Chipmaker Advanced Micro Devices (AMD) announced on Wednesday that it has acquired Enosemi, which is a company that builds photonic integrated circuits. These circuits are designed to improve how chips communicate using light instead of electricity. While AMD didn’t reveal how much it paid for Enosemi, the deal is part of its broader plan to improve data transfer speeds and power efficiency in artificial intelligence systems. This technology could help AMD stay competitive in the fast-growing AI chip market.
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Interestingly, the technology AMD is investing in is called co-packaged optics. Unlike traditional copper cables, co-packaged optics uses laser light to send data between chips through fiber optic cables. This method allows chips to communicate more quickly and with less energy, which is crucial for running large-scale AI models that require massive amounts of data to be processed efficiently across computer systems.
As a result, many investors and engineers in Silicon Valley believe that this technology is the future of building powerful AI infrastructure. It is also worth noting that earlier in the year, AMD acquired server maker ZT Systems for $4.9 billion in order to expand its range of AI chips and hardware. Both acquisitions show that AMD is serious about challenging Nvidia (NVDA), which currently dominates the AI chip space. By adding advanced optics and more AI-focused hardware to its portfolio, AMD is working to become a stronger player.
Is AMD a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on AMD stock based on 22 Buys, 10 Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMD price target of $126.55 per share implies 11.4% upside potential.
