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AMD Acquires Xilinx, Intensifies Competition with Peers

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Advanced Micro Devices' (AMD - Free Report) all-stock deal to acquire peer Xilinx is anticipated to close in the first quarter of 2022 delayed from the prior target of 2021 end.

AMD has made this strategic transaction with an aim to strengthen the company's technology portfolio and expand its rapidly growing data center business amid strong competition.

Per AMD's official statement, the company will acquire Xilinx in an all-stock deal for $35 billion, which will increase AMD's Total Addressable/Available Market (TAM) to $110 billion and enhance AMD’s margins, EPS and cash flow generation.

Together the companies will cater to some of the most important growth segments for the industry including data center, gaming, PCs, communications, automotive, industrial and aerospace and defense.

Intensifying Competition to Win Market Share

NVIDIA Corporation (NVDA - Free Report) is one of the major competitors of AMD. The competition between the two companies has taken a meaningful turn.

NVIDIA is a dominant name in the data Center, professional visualization and gaming markets where the company peers are playing a catch-up role. NVIDIA is a major competitor of AMD in the GPU market and competition in the mobile segment is intensifying with NVIDIA’s acquisition of ARM Holdings.

Intel (INTC - Free Report) recently completed the first phase of the sale of its manufacturing facility in China in sync with its long-term strategic goals. The company is gradually reducing its dependence on the PC-centric business by transitioning to data-centric businesses such as AI and autonomous driving.

Intel's acquisition of Israel-based Mobileye, an autonomous vehicle technology provider, is positive. The buyout will help the company rapidly penetrate the autonomous car technology market that is currently dominated by NVIDIA.

Share Price Appreciation

Shares of AMD, which currently carries a Zacks Rank # 2 (Buy), have surged 58.9% on a six month basis compared with the Computer & Technology Sector's rally of 35.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NVIDIA stock has appreciated 47.1% while shares of Intel have fallen by 6.4%. Advanced Micro Devices acquired Xilinx has returned 54.3% on a six month basis.


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