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Why Xilinx Stock Gained 22.6% in November

By Keith Noonan – Updated Dec 8, 2020 at 8:44AM

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Why did the semiconductor specialist's valuation climb above AMD's $35 billion buyout price?

What happened

Shares of Xilinx (XLNX) rose 22.6% in November, according to data from S&P Global Market Intelligence. The stock gained ground amid excitement about the company potentially being acquired by Advanced Micro Devices (AMD -3.70%) and a month of record-setting momentum for the broader market.  

^SPX Chart

^SPX data by YCharts.

AMD announced on Oct. 27 that it was aiming to acquire Xilinx in an all-stock deal valuing the programmable chip specialist at $35 billion. With investors looking forward to Xilinx being acquired at a premium and the S&P 500 index posting record gains in November, the company's share price climbed double digits last month. 

An AI chip on a circuit board.

Image source: Getty Images.

So what

Xilinx ended November with a market capitalization of roughly $35.6 billion. Once the deal closes, the company's stock will be converted into AMD shares. AMD stock rose 23% last month, and momentum for the stock helped push Xilinx's valuation above the agreed acquisition price. 

Xilinx's field-programmable gate array (FPGA) and adaptive compute acceleration platform (ACAP) chips are poised to play a significant role in the evolution of next-generation data center, telecommunications, and artificial-intelligence technologies. Its expertise in programmable chips should prove very valuable to AMD.

Now what

Xilinx stock has continued to climb higher in conjunction with momentum for the broader market early in December. The company's share price is up roughly 2% in the month as of this writing. 

XLNX Chart

XLNX data by YCharts.

Xilinx now has a market capitalization of roughly $36.3 billion, or roughly 3% above the $35 billion valuation initially outlined by AMD. The programmable chip company's share price will likely move in conjunction with AMD stock until the acquisition closes. The deal is still subject to approval from regulatory committees and both companies' shareholders, but it will likely go through before the end of next year. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Xilinx. The Motley Fool has a disclosure policy.

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