micro Devices ’ $35 billion acquisition of Xilinx has upended the thesis around AMD stock, causing sellers to outnumber buyers in the … As a result, AMD is gaining market share from Intel. Based on the exchange ratio, this represents approximately $143 per share of Xilinx common stock 2. Two weeks later, The Wall Street Journal reported AMD had reached an agreed deal to buy a rival chipmaker, Xilinx (NASDAQ: XLNX), using AMD stock. I analyzed how this would actually lower the overall price-earnings (P/E) ratio for AMD on a combined basis. 2021 InvestorPlace Media, LLC. "Our acquisition of Xilinx … This was based on a $30 billion takeover price. That’s not good news for AMD, Nvidia, Intel, Arm or Xilinx. Under the terms of the agreement, Xilinx stockholders will receive a fixed exchange ratio of 1.7234 shares of AMD common stock for each share of Xilinx common stock they hold at the closing of the transaction. For example, Rakers argues that AMD’s data center processors will meet the need for more chips that can process the large amounts of data they use. Post was not sent - check your email addresses! For example, as a group, their average target price is only $94.18. As per the deal, Xilinx stockholders would receive a fixed exchange ratio of 1.7234 shares of AMD common stock for each share of Xilinx common stock they hold at the closing of the transaction. AMD is at the forefront of where the action is in terms of who really needs and buys large amounts of semiconductor chips. In addition, he argues that this trend will continue. quotes delayed at least 15 minutes, all others at least 20 minutes. The companies rely on manufacturing partners — namely Taiwan Semiconductor Manufacturing Co., or TSMC — to make their products. The acquisition, expected to close by the end of next year, will create a combined semiconductor giant with 13,000 engineers and more than $2.7 billion in annual research and development investment, the California-based companies said. Xilinx closed at $105.99 on Thursday, giving it a market capitalization of $25.9 billion, about a quarter of AMD’s value. AMD is ramping up production of its Zen-3 Epyc Milan CPUs. AMD’s stock, which was up 79% on the year as of Monday’s close, was down 4.1% in Tuesday trading to $78.88. Advanced Micro Devices (NASDAQ:AMD) keeps moving higher as analysts offer up higher price target recommendations. I wrote about that deal at the end of September and how Nvidia lowered its P/E ratio just like AMD has. The blockbuster acquisition will unite two leading developers of semiconductors and further ramp up AMD’s bid to challenge Silicon Valley titan Intel, particularly in the rapidly growing data center business. AMD Agrees to Buy Xilinx for $35 Billion in Stock The deal would broaden AMD’s business into chips for markets like 5G communications and automotive electronics. By the way, Wells Fargo has the highest rating and price target among a group of 20 analysts that TipRanks follows on AMD stock. Even though much of the benefits are clearly already seen in the AMD stock price, at least the company is using shares. The Financial Times recently wrote that this deal shows that Advanced Micro Devices (AMD) is one of the long-term winners as a chip supplier for data centers. According to TipRanks, Rakers lifted his price target on AMD stock to $120 from $100. AMD shareholders will own about 74% of the combined firm, with Xilinx shareholders owning the remaining 26%. For Xilinx’s part, president and CEO Victor Peng said the deal will help speed up the growth of its data center business and “enable us to pursue a broader customer base across more markets.” He’ll be a president in charge of the Xilinx business at the combined company, which Su will lead as CEO. AMD's all-stock purchase will grant current Xilinx shareholders 1.7234 shares of AMD for each Xilinx share they own. About half … I suspect that more analysts will begin raising their price targets on AMD stock as they assimilate the benefits of the Xilinx deal. After weeks of speculation , AMD confirmed Tuesday that it will acquire programmable chip maker Xilinx in an all-stock deal valued at $35 billion. 1,307, This story has been shared 732 times. The deal was going to be valued at $35 billion, so the net effective reduction in P/E ratios would be lower. News of the tie-up sent Xilinx’s stock price nearly 10 percent in premarket trading to $125.96 as of 7:12 a.m. Tuesday, while AMD’s shares fell 4.4 percent to $78.58. Your California Privacy Rights AMD shares closed more than 4% lower on Tuesday at $78.88. Both companies are looking to increase their market gains in the lucrative data center market for advanced CPU chips. So, Rakers is one of the few who has consistently beaten the group and so investors might want to pay attention to his predictions. In the date of publication, Mark R. Hake did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. AMD Stock Falls, While Xilinx Stock Surges. Both AMD and Xilinx develop processors that are used in devices such as computers, gaming systems and data centers that power internet-based services and applications. Xilinx stock was on track to open at the highest level seen during regular-session hours since July 2019. The P/E ratio would fall from 55x to about 44x. 1125 N. Charles St, Baltimore, MD 21201. Under the deal, Xilinx shareholders will receive about 1.7 shares of AMD common stock for each share of Xilinx common stock, valuing Xilinx at $143 per share, or about 24.8% higher than its $114.55 closing price on Oct. 26. Xilinx ended November with a market capitalization of roughly $35.6 billion. 652, © 2021 NYP Holdings, Inc. All Rights Reserved This will have the effect of lowering the overall P/E ratio for the combination. This article by Wordstream shows how 10 companies are using machine learning by manipulating large data sets. This implies a potential 25% gain in the stock if it hits that price target. All rights reserved. The rumors were true, only the price was off. Advanced Micro Devices Inc. announced Tuesday morning that it plans to acquire Xilinx Inc. in an all-stock deal valued at $35 billion, confirming … Xilinx shares closed up over 8.5%. On Dec. 18, Barron’s reported that a Wells Fargo analyst, Aaron Rakers, recommended four semiconductor companies, one of which was AMD stock. The deal comes as AMD snaps up a greater share of the market from Intel, which still manufactures its own chips but has struggled to match the quality of those produced by TSMC. But it still shows how powerful this tool is – using your highly valued shares to buy a rival that has a lower P/E ratio. The stock traded in the … As long as they love AMD, I think you can see the stock continue to move up. 732, This story has been shared 652 times. On January 19 at 4 p.m. Therefore, as a result of this avant garde acquisition, analysts are now singing the praises of AMD stock. At Thursday's close, the company had a … Advanced Micro Devices (NASDAQ: AMD) agreed to buy Xilinx for $35 billion in stock. Do Not Sell My Personal Information. 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Computer-chip designer AMD will buy industry peer Xilinx in a $35 billion all-stock deal, the companies announced Tuesday. AMD’s stockholders will own about 74 percent of the combined company, while Xilinx shareholders will control the other 26 percent, according to a news release. Barron’s suggested that these stocks could rise further in 2021 based on the report by Wells Fargo. Advanced Micro Devices (AMD) - Get Report agreed to buy rival Xilinx (XLNX) - Get Report for $35 billion in stock. The terms of the deal will give Xilinx stockholders about 1.7 AMD shares for each of their Xilinx shares. Your Ad Choices “Our shared cultures of innovation, excellence and collaboration make this an ideal combination,” Peng said in a statement. Also known as machine learning, many large companies are already employing this technology. It's still looking to complete its announced deal to buy Xilinx (NASDAQ:XLNX). The Financial Times article explains that the chips that AMD and Xilinx make, known as FPGAs, help neural networks by acting as accelerators for “deep learning.” Neural networks are necessary for artificial intelligence (AI) applications in various industries. Therefore, follow the lead of the Wells Fargo analyst, Rakers, who seems to know what’s up with AMD stock. Terms of Use AMD’s better-performing products have helped it capture nearly 20 percent of the market for central processor units, which has driven its stock price up 68 percent this year as of Monday. Privacy Notice Computer-chip designer AMD will buy industry peer Xilinx in a $35 billion all-stock deal, the companies announced Tuesday. 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