AMD Expands AI Capabilities, Acquires ZT Systems in Major $4.9B Deal

Advanced Micro Devices, Inc AMD stock is trading higher Monday after the chip designer forged an agreement to acquire ZT Systems.

AMD agreed to acquire ZT Systems, a provider of AI infrastructure for hyperscale computing companies, in a cash and stock transaction valued at $4.9 billion, including an earnout payment of up to $400 million.

AMD expects the transaction to be accretive on an adjusted basis by the end of 2025.

Also Read: Apple, Intel, And AMD Lead Charge In AI-Capable PC Market Surge: Report

ZT Systems will join the AMD Data Center Solutions Business Group. ZT CEO Frank Zhang will lead the manufacturing business, and ZT President Doug Huang will lead the design and customer enablement teams.

AMD will seek a strategic partner to acquire ZT Systems’ U.S. data center infrastructure manufacturing business.

AMD has invested over $1 billion to expand the AMD AI ecosystem and boost its AI software capabilities.

AMD Chair and CEO Dr. Lisa Su: “ZT adds world-class systems design and rack-scale solutions expertise to significantly strengthen our data center AI systems and customer enablement capabilities. This acquisition also builds on the investments we have made to accelerate our AI hardware and software roadmaps.”

AMD held $5.34 billion in cash and equivalents as of June 29, 2024.

JPMorgan analyst Harlan Sur expects AMD to grow data center GPU revenue by over $5 billion in fiscal 2024 courtesy of market share win in server and PC CPUs.

AMD stock gained over 37% in the last 12 months. Investors can gain exposure to the stock through SPDR S&P 500 SPY and iShares Core S&P 500 ETF IVV.

Price Actions: At the last check on Monday, AMD shares were trading higher by 2.55% at $152.35 premarket.

Also Read:

• Intel’s $10B Cost Cut Seen as Necessary but Not Enough for Competitive Edge: Analyst

Photo courtesy of AMD