AMD Programming its Potential; Snaps Up Pensando for $1.9B

Chipmaker Advanced Micro Devices, Inc. (NASDAQ: AMD) has inked a deal to acquire Pensando Systems for around $1.9 billion. Following the news, shares of the semiconductor company closed more than 2% higher on Monday. 

According to AMD’s press release, Pensando is a pioneer in distributed computing, which is “designed for the New Edge, powering software-defined cloud, compute, networking, storage, and security services.”

Through the acquisition, AMD’s product portfolio will be expanded by Pensando’s distributed services platform. It includes an advanced vertically integrated processor and software stack, which are currently used by customers like Goldman Sachs (GS), IBM (IBM) Cloud, Microsoft Azure (MSFT), and Oracle Cloud (ORCL). 

Benefits of the Acquisition 

Pensando’s platform offers enhanced networking, security, storage, and other services for cloud, enterprise, and edge applications. It also has a competitive edge, as its solution shows better performance by the range of eight to 13 times compared to peers. 

Executing its product and technology plans, Pensando will expand the customer base broadening AMD’s data center capabilities across markets. 

Other Details 

AMD’s Data Center Solutions Group will be joined by Pensando CEO Prem Jain and the team, which will be headed by AMD SVP and GM Forrest Norrod.  

The acquisition is likely to conclude in the second quarter of 2022, pending approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, among other conditions. 

Official Comments 

Commenting on the deal, AMD CEO Dr. Lisa Su said, “Today, with our acquisition of Pensando, we add a leading distributed services platform to our high-performance CPU, GPU, FPGA and adaptive SoC portfolio.” 

Smart Score 

Advanced Micro Devices scores a 9 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations. 

Wall Street’s Take  

Rosenblatt Securities analyst Hans Mosesmann maintained a Buy rating on Advanced Micro Devices and a price target of $200 (80.95% upside potential). 

The rest of the Street is cautiously optimistic about the stock, which has a Moderate Buy consensus rating based on 14 Buys and seven Holds. The average Advanced Micro Devices price target of $150.41 implies 36.08% upside potential. Shares have increased 35.74% over the past year.

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