The market seems annoyed by the acquisition of Pensando by AMD

  • AMD announced the acquisition of Pensando for $1.9 billion.
  • Advanced Micro Devices stock fell more than 1% on Friday.
  • Barclays gave AMD stock a price target of $115, which caused an 8% decline last Thursday.

Advanced Micro Devices (AMD) stock opened 1.6% higher on Monday after announcing the $1.9 billion acquisition of cloud-based distributed services platform Pensando. Pensando’s software is already operational in the cloud setups of heavyweights like Goldman Sachs and is used by major cloud operators like IBM Cloud, Microsoft Azure and Oracle Cloud. AMD says the acquisition will bring it closer to its data center and cloud enterprise partners.

Advanced Micro Devices Stock News: A New Acquisition

In the press release, AMD says Pensando’s technology offers a “fully programmable packet processor and comprehensive software stack that accelerates networking, security, storage and other services for cloud applications, enterprise and periphery”.

“Building a cutting-edge data center with the best performance, security, flexibility, and lowest total cost of ownership requires a wide range of compute engines,” said CEO and President Lisa Su. “All major cloud and OEM customers have adopted EPYC processors to power their data center offerings. Today, with our acquisition of Pensando, we are adding a leading distributed services platform to our portfolio of high-performance adaptive CPUs, GPUs, FPGAs and SoCs. Pensando’s team brings world-class expertise and a proven track record of chip, software and platform innovation, which expands our ability to deliver leadership solutions to our cloud customers. business and periphery.

Although AMD’s stock price is high on Monday, it doesn’t seem like the market is as euphoric about the new acquisition.. AMD just finished finalizing the much larger Xilinx deal earlier this year. Investors may not like the emphasis on buying growth. The deal is expected to close in the second quarter.

AMD remains below $110 after Barclays downgraded the chipmaker last Thursday. Barclays rated AMD at “equal weight” from a previous rating of “overweight”. Additionally, its price target has been reduced from $148 to $115. Investment banks have said demand for products in the gaming, personal computer and Xilinx segments will dry up in 2023 due to the economic cycle.

AMD Key Statistics

Market capitalization $178 billion
Price/Benefit 41
Price/Sales 8
Price/Book 19
Enterprise value $175 billion
Operating margin 22%
Profit margin

19%

52 week high $164.46
52 week low $72.50
Short interest 6%
Average Wall Street Rating and Price Target Buy, $153.59

Advanced micro-device inventory forecast: A deal with little bounce

The market doesn’t seem to care much about the Pensando acquisition. Nearly $2 billion takeover doesn’t seem like it could help AMD grow even 2%. As of this writing, stocks are treading water 0.6%. AMD stock rose to $110 at the open but soon fell to $108.50. Thereafter, for the first 40 minutes, AMD stocks saw a steady breakout of 5-minute lower candles. It seems that the market wants to find a dose of support before any progress. The upper trendline of the descending price channel that has lasted more than six months, and which AMD stock broke on March 16, can serve as support near $107. AMD needs to break above $112.50 to regain a neutral outlook.

AMD Graphics in 5 Minutes


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