Will Advanced Micro Devices stock hit $200? One Wall Street firm thinks so.

Rapidly growing demand for Advanced Micro Devices‘ (AMD 1.40%) Data center chips pushed the stock to $227 earlier this year. The stock is now off those highs — around $157 — and offers an attractive entry point, according to Wedbush.

The firm maintained an “outperform” (buy) rating on the stock this week and kept its price target at $200, which implies a 27% upside from the current share price.

Wedbush is bullish on AMD’s recent acquisition of ZT Ssystems, a leading provider of artificial intelligence (AI) infrastructure for data center operators. Here’s what it means for AMD’s growth and why it could help the stock return to its previous high.

Why AMD stock is worth buying

AMD announced Monday that it is acquiring ZT Systems in a cash and stock transaction. “ZT adds world-class systems design and rack-scale expertise that will significantly strengthen our data center AI systems and customer service capabilities,” AMD CEO Lisa Su said in a statement.

Some investors see the takeover as a desperate attempt to catch up Nvidiawhich dominates the market for high-performance graphics processing units (GPUs) and AI systems for data centers.

Wedbush disagrees. The company likes that AMD was able to acquire ZT at a discounted valuation. AMD will want to sell ZT’s manufacturing assets and keep its more valuable design and services business.

Most importantly, Wedbush sees the $4.9 billion deal as a validation of AMD’s growth potential in the growing $236 billion data center market. AMD is growing right along with it. Data center revenue skyrocketed 115% year over year in the latest quarter, and the acquisition of ZT Systems should only strengthen the offering for the world’s leading data center players.

AMD continues to see weak demand in other areas of its business, such as gaming GPUs, but once the company is back to full speed, the stock could see a significant increase above analysts’ price targets.