- AMD’s recent acquisitions of Silo AI and ZT Systems create a full-stack offering for data center infrastructure design and may boost EPYC and Instinct sales growth.
- AMD is ramping up production of the MI325 and MI350 GPUs in 2h25 and remains on track to release Mi400 in 2026.
- AMD trades at a significant discount to the market, providing room for growth both through operations and multiple expansion.
Advanced Micro Devices (NASDAQ:AMD) recently announced their acquisition of ZT Systems in a deal valued at $4.9b. Though this deal will not necessarily be directly accretive to the top-line, management anticipates the acquired design team will create synergies across the company and accelerate their go-to-market strategy for their Data Center segment. I am reiterating my STRONG BUY recommendation for AMD shares with a price target of $225/share at 11x eFY25 price/sales.
AMD Operations
AMD is progressing forward to becoming a full-stack data center design enabler with their recent acquisitions of Silo AI and, more recently, ZT Systems. These two acquisitions are expected to help AMD accelerate growth across multiple verticals, leveraging the expertise of each respective firm. Silo AI was acquired in q2’24 for $665mm in cash on July 10, 2024, with the intent of absorbing the 300 scientists and engineers to bolster AMD’s software capabilities.
Silo AI should help AMD bolster their embedded segment and services capabilities across multiple nodes, including industrial IoT, automotive, and other industries that can leverage LLMs. Silo AI’s MLOps ideology helps companies modernize their machine learning’s capabilities for more autonomous capabilities. I believe this acquisition will help AMD create a more complete product as the firm takes aim at embedding their MI300X GPUs as the go-to chip for AI training and inferencing. This may also create an additional services capability, as the additional data scientists and engineers can work one-on-one with enterprise and hyperscaler customers in helping them develop their AI/ML vision.
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