The AMD stock price spiked on Tuesday after the UK approved of the company’s acquisition of Xilinx. The shares rose by more than 3% to $90, bringing its total market capitalization to more than $109 billion. The stock has jumped by 80% in the past 12 months.
The chip industry is going through significant changes as companies fight for market share and as some of the biggest buyers start building their own silicon. Apple has already rolled out its M1 chips and Microsoft is said to be creating its own.
This trend has pushed the biggest companies to make changes. Nvidia is acquiring Arm Holdings while AMD is buying Xilinx. Nvidia’s deal will help it grow its market share in Arm’s x86 architecture while AMD’s deal will see it grow its business in the FPGA industry.
In a statement today, the UK Competition and Markets Authority (CMA) gave approval to the deal. The agency said:
“The CMA has cleared the anticipated acquisition by Advanced Micro Devices, Inc. of Xilinx, Inc. The full text of the decision will be available shortly.”
The acquisition has already received thumbs up from the European antitrust agency. This means that the only major regulator who has not approved the deal is from China. Analysts expect that the country’s agency will approve of the deal in the near term.
Is AMD a buy or sell?
While AMD is not cheap, analysts believe that the company is a good investment. For example, analysts at Benchmark expect that the shares will rise to $100. Similarly, those at Susquehanna, Northland, Raymond James, and Mizuho expect that the AMD stock price will surge to more than $120.
The overall bullish case is that AMD will continue gaining market share from Intel. They also see it gaining share in both its CPU and the GPU industries. Further, the company has a strong management team, led by Dr. Lisa Su. In the past few years, she has managed to turnaround the company to becoming one of the leading chip manufacturers.
As shown below, analysts expect that AMD will continue to grow its revenue, earnings per share (EPS), and operating margin in the next two years. This pace will likely accelerate with the addition of Xilinx.
AMD stock price forecast
In my last article on the AMD stock price, I warned that the time was not ready to buy the shares. Today, looking at the daily chart, we see that the stock has formed a double-bottom at the $72 level. At the same time, the 50-day and 100-day moving averages are about to make a bullish crossover while the Supertrend indicator is extremely bullish.
Therefore, I suspect that stock will keep rising now that there is momentum behind it. If this happens, the next key level to watch will be the year-to-date high of $99.02, which is about 10% above the current level.