ON Semiconductor's (ON) planned all-stock acquisition of Synaptics (SYNA) for about $7 billion appears to be a pivot away from its intended focus on data centers for artificial intelligence applications, Truist Securities said in a note Thursday.

The brokerage said the company appeared to be focused on "growing exposure to the data center venue of AI applications primarily through sophisticated power solutions," but the Synaptics deal seems to be a move toward edge AI solutions instead.

The transaction, however, presents an opportunity to drive margins and sales growth through cross-selling and integrations, the brokerage said. Estimated cost synergies from the acquisition point to a 4% accretion to earnings per share in 2028, according to the note.

Truist Securities maintained its hold rating and $101 price target on ON Semiconductor.

Shares of ON were down more than 14% in premarket activity Friday, while Synaptics stock was up 3%.