Wells Fargo Keeps Overweight on AMD, $120 Price Target

Wells Fargo analyst Aaron Rakers reiterated an Overweight rating and $120 price target on AMD (NASDAQ: AMD)

“Sale Price at ~$3.0B vs Our $3.5B+ Expectation. Sanmina is purchasing ZT Systems’ manufacturing operations for ~$3.0B—reflects $2.4B cash + ~$150M stock + $450M contingent payment.

Transaction anticipated to close near CYE. Reminder: AMD closed the acq. of ZT Systems on 3/31 for ~$4.6B (~$3.375B cash + 8.336M AMD shares; potential future consideration of ~$375M).

This news follows last week’s announcement of an add’l $6B share repo, implying ~$9.94B total auth w/ $3.943B remaining exit 1Q25.

Strategic Partnership w/ Sanmina as AMD Focused on Rack-Scale Integration / Acceleration.

As part of this transaction agreement, AMD and Sanmina have agreed that Sanmina would become a preferred new product introduction (NPI) partner for AMD’s cloud rack and cluster-scale AI solutions.

AMD’s acq of ZT Systems was focused on ZT’s rack-scale AI solutions design and custom enablement capabilities; accelerating the quality and time-to-market deployment for cloud customers of next-gen Instinct GPUs.

Focus on AMD’s Rack-Scale Capabilities w/ MI400-Series in 2026. AMD has emphasized its rack-scale push with the Instinct MI400-series GPUs looking into 2026.

AMD is expected to introduce their first rack-scale offering in 2H2026—e.g., recent industry reports highlighting AMD’s possible MI450 IF128 cluster (128x GPU packages communicating at >1.8TB/s unidirectional bandwidth per GPU).

We expect to hear more about AMD’s MI400-series driven rack-scale strategy at AMD’s upcoming (6/12) AI event.

We continue to believe investors would like to learn / hear more about AMD’s scale-up networking capabilities—i.e., Infinity Architecture / Fabric vs. NVIDIA’s NVLink.

We would note that it is interesting to see last night’s NVIDIA NVLink Fusion announcement at Computex (see here).

NVLink Fusion reflects NVIDIA’s opening up of NVLink—providing an open ecosystem for NVLink to be supported / integrated with hyperscale semi-custom silicon, as well as CPUs.”

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