Wells Fargo maintains AMD stock Overweight with $120 target

Published 20/05/2025, 10:54
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Tuesday, Wells Fargo (NYSE:WFC) reiterated an Overweight rating on AMD stock (NASDAQ:AMD) with a $120.00 price target, as the semiconductor giant, currently valued at $186 billion, continues to show strong momentum. According to InvestingPro data, AMD appears undervalued based on its Fair Value analysis, with the stock demonstrating robust revenue growth of 21.7% over the last twelve months. The firm’s analyst highlighted the recent sale of ZT Systems’ manufacturing operations to Sanmina for approximately $3.0 billion, which is slightly below their expectation of $3.5 billion. The transaction includes $2.4 billion in cash, around $150 million in stock, and a $450 million contingent payment, and is expected to close around the calendar year-end.

AMD had acquired ZT Systems on March 31 for about $4.6 billion, which was paid with approximately $3.375 billion in cash and 8.336 million AMD shares, along with a potential future consideration of around $375 million. This move follows last week’s announcement that AMD authorized an additional $6 billion for share repurchases, bringing the total authorization to approximately $9.94 billion, with $3.943 billion remaining at the end of the first quarter of 2025. InvestingPro analysis shows AMD maintains a healthy financial position with a current ratio of 2.8 and operates with a moderate debt level, supporting its strategic initiatives.

Alongside the transaction, AMD has entered into a strategic partnership with Sanmina, making them a preferred partner for new product introduction related to AMD’s cloud rack and cluster-scale AI solutions. The acquisition of ZT Systems was aimed at enhancing AMD’s capabilities in rack-scale AI solutions design and custom enablement, which is expected to improve the deployment speed and quality for cloud customers’ next-generation Instinct GPUs.

AMD is focusing on its rack-scale offerings with the Instinct MI400-series GPUs, slated for introduction in the second half of 2026. Industry reports have suggested that AMD may unveil a MI450 IF128 cluster, which would enable communication at rates greater than 1.8TB/s unidirectional bandwidth per GPU package. More details on AMD’s MI400-series and its rack-scale strategy are anticipated at the upcoming AI event on June 12.

The analyst also noted the recent NVIDIA (NASDAQ:NVDA) NVLink Fusion announcement at Computex, which opens up the NVLink ecosystem for integration with hyperscale semi-custom silicon and CPUs. This development could be significant for the industry, as it encourages broader support and integration for NVLink technology. For investors seeking deeper insights, InvestingPro offers comprehensive analysis with over 15 additional ProTips and a detailed Pro Research Report, helping you make informed decisions about AMD’s position in the competitive semiconductor landscape.

In other recent news, AMD has announced the sale of the manufacturing segment of ZT Systems to Sanmina for $3.0 billion. This strategic move is part of AMD’s plan to retain ZT Systems’ engineering team, acquired for $4.6 billion, to enhance its competitive position in the technology sector. Analysts at Citi have maintained a Neutral rating on AMD, with a price target of $100, following this transaction. Meanwhile, Stifel analysts reiterated a Buy rating with a price target of $132, highlighting AMD’s focus on expanding its AI infrastructure capabilities. Sanmina’s acquisition of ZT Systems is valued at $2.55 billion in cash and equity, with an additional $450 million in contingent consideration, aimed at strengthening its cloud and AI infrastructure manufacturing. Mizuho (NYSE:MFG) Securities has raised AMD’s price target to $135, citing anticipated growth in AI and new product launches. Evercore ISI also maintained an Outperform rating with a $126 target, noting AMD’s strategic approach in the datacenter GPU market, mirroring its past success in server CPUs. These developments reflect AMD’s ongoing efforts to solidify its position in advanced computing and AI technologies.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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