Advanced Micro Devices (AMD) completed the sale of ZT Systems’ data center manufacturing business to Sanmina (SANM) for $2.4 billion in cash and equity. The deal closed ahead of schedule, giving AMD more room to focus on the fast-growing AI systems market.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Partnership to Speed AI System Development
Under the new partnership, AMD will keep ZT’s design and customer teams. These teams will help AMD speed up the creation of new AI systems for large cloud clients. In turn, Sanmina will handle the production side as AMD’s main manufacturing partner. The company will use its facilities in New Jersey, Texas, and the Netherlands to make cloud and rack-scale AI systems.
AMD executive Forrest Norrod said the move fits the company’s data center plan, which aims to deliver faster and more flexible systems for cloud and AI customers. Sanmina’s chief executive, Jure Sola, added that the deal expands its reach in the growing cloud and AI hardware market.
Financial Context and Market Outlook
The sale follows AMD’s $4.9 billion purchase of ZT Systems in March 2025. By selling the manufacturing unit, AMD gains cash and cuts operational costs while keeping control of key design functions. The company also received 1.15 million Sanmina shares and could earn up to $450 million more if certain goals are met.
The broader market for cloud and AI infrastructure continues to grow quickly. Industry data projects the hyperscale cloud market to reach $461.17 billion in 2025, expanding at a 19.2% yearly rate. This trend has pushed tech firms to partner with specialized manufacturers and focus on their strongest areas, such as design, chips, and software.
A Streamlined Path Forward
For AMD, the move creates a clearer focus on high-value areas like AI platforms and data center solutions. The partnership with Sanmina supports faster production while allowing AMD to guide product design and system architecture. Investors may see the deal as a sign that AMD is adjusting its structure to compete more effectively with rivals in the AI hardware space.
Overall, the sale highlights AMD’s plan to stay flexible, strengthen its balance sheet, and sharpen its edge in the next phase of the data center market.
Is AMD Stock a Buy or Sell?
Turning to the Street, Advanced Micro Devices boasts a Moderate Buy consensus, based on 39 analysts’ ratings. The average AMD stock price target stands at $249.92, suggesting a 0.10% downside from the current price.
