On Tuesday, Advanced Micro Devices (NASDAQ:AMD) sold ZT Systems' manufacturing arm to Sanmina for $3 billion, retaining ZT's engineering team to support its AI infrastructure goals.

Following the deal, Analysts have reshuffled their outlook. Stifel analyst Ruben Roy reaffirmed a Buy rating and raised his price objective to $132, about 16% above current levels. He argues that ZT's 1,200 engineers will accelerate development of AMD's rack-scale AI systems and that Sanmina's flexible manufacturing capabilities align well with cloud and AI deployments.

Warning! GuruFocus has detected 4 Warning Signs with AMD.

Wells Fargo's Aaron Rakers also maintained a Buy rating, setting a $120 target, citing AMD's long-term AI potential. He highlighted the upcoming Instinct MI400-series GPUs and expects Sanmina to speed AI system rollouts for large-scale data-center customers.

In contrast, Citi's Christopher Danely kept a Hold rating with a $100 objective. Danely focused on the $1.6 billion discount between AMD's $4.6 billion acquisition of ZT and the $3 billion sale price, noting the financial haircut but acknowledging the deal could still strengthen AMD's data-center GPU scaling.

Overall, analysts view the ZT divestiture as a strategic move to sharpen AMD's focus on its core chip and AI businesses, though they differ on its immediate impact on valuation and earnings.

Is AMD Stock a Buy?Top Analysts Ride the AMD AI Wave Post $3 Billion ZT Systems Deal

Based on the one year price targets offered by 41 analysts, the average target price for Advanced Micro Devices Inc is $128.44 with a high estimate of $200.00 and a low estimate of $75.00. The average target implies a upside of +13.15% from the current price of $113.51.

Based on GuruFocus estimates, the estimated GF Value for Advanced Micro Devices Inc in one year is $162.56, suggesting a upside of +43.21% from the current price of $113.51.

This article first appeared on GuruFocus.

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