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Xilinx-AMD Deal Talk Sends Nasdaq Surging; Mizuho Bids Up eBay

Stocks were headed higher on Friday, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) once again led the way. After some fits and starts, it now looks as though there might indeed be a federal government stimulus package before the election, and market participants were pleased to see potential targeted support for particularly hard-hit industries. As of just before 3 p.m. EDT, the Nasdaq was up more than 1%.

Getting the attention of investors early Friday were reports that Xilinx (NASDAQ: XLNX) could be an acquisition target, which sent shares of the programmable chipmaker higher. eBay (NASDAQ: EBAY) also saw solid gains following favorable comments from stock analysts.

Shareholders like the idea of an AMD-Xilinx combination

Xilinx jumped 14% Friday afternoon in the wake of takeover rumors. According to reports, Advanced Micro Devices (NASDAQ: AMD) might emerge as the potential bidder in a purchase that could bring a price tag of $30 billion or more. AMD shares were down 4%.

Image source: Getty Images.

There are plenty of ways in which an AMD-Xilinx merger would make sense. The 5G wireless network upgrade cycle is approaching quickly, and it should have a big impact on the industry and demand for chips. In particular, the programmable chips that Xilinx makes are especially useful because they aren't locked into a single type of application throughout their lives. As needs change, IT specialists can reprogram the chip to fulfill different tasks.

In some ways, a tie-up like this almost seemed inevitable. With NVIDIA (NASDAQ: NVDA) looking to acquire Arm Holdings and Analog Devices (NASDAQ: ADI) having purchased Maxim Integrated Devices earlier this year, AMD was in some danger of falling behind the curve.

As of Friday afternoon, AMD hadn't confirmed the reports, and some on Wall Street aren't convinced that it will actually happen. Nevertheless, Xilinx shareholders appear to be excited at the prospects for consolidation in the semiconductor industry at a critical time.

eBay gets a vote of confidence

Elsewhere, shares of eBay got a lift, rising 7%. The e-commerce marketplace got positive comments from a stock analyst, although it didn't get an unqualified recommendation.

Analysts at Mizuho boosted their price target on eBay by $3 per share. That brought their call on the stock price up to $55, which corresponds quite nicely to the gain in the stock today. However, Mizuho kept a neutral rating on the stock, choosing not to do a full upgrade.

Mizuho is optimistic about how eBay will perform this quarter. The analysts observed that search traffic growth appears to be getting more robust, which bodes well for gross merchandise volume figures for the auction site and online marketplace. That matches up well with comments earlier this week from Piper Sandler, which believes that forward revenue guidance for eBay looks unrealistically low.

eBay has been under fire for a while, with many shareholders not being certain whether the company would be able to find a niche between the dominance of (NASDAQ: AMZN) and the emergence of up-and-coming e-commerce facilitators like Shopify (NYSE: SHOP). Today's comments from Mizuho won't solve all of the challenges that eBay faces in the business world, but it was enough to make investors feel good going into the weekend.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, NVIDIA, and Shopify. The Motley Fool recommends eBay and Xilinx and recommends the following options: long January 2021 $18 calls on eBay, short January 2021 $37 calls on eBay, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.


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