Nvidia Rival AMD Completes $4.9B Acquisition Of ZT Systems To Strengthen AI And Data Center Dominance

In a move to bolster its AI data-center offerings, Advanced Micro Devices AMD completed its $4.9 billion acquisition of data-center equipment designer ZT Systems on Monday.

What Happened: The acquisition, first announced in August, is a strategic move by AMD to strengthen its data-center systems offerings and position itself as a strong contender against Nvidia Corporation NVDA. This acquisition will allow AMD to provide alternatives to Nvidia’s dominant chips and servers to key clients such as Microsoft MSFT and Meta Platforms META.

AMD’s CEO, Lisa Su, highlighted the increasing complexity of hardware integration with the rise of AI, stating, “You really have to put the entire system together.”

AMD’s acquisition of ZT is aimed at securing a share of the “AI factory,” a concept associated with Nvidia’s strategy of providing a one-stop solution for all key data center components. AMD sets itself apart by offering an open-source ecosystem, allowing customers to select their preferred components.

AMD has also incorporated ZT Systems’ 1,000 design engineers, who focus on hardware and server design, into the AMD Data Center Solutions division.

Frank Zhang, Former ZT Systems Founder and CEO, joins AMD as senior vice president of ZT Manufacturing, while Former President Doug Huang joins as senior vice president of Data Center Platform Engineering

Why It Matters: The acquisition of ZT Systems by AMD marked a significant expansion of AMD’s AI capabilities. The deal is seen as a major step towards enhancing AMD’s position in the AI infrastructure market.

ZT Systems, a privately held company based in Secaucus, N.J., had over $10 billion in annual revenue when the deal was announced. AMD is now in the process of selling ZT's manufacturing unit.

During the past years, AMD has acquired other companies to strengthen its data center capabilities. In 2022, AMD acquired Xilinx and Pensando to strengthen its data-center offerings.

AMD’s strategy to strengthen its data-center offerings was further highlighted recently when the company announced that its fifth-generation AMD EPYC processors would power the Oracle Corp ORCL Oracle Cloud Infrastructure (OCI) Compute E6 Standard shapes. This move promised a significant boost in performance, with up to a 2 times increase in cost-to-performance compared to the previous E5 instance generation.

AMD holds a momentum rating of 12.93% and a growth rating of 66.54%, according to Benzinga's Proprietary Edge Rankings. For an in-depth report on more stocks and insights into growth opportunities, sign up for Benzinga Edge.