The P/E ratio would fall from 55x to about 44x. 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. This story has been shared 1,307 times. “Our shared cultures of innovation, excellence and collaboration make this an ideal combination,” Peng said in a statement. As a result, AMD is gaining market share from Intel. 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. We've received your submission. So, Rakers is one of the few who has consistently beaten the group and so investors might want to pay attention to his predictions. Copyright © I showed how AMD could use its high-priced stock profitably to buy a rival. Your Ad Choices Xilinx’s stock, which previously soared on … AMD stock … 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. Shares of Santa Clara, California-based AMD … The stock traded in the … It's still looking to complete its announced deal to buy Xilinx (NASDAQ:XLNX). AMD stock fell more than 4.0 percent yesterday to finish at $78.88 after the company announced its deal to acquire Xilinx. Article printed from InvestorPlace Media, https://investorplace.com/2020/12/amd-stock-is-a-favorite-of-analysts-after-buying-xilinx/. According to TipRanks, Rakers lifted his price target on AMD stock to $120 from $100. All rights reserved. Advanced Micro Devices (AMD) - Get Report agreed to buy rival Xilinx (XLNX) - Get Report for $35 billion in stock. All rights reserved. At the same time, AMD has mergers and acquisitions (M&A) plans of its own. 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. Therefore, follow the lead of the Wells Fargo analyst, Rakers, who seems to know what’s up with 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. 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. NYC eateries beg Gov. Privacy Notice 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. AMD's all-stock purchase will grant current Xilinx shareholders 1.7234 shares of AMD for each Xilinx share they own. Advanced Micro Devices Inc. announced Tuesday morning that it plans to acquire Xilinx Inc. in an all-stock deal valued at $35 billion, confirming … 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. Computer-chip designer AMD will buy industry peer Xilinx in a $35 billion all-stock deal, the companies announced Tuesday. This article by Wordstream shows how 10 companies are using machine learning by manipulating large data sets. 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. ET, the man who recommended Google before anyone else will reveal his #1 stock pick for 2021 — for FREE — ticker symbol and all — in a special presentation. 652, © 2021 NYP Holdings, Inc. All Rights Reserved "Our acquisition of Xilinx … I wrote about that deal at the end of September and how Nvidia lowered its P/E ratio just like AMD has. As long as they love AMD, I think you can see the stock continue to move up. Nasdaq 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. Post was not sent - check your email addresses! For example, rival Nvidia (NASDAQ:NVDA) recently bought Arm Limited, the U.K. semiconductor unit of Softbank (OTCMKTS:SFTBY). Also known as machine learning, many large companies are already employing this technology. Sorry, your blog cannot share posts by email. Do Not Sell My Personal Information, Your California Privacy Rights 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. 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. Moreover, he reports that AMD’s central processing units (CPUs) are more popular than CPUs from Intel (NASDAQ:INTC). On January 19 at 4 p.m. The deal was going to be valued at $35 billion, so the net effective reduction in P/E ratios would be lower. 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Computer-chip designer AMD will buy industry peer Xilinx in a $35 billion all-stock deal, the companies announced Tuesday. Your California Privacy Rights AMD is at the forefront of where the action is in terms of who really needs and buys large amounts of semiconductor chips. Advanced Micro Devices (NASDAQ: AMD) agreed to buy Xilinx for $35 billion in stock. This will have the effect of lowering the overall P/E ratio for the combination. 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.. Xilinx closed at $105.99 on Thursday, giving it a market capitalization of $25.9 billion, about a quarter of AMD’s value. After weeks of speculation , AMD confirmed Tuesday that it will acquire programmable chip maker Xilinx in an all-stock deal valued at $35 billion. Terms of Use 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. On the stock market today, AMD stock fell 4.1% to 78.88.Xilinx stock jumped 8.6% to 124.35. Both companies are looking to increase their market gains in the lucrative data center market for advanced CPU chips. 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. 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. 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. Chipmaker AMD also reported … Based on the exchange ratio, this represents approximately $143 per share of Xilinx common stock 2. 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 is ramping up production of its Zen-3 Epyc Milan CPUs. Product and markets. Based on the deal's details, AMD will give 1.7234 shares of stock for everyone, one share of Xilinx stock. The deal could be transformative for AMD, providing a huge boost for its ambitions to become a major player in the data center industry and bumping the company's expertise with over 13,000 engineers and more than $2.7 … Xilinx shares closed up over 8.5%. In addition, he argues that this trend will continue. On Dec. 18, Barron’s reported that a Wells Fargo analyst, Aaron Rakers, recommended four semiconductor companies, one of which was AMD stock. 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The terms of the deal will give Xilinx stockholders about 1.7 AMD shares for each of their Xilinx shares. 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. Barron’s suggested that these stocks could rise further in 2021 based on the report by Wells Fargo. For example, as a group, their average target price is only $94.18. 732, This story has been shared 652 times. The rumors were true, only the price was off. Advanced Micro Devices (NASDAQ:AMD) keeps moving higher as analysts offer up higher price target recommendations. The deal was going to be valued at $35 billion, … 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. Xilinx ended November with a market capitalization of roughly $35.6 billion. 1125 N. Charles St, Baltimore, MD 21201. The article points out that data centers are essentially what is known as “the cloud” for us laypeople. 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. It paid a mixture of cash and stock valued at $40 billion to buy this chip unit. 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. 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 … 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. Do Not Sell My Personal Information. I talked to AMD CEO Lisa Su last night and got the download on what could be a historic, $35B semiconductor deal to acquire Xilinx. Copyright © 2021 InvestorPlace Media, LLC. This was based on a $30 billion takeover price. AMD. AMD Stock Falls, While Xilinx Stock Surges. AMD will exchange 1.7234 shares of newly printed stock for each Xilinx share, representing a cash value per Xilinx … quotes delayed at least 15 minutes, all others at least 20 minutes. 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. That’s not good news for AMD, Nvidia, Intel, Arm or Xilinx. Advanced Micro Devices ’ $35 billion acquisition of Xilinx has upended the thesis around AMD stock, causing sellers to outnumber buyers in the … I analyzed how this would actually lower the overall price-earnings (P/E) ratio for AMD on a combined basis. 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. 1,307, This story has been shared 732 times. 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. 1125 N. Charles St, Baltimore, MD 21201. This implies a potential 25% gain in the stock if it hits that price target. Thanks for contacting us. 2021 InvestorPlace Media, LLC. This is despite the high valuation that AMD stock sports, which I have written about before. At Thursday's close, the company had a … AMD shareholders will own about 74% of the combined firm, with Xilinx shareholders owning the remaining 26%. Xilinx stock was on track to open at the highest level seen during regular-session hours since July 2019. “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. Competing in the semiconductor industry is often a game of chess, placing long term bets several moves ahead that culminate for a winning strategy. 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. The companies rely on manufacturing partners — namely Taiwan Semiconductor Manufacturing Co., or TSMC — to make their products. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. 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