Should you invest in AMD stock following Xilinx takeover?

Should you invest in AMD stock following Xilinx takeover?
Written by:
Michael Harris
29th October, 20:42
Updated: 29th October, 20:45
  • AMD to acquire Xilinx for $35 billion in an all-stock deal
  • AMD shareholders will own 74% of the merged company, while Xilinx stockholders will get the remaining 26%
  • Legendary stock market analyst Jim Cramer believes AMD stock is “a steal”

Shares of Advanced Micro Devices (NASDAQ: AMD) are trading lower this week after chipmaker paid  $35 billion in an all-stock deal to acquire Xilinx (NASDAQ: XLNX).

Fundamental analysis: Major investment

In yet another deal in the semiconductor industry, investors will receive 1.7234 shares of AMD stock for each Xilinx share. Once the deal is approved, AMD shareholders will own 74% of the merged company, while Xilinx stockholders will get the remaining 26%.

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“Joining together with AMD will help accelerate growth in our data center business and enable us to pursue a broader customer base across more markets,” said Victor Peng, Chief Executive of Xilinx.

Dr Lisa Su, CEO of AMD, will lead the new company as Peng becomes the President responsible for Xilinx.

A few days ago, Xilinx announced a breakthrough product that will have a big impact on the 5G infrastructure rollout.

“For the first time, Xilinx is providing a wireless radio platform with more hardened application-specific IP than adaptive logic to address low power and low-cost 5G requirements,” said Liam Madden, head of the Wired and Wireless Group (WWG) at Xilinx. 

Two weeks ago, Invezz reported that AMD and Xilinx are in talks over a merger.

Technical analysis:  Shares threating to close lower

Jim Cramer, the legendary host of CNBC’s “Mad Money”, commented by saying that AMD stock looks like “a steal”.

AMD stock chart (TradingView)

“I think AMD still has a ton of upside. You’re effectively getting today’s incredible, magnificent quarter for free. At these levels, I think the stock’s a steal,” he said. 

AMD stock price is trading 4.8% lower on the week after plunging over 3% on Xilinx news. Shares are now approaching a major buy area near $73.00 area, which hosts both the 200-DMA and multi-month horizontal support. 

Summary

Shares of AMD trade lower this week as the price action nears an intramonthly support line near $73 in a move that will offer solid opportunity to invest in AMD shares. 

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