After Rosenblatt announced its acquisition of World Labs through AMD, it maintained a ‘buy’ rating for the company along with a target price of $700. The institution believes that the significance of this transaction lies not only in expanding AMD's AI business but also in helping the company strengthen its software, modeling, and simulation capabilities, enabling it to further transform from a traditional semiconductor manufacturer into a system-level AI platform provider.
AMD This time, World Labs is acquired in its entirety through a stock deal, with a transaction value of approximately $8.2 billion. Rosenblatt believes that with the rapid development of the AI market, the capabilities required for competition have surpassed those of traditional chip design alone. Manufacturers now need to have a deeper understanding of model architecture, system software, and how complex AI applications work in conjunction with hardware.
What AMD adds is not just model capabilities, but “system-level AI capabilities”.
Rosenblatt pointed out that in the future, AI competition will increasingly rely on system-level knowledge, rather than just semiconductor performance.
In the past, the advantages of AMD mainly lay in CPU, GPU, and other computing hardware. However, the engineering team brought by World Labs can help the company accelerate the development of the AI platform at the model, software, and simulation levels, thereby enabling a closer collaboration between hardware design and the higher-level AI applications.
This means that, AMD, in the future, will not only sell computing chips to customers but also be able to participate earlier in the design of models and systems, and accordingly optimize its own hardware products.
Rosenblatt believes that this capability is particularly important for the next stage of the AI market, as customers are paying more and more attention to the performance of the entire system, rather than the parameters of a single chip.
Acquisition is equivalent to buying future R&D investment in advance.
Rosenblatt also regards this transaction as an "early investment" by AMD in future research and development expenditures.
If AMD chooses to develop similar technologies entirely in-house, the company will still need to continue to invest a large amount of research and development funds in the coming years, as well as bear the time costs associated with team building and technology accumulation.
By directly acquiring World Labs, AMD essentially obtains a well-established technical team and R&D capabilities in one go, thereby reducing the time required to enter the relevant field.
Therefore, Rosenblatt approves of the management's decision made by AMD. It is believed that this acquisition is not merely aimed at expanding the asset scale, but rather, in the context of the rapid iteration of AI's technology, it serves as a means to exchange mergers and acquisitions for faster research and development speed.
Robots may become a new entry point into the market.
World Labs may also help AMD enter new application markets, among which robotics is a direction specifically mentioned by Rosenblatt.
Robots need to handle visual perception, environmental modeling, motion planning, and real-time reasoning simultaneously, which requires a high level of coordination among hardware, models, and simulation capabilities.
If AMD is able to combine the modeling and simulation technologies of World Labs with its own computing platforms such as GPU and CPU, there will be an opportunity to extend the existing AI products from data centers to robots and a wider range of physical AI applications.
This also means that the value of acquiring World Labs is not only reflected in the existing AI server market, but it may also help AMD to open up new long-term growth opportunities.
The target price of $700 remains unchanged.
Although Rosenblatt acknowledges the strategic significance of this acquisition, it has not adjusted its previous target price of $700 as a result.
The current judgment of this institution is that World Labs mainly strengthens the integrity and execution capability of AMD's long-term AI strategy, rather than immediately changing the short-term profit model.
Therefore, the core logic behind this rating can be summarized as follows: The competition is shifting from "who has the stronger chips" to "who can provide a more comprehensive system capability." The acquisition of World Labs has enabled AMD to complete the puzzle of software, models, and simulation capabilities in this competition.
