Intel’s acquisition of Altera is getting mixed reactions from analysts even though the stocks of the both companies pulled up following the news. Analysts have different opinions on the long-term impacts of this deal on the stocks.

Intel Corporation, Altera Deal Gets Gets Mixed Reactions

Intel – Altera deal gets some nods

Intel, which quoted a price of $54 per share or $16.7 billion for Altera, expects the deal to boost its data center group at a time when peers are occupied with producing chips for mobile devices. Though there were mixed comments from analysts, many underlined the growth potential in data center profits as a cause to invest in Intel.

Canaccord Genuity analysts Matthew D. Ramsay and Steven Lee assigned a Buy rating to Intel, considering some short-term synergies this deal can produce. The research firm believes that the deal will benefit the company as customers will be able to control their own algorithms with the help of more customizable server SKUs.

Separately, MKM Partners analyst Ian Ing stated that Intel’s acquiring Altera is an indication of efficient semiconductor models returning to manufacturing vertical integration. Also Pacific Crest Securities analyst Michael McConnell is positive on the deal, seeing it as an upcoming challenge for companies such as Nvidia and TSMC.

Jefferies analyst Mark Lipacis notes that Intel’s data center profit will likely exceed that of client computing for the first time in 2017 and will reflect the transformation of Intel from PCs to data centers. Lipacis assigned a Buy rating with a price target of $48. Data centers posted an increase of 19% in year over year revenue to $3.7 billion in the first quarter, but the Client Computing Group, the company’s largest revenue contributor, saw a decline in revenue by 8% year over year to $7.4 billion.

Not all in favor of deal

BMO Capital analyst Ambrish Srivastava stated that they are not encouraged with Intel’s decision to buy Altera. Srivastava said that there is a lack of solid reason or opportunity in this deal. Also the analyst differed from Intel’s guidance of 7% CAGR for the business. Srivastava said that they do not see how this deal is going to add value to shareholders in the long run. BMO assigned an Overweight rating to the chip maker with a price target of $37.

Also Credit Suisse analyst John Pitzer gave “mixed views on the acquisition specifically on the more critical side” but assigned an Outperform rating with a price target of $40.

On Tuesday, Intel shares closed down 1.87% at $33.27, and year to date, the stock is down by almost 10%.