AMD Retains ZT Systems’ Engineering Team, Sells Manufacturing Operations

Advanced Micro Devices' stock (AMD) is trading up 1.71% through the early part of trading. Despite rallying strongly over the past month (+34.94%), AMD's stock remains 30% down over the past year, and a long way from highs.

The company recently announced the sale of ZT Systems' manufacturing operations to Sanmina Corporation for $3 billion. Despite parting with ZT's manufacturing business, AMD has retained the engineering team, underscoring its commitment to expanding its capabilities in the AI domain.

AMD's decision to sell ZT Systems' manufacturing operations is seen as a strategic move to focus more intensely on the AI market. The transaction is designed to strengthen AMD's position in rack-scale AI solutions, drawing direct competition with industry giant Nvidia. The retained engineering team of 1,200 professionals is expected to play a pivotal role in accelerating the development of AI systems, aligning with AMD's long-term AI ambitions.

The sale has led to positive reactions from top Wall Street analysts. Stifel analyst Ruben Roy reaffirmed a Buy rating for AMD with a price target of $132 (down from $162), highlighting the expansion of AI infrastructure as a critical strategic move. Roy believes that the utilized engineering talent will notably speed up AI system advancements.

Despite the general optimism, Citi analyst Christopher Danely held a more tempered view, assigning a Hold rating with a $100 price target. Danely noted that the $3 billion sale price was somewhat below market expectations. However, he acknowledged that this move would still aid AMD in scaling up within the data center GPU market, providing further competition to Nvidia.

The Wall Street consensus on AMD remains moderately bullish, with an overall Moderate Buy rating and $126.92 average price target, suggesting a ~10% upside potential. This sentiment reflects confidence in AMD's strategic shift towards AI and data center technologies, especially with products like the Instinct MI400-series GPUs anticipated for release in 2026.