AMD Reshapes Strategy, Plans $4 Billion Data Center Asset Sale While Doubling Down on GPUs

Advanced Micro Devices, Inc AMD discussed divesting ZT Systems’ data center infrastructure production capabilities to Taiwan’s Compal Electronics Inc, Inventec Corp, Pegatron Corp, and Wistron Corp, as disclosed earlier. Nevertheless, AMD had also remained adamant about not changing its focus priority from its primary GPU roadmap.

The assets could be worth $3 billion-$4 billion, including debt, Bloomberg reported, citing unnamed sources familiar with the matter.

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The server manufacturing operations had ~$10 billion in revenue over the 12 months before AMD’s purchase.

Some of the plants are in New Jersey and Texas, making them potentially attractive to avoid tariffs and other measures from U.S. President Donald Trump’s administration.

The Nvidia Corp NVDA rival agreed to acquire the data center manufacturing plants in 2024.

AMD’s $4.9 billion acquisition of ZT Systems helped it acquire the assets. In 2024, AMD shared plans to divest the manufacturing business to avoid competing with its customers, such as Dell Technologies Inc DELL and Hewlett Packard Enterprise Co HPE.

Unlike Nvidia, AMD’s stock value lost over 37% in the last 12 months as it failed to capitalize on the AI frenzy.

BofA Securities‘ Vivek Arya, Goldman Sachs’ analyst Toshiya Hari, and JP Morgan’s Harlan Sur maintained their Neutral stock rating on AMD after its fourth-quarter results, citing its struggle to carve out a niche against Nvidia’s dominance and the rise of custom AI chips, challenges in cyclical sectors like industrial and communication, and weaker-than-expected demand for data center GPUs.

Investors can gain exposure to AMD through iShares Semiconductor ETF SOXX and EA Series Trust Strive US Semiconductor ETF SHOC.

Price Action: AMD stock closed lower by 2.92% to $110.84 on Friday.

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