AMD Completes $4.9 Billion Acquisition of ZT Systems to Boost AI Infrastructure Capabilities

AMD goes all-in on being a data centre designer by purchasing ZT Systems for $4.9 billion

That's a lot of money but it's peanuts compared to how much cash AMD could rake in via AI. It won't have escaped your notice that in recent years, Nvidia has been transitioning away from being 'just' a chip designer into a fully-fledged systems integration company. If you want a massive data centre or a host of AI servers, Nvidia will design and build the whole thing for you. And now it seems AMD is getting in on the action having finalised a near-five billion dollar deal for ZT Systems, a company that designs and makes -- yes, you've guessed it -- data, cloud, and AI centres. AMD announced its closing of the purchase deal today (via GlobalWire), having first made its intentions publicly known in August of last year. The acquisition, worth $4.9 billion in cash and stocks, will certainly make a bit of a dent in AMD's financials, but there's no doubt that it'll be worth every cent if the AI market continues to grow as expected. In FY 2024, AMD pulled in revenues of $12.6 billion with its data centre division, accounting for almost 50% of its entire revenue that year. It's also AMD's second most profitable sector, with an operating margin of roughly 27% -- more than double that of its Client and Gaming sectors. Nvidia's data centre division is a veritable money-making machine, pulling in nearly $50 billion in revenue last year, so it's not hard to see why AMD set about snapping up ZT Systems. The last mega purchase it made was Xilinx for $35 billion, to bolster its embedded sector, so this one is chump change in comparison. Whether this acquisition pays out, though, is another question altogether, as Nvidia currently dominates the AI server market. Up to now AMD's only had the hardware on offer, in the form of its gargantuan and very popular Instinct MI300 chips, but now it will be able to provide entire systems and installations. Anyone who has worked in system building, be it gaming desktop PCs or massive servers, will know that this is where the real profit margins lie (it's why Nvidia's profit margins are so big). More importantly, customers like Apple, Facebook, and the usual AI crowd will be more willing to splash the cash on a complete service rather than having to fiddle about with the hardware themselves. That said, while the purchase of Xilinx seemed like a great idea at the time and AMD's embedded sector currently enjoys an enormous operating profit margin of 40%, it'll likely be many years before that particular acquisition actually pays for itself. I should imagine that AMD will be hoping that buying ZT Systems will bring in more money and quicker, to help offset the decline in Gaming revenue. Now, I reckon I can scrap together $14.52 -- maybe even a whole 20 bucks -- to acquire something, so AMD better watch out!

AMD Acquires AI Infrastructure Firm ZT Systems for $4.9 Billion

"With ZT Systems, we're bringing in an incredible team," said Lisa Su, CEO of AMD. American computing giant AMD has completed the acquisition of ZT Systems, a company that provides computer, storage and accelerator solutions for cloud and telecom service providers. Last year, AMD announced its plans to acquire ZT Systems for $4.9 billion. The move will accelerate the design and deployment of AMD-powered AI infrastructure at scale, optimised for the cloud. AMD indicated that this will facilitate innovative end-to-end AI solutions by integrating AMD CPUs, GPUs, networking, and ROCm software while expediting the deployment of large-scale, cloud-optimised AI infrastructure. "With ZT Systems, we're bringing in an incredible team," said Lisa Su, CEO of AMD, in an interaction with Yahoo Finance. "We're bringing in over a thousand design engineers who are working hand in hand with our silicon engineers, as well as our customers, and systems engineers," she added. ZT Systems is a key partner to some of the world's largest firms, such as Microsoft and Meta. Founded in 1994, the company focused on desktop PCs and server message block (SMB) servers, but then transitioned to making data center servers in 2004. "This [the acquisition] is all about ensuring that we have all of the pieces, both from a hardware standpoint, and lots of investment in software. And ZT is a critical piece in that supply chain and that value chain to give us the systems knowledge," added Su. Furthermore, AMD announced on Monday that its recently revealed 5th generation AMD EPYC processors are powering Oracle Cloud Infrastructure (OCI) E6 Standard shapes. AMD's hardware will now enable OCI Compute E6 shapes to deliver up to a two-fold increase in cost-to-performance, compared to the previous E5 instance generation. In February, AMD announced its fourth quarter results for last year, revealing that its data centre segment revenue grew by 69% year-over-year to $3.9 billion. The company generated $12.6 billion in revenue from the data centre segment for the entire last year.

AMD completes its $4.9 billion acquisition of ZT Systems, will better compete against NVIDIA

TL;DR: AMD has completed its $4.9 billion acquisition of ZT Systems, enhancing its AI infrastructure capabilities. This move aims to integrate ZT's expertise with AMD's Instinct MI300 series AI accelerators, providing comprehensive AI solutions. AMD has officially closed its $4.9 billion acquisition of ZT Systems, a leading provider of AI infrastructure for the world's largest hyperscale computing companies. In a new post on X, the company said: "We are excited to welcome the ZT team into the AMD family - they are the best in the industry! The ZT team brings unparalleled choice to our customers with critical systems expertise needed to deliver a full AI solution - from silicon to software to rack and cluster-level solutions". ZT Systems is an artificial intelligence infrastructure group that will help AMD create a better AI infrastructure, helping get AMD's new Instinct MI300 series AI accelerators into data centers. ZT Systems was founded over 30 years ago, and is a private company that builds custom computing infrastructure for some of the world's biggest AI hyperscalers. Forrest Norrod, executive vice president and general manager, Data Center Solutions business unit at AMD, said: "With the rapid pace of innovation in AI, reducing the end-to-end design and deployment time of cluster-level data center AI systems will be a significant competitive advantage for our customers". He continues: "Acquiring ZT Systems is a significant milestone in our AI strategy to deliver leadership training and inferencing solutions that are optimized for our customers' unique environment, ready-to-deploy at scale, and based on our open ecosystem approach that combines open-source software, industry standard networking technologies and now ZT Systems' leadership systems design and customer enablement expertise. We welcome Frank Zhang, Doug Huang and the talented ZT Systems team to AMD, where together we will offer customers both choice and speed to market, allowing them to invest in key areas where they choose to differentiate their AI offerings".

AMD: Completed $4.9B ZT Systems Buy Gives Us 'Rack-Level Expertise' For AI Solutions

Marking a new chapter in AMD's competition against Nvidia, the chip designer says its ZT Systems acquisition, completed Monday, will allow it to combine 'industry-leading systems' and 'rack-level expertise' with its silicon to offer a 'new class of end-to-end AI solutions.' AMD said it will combine "industry-leading systems" and "rack-level expertise" from the chip designer's $4.9 billion acquisition of ZT Systems with its portfolio of processors and networking silicon to offer a "new class of end-to-end AI solutions." The Santa Clara, Calif.-based company on Monday said that it had completed its acquisition of AI and general-purpose computing infrastructure provider ZT Systems, which was announced last August as a way for the chip designer to better compete with AI computing giant Nvidia in data centers, particularly among hyperscalers and enterprises. [Related: In DeepSeek Era, Nvidia Fixes On Blackwell Ultra's AI Money-Making Potential] While AMD has significantly ramped up its investments to compete against Nvidia's AI computing prowess with its Instinct data center GPUs and open-source ROCm software over the past few years, the company's revenue in this area was a small fraction of Nvidia's last year, with AMD's Instinct chips generating $5 billion versus the $102.2 billion of Nvidia's data center computing business, which includes GPUs. Lisa Su, AMD's CEO, has declined to offer an Instinct revenue forecast for 2025 -- unlike what she did for the previous year -- instead saying in the company's most recent earnings call that the product segment will generate tens of billions of dollars in the "coming years." With the deal's closing, ZT Systems' design and customer enablement teams will join AMD's data center solutions business, which is led by Executive Vice President Forrest Norrod. These will be led by former ZT Systems President Doug Huang, who will work closely with Norrod's group and AMD's AI group for new data center AI solutions. AMD said it is "actively engaged with multiple potential partners to acquire" ZT Systems' data center infrastructure manufacturing business this year, as it originally intended. These efforts will be led in part by former ZT Systems founder and CEO Frank Zhang, who has joined AMD as senior vice president of ZT Manufacturing. In a statement, Norrod said the ZT Systems acquisition will allow AMD to reduce the time it takes to design and deploy "cluster-level" data center AI systems for customers. "Acquiring ZT Systems is a significant milestone in our AI strategy to deliver leadership training and inferencing solutions that are optimized for our customers' unique environment, ready-to-deploy at scale, and based on our open ecosystem approach that combines open-source software, industry standard networking technologies and now ZT Systems' leadership systems design and customer enablement expertise," he said. Originally valued at $4.9 billion last August, the transaction consisted of 8.3 million shares of AMD common stock and $3.4 billion to ZT Systems' sellers, according to an AMD document filed Monday with the U.S. Securities and Exchange Commission. AMD plans to offer the sellers an additional 740,961 shares of AMD common stock and $300 million in cash once certain conditions are met, the document added.

AMD Announces Complete Acquisition of ZT Systems, Attempting To Combat Against NVIDIA's Influence Over The AI/DC Markets

AMD has officially completed the acquisition of ZT Systems, which will allow Team Red to strengthen its AI infrastructure and compete more dominantly in the markets. [Press Release]: AMD today announced the completion of its acquisition of ZT Systems, a leading provider of AI and general-purpose compute infrastructure for the world's largest hyperscale providers. The acquisition will enable a new class of end-to-end AI solutions based on the combination of AMD CPU, GPU and networking silicon, open-source AMD ROCm software and rack-scale systems capabilities. It will also accelerate the design and deployment of AMD-powered AI infrastructure at scale optimized for the cloud. With the rapid pace of innovation in AI, reducing the end-to-end design and deployment time of cluster-level data center AI systems will be a significant competitive advantage for our customers. Acquiring ZT Systems is a significant milestone in our AI strategy to deliver leadership training and inferencing solutions that are optimized for our customers' unique environment, ready-to-deploy at scale, and based on our open ecosystem approach that combines open-source software, industry standard networking technologies and now ZT Systems' leadership systems design and customer enablement expertise. AMD expects the transaction to be accretive on a non-GAAP basis by the end of 2025. The world-class design teams will join the AMD Data Center Solutions business unit led by AMD Executive Vice President Forrest Norrod. AMD is actively engaged with multiple potential strategic partners to acquire ZT Systems' industry-leading U.S.-based data center infrastructure manufacturing business in 2025. Former ZT Systems Founder and CEO Frank Zhang joins AMD as senior vice president of ZT Manufacturing, reporting to Forrest Norrod, where he will help lead the divestiture of the manufacturing business. Former President Doug Huang joins AMD as senior vice president of Data Center Platform Engineering, also reporting to Forrest Norrod. In this role, he will lead design and customer enablement teams, working closely with the AMD Data Center Solutions business unit and AI Group to accelerate time-to-market for data center AI solutions.

Nvidia Rival AMD Completes $4.9B Acquisition Of ZT Systems To Strengthen AI And Data Center Dominance - Alphabet (NASDAQ:GOOGL), Advanced Micro Devices (NASDAQ:AMD)

In a move to bolster its AI data-center offerings, Advanced Micro Devices AMD completed its $4.9 billion acquisition of data-center equipment designer ZT Systems on Monday. What Happened: The acquisition, first announced in August, is a strategic move by AMD to strengthen its data-center systems offerings and position itself as a strong contender against Nvidia Corporation NVDA. This acquisition will allow AMD to provide alternatives to Nvidia's dominant chips and servers to key clients such as Microsoft MSFT and Meta Platforms META. AMD's CEO, Lisa Su, highlighted the increasing complexity of hardware integration with the rise of AI, stating, "You really have to put the entire system together." See Also: Bitcoin, Ethereum, XRP, Dogecoin Surge As Trader Eyes $88,000 For BTC To Touch 'New Higher High' AMD's acquisition of ZT is aimed at securing a share of the "AI factory," a concept associated with Nvidia's strategy of providing a one-stop solution for all key data center components. AMD sets itself apart by offering an open-source ecosystem, allowing customers to select their preferred components. AMD has also incorporated ZT Systems' 1,000 design engineers, who focus on hardware and server design, into the AMD Data Center Solutions division. Frank Zhang, Former ZT Systems Founder and CEO, joins AMD as senior vice president of ZT Manufacturing, while Former President Doug Huang joins as senior vice president of Data Center Platform Engineering Why It Matters: The acquisition of ZT Systems by AMD marked a significant expansion of AMD's AI capabilities. The deal is seen as a major step towards enhancing AMD's position in the AI infrastructure market. ZT Systems, a privately held company based in Secaucus, N.J., had over $10 billion in annual revenue when the deal was announced. AMD is now in the process of selling ZT's manufacturing unit. During the past years, AMD has acquired other companies to strengthen its data center capabilities. In 2022, AMD acquired Xilinx and Pensando to strengthen its data-center offerings. AMD's strategy to strengthen its data-center offerings was further highlighted recently when the company announced that its fifth-generation AMD EPYC processors would power the Oracle Corp ORCL Oracle Cloud Infrastructure (OCI) Compute E6 Standard shapes. This move promised a significant boost in performance, with up to a 2 times increase in cost-to-performance compared to the previous E5 instance generation. AMD holds a momentum rating of 12.93% and a growth rating of 66.54%, according to Benzinga's Proprietary Edge Rankings. For an in-depth report on more stocks and insights into growth opportunities, sign up for Benzinga Edge. Read Next: Sundar Pichai Shows Off Google's 'Most Intelligent AI' Ever With A Dinosaur Video Game That Even You Could Make With A Simple Prompt Image via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. AMDAdvanced Micro Devices Inc$102.78-%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum12.93Growth66.54Quality89.34Value13.79Price TrendShortMediumLongOverviewGOOGLAlphabet Inc$157.650.37%METAMeta Platforms Inc$586.500.09%MSFTMicrosoft Corp$382.400.05%NVDANVIDIA Corp$110.03-0.11%ORCLOracle Corp$142.500.39%Market News and Data brought to you by Benzinga APIs

AMD Completes Acquisition of ZT Systems to Strengthen AI and Data Center Capabilities

AMD announced the completion of its acquisition of ZT Systems, a leading provider of AI and general-purpose compute infrastructure for the world's largest hyperscale providers AMD announced the completion of its acquisition of ZT Systems, a leading provider of AI and general-purpose compute infrastructure for the world's largest hyperscale providers. The acquisition will enable a new class of end-to-end AI solutions based on the combination of AMD CPU, GPU and networking silicon, open-source AMD ROCm™ software and rack-scale systems capabilities. It will also accelerate the design and deployment of AMD-powered AI infrastructure at scale optimized for the cloud.

AMD completes acquisition of ZT Systems to boost AI solutions By Investing.com

SANTA CLARA, Calif. - Advanced Micro Devices (NASDAQ:AMD), a prominent semiconductor company with annual revenue of $25.79 billion and market capitalization of $167.27 billion, announced today the completion of its acquisition of ZT Systems, a key provider of AI and general-purpose compute infrastructure for major hyperscale providers. According to InvestingPro data, AMD maintains strong financial health with a robust current ratio of 2.62, positioning it well for this strategic move to address the data center AI accelerator market, which is projected to reach $500 billion by 2028. The acquisition merges AMD's GPU, CPU, and networking silicon with ZT Systems' rack-scale systems capabilities and open-source ROCm software. This combination aims to create a new class of end-to-end AI solutions and accelerate the deployment of AMD-powered AI infrastructure optimized for the cloud. With revenue growth of 13.69% in the last twelve months and a strong financial health score rated as "GOOD" by InvestingPro, AMD appears well-positioned to execute this strategic expansion. AMD's Executive Vice President Forrest Norrod, who leads the Data Center Solutions business unit, stated that this acquisition marks a significant milestone in AMD's AI strategy. It is expected to offer leadership training and inferencing solutions that are ready-to-deploy at scale and optimized for customers' unique environments. The company anticipates the transaction to be accretive on a non-GAAP basis by the end of 2025. As part of the acquisition, ZT Systems' former Founder and CEO, Frank Zhang, joins AMD as senior vice president of ZT Manufacturing. Doug Huang, former President of ZT Systems, is appointed as senior vice president of Data Center Platform Engineering. Both will report to Norrod and play pivotal roles in the design and customer enablement of data center AI solutions. AMD is also actively seeking strategic partners to acquire ZT Systems' U.S.-based data center infrastructure manufacturing business within the year. The acquisition is expected to reduce the time required to design and deploy cluster-level data center AI systems, providing a competitive edge for AMD's customers. The company's commitment to an open ecosystem approach, combining open-source software with industry-standard networking technologies and now ZT Systems' systems design expertise, is central to this strategy. This development is based on a press release statement and reflects AMD's ongoing efforts to innovate and expand its footprint in the high-performance computing and AI sectors. Currently trading below its Fair Value according to InvestingPro analysis, AMD shows promising growth potential with analysts forecasting increased profitability this year. For deeper insights into AMD's valuation and growth prospects, including 15 additional ProTips and comprehensive financial metrics, investors can access the full Pro Research Report on InvestingPro. In other recent news, Advanced Micro Devices (AMD) has announced the availability of its Versal AI Edge XQRVE2302, a space-grade device qualified for spaceflight, now ready for order. This device is part of AMD's adaptive SoC portfolio, designed for AI inferencing in space applications. Meanwhile, Jefferies downgraded AMD's stock from 'Buy' to 'Hold', citing challenges in the AI market and increased competition from Intel. The firm also lowered its price target from $135.00 to $120.00, reflecting concerns about AMD's performance in AI and competitive pressures. Additionally, Mizuho Securities has revised its price target for AMD to $120.00, maintaining an 'Outperform' rating. Mizuho's analysis indicates potential headwinds in AMD's AI sector but highlights strong prospects in the server and PC markets. In another development, AMD is collaborating with Cisco, Nokia, and Jio Platforms to create the Open Telecom AI Platform, aiming to enhance telecom infrastructure with AI-driven solutions. This partnership will leverage AMD's computing technologies alongside contributions from Cisco and Nokia. These recent developments reflect AMD's strategic moves in both space and telecom sectors, as well as the challenges it faces in the AI market.