Advanced Micro Devices Surging Amid Analyst Adulation

Advanced Micro Devices, Inc. (AMD) is surging again this week, declining 0.1% as of 10:31 a.m. in New York and up about 10% since Monday's open as analysts add to the excitement for the resurgent chip-maker.

The jump in share price adds to a gangbusters 2018 for the technology competitor, as shares of the Santa Clara, California-based semiconductor company have nearly tripled year to date, moving from around $10 per share to nearly $30 in pre-market trading on Tuesday.

AMD is gaining momentum as the company is lining up a range of promising Ryzen processors, Vega GPUs and Epyc processors, growing demand across fast-growing new industries like AI and autonomous driving, high-profile clients like Baidu and previously bearish analysts projecting further market share growth.

"For most of the past 12 years, Intel has executed near flawlessly, as AMD often stumbled and lost (market) share," Jefferies Financial (JEF) analyst Mark Lipacis wrote in a note last week. "However, over the past four years, AMD's, and its foundry partner TSMC's, execution has been, in our view, near-flawless."

For reference, four years ago the company was hovering lower than $5 per share and reached a low of about $1 by 2016. So, in 2 years, the company has reversed its fortunes and had a 30-fold increase in share price.

Intel Corporation (INTC) , one of the main competitors to AMD and its data center business, has fallen nearly 10% since the start of the third quarter of this year by contrast.

On the back of the continued success from its time in the desert, Jefferies raised their price target for AMD on September 3 from $22 to $30, a nearly 27% increase on their prior target, in the belief that they can continue to succeed in spite of the competition.

The company has outpaced the PHLX Semiconductor Index by a wide margin this year, as the index has climbed just 7% on the year.

"AMD remains a top 'tectonic shift' pick," Lipacis concluded.

Leadership Lights the Way

One of the notable changes as the company has rebounded so rapidly is the ascension of Dr. Lisa Su to the CEO chair just three years ago.

The former electrical engineer has overseen a serious turnaround at the company that has seen it regain prominence not seen for the semiconductor company for about 10 years.

"We had an outstanding second quarter with strong revenue growth, margin expansion and our highest quarterly net income in seven years," Su told analysts in a statement on the day of the company's second quarter earnings. "Most importantly, we believe our long-term technology bets position us very well for the future. We are confident that with the continued execution of our product roadmaps, we are on an excellent trajectory to drive market share gains and profitable growth."

Confidence in her ability to continue this growth trajectory led Wells Fargo WF senior analyst Aaron Rakers to follow suit alongside Jefferies, raising his price target on September 9.

"With a positive view on AMD's ability to drive over $2 billion per annum in server CPU revenue, coupled with forthcoming 7nm GPUs and a belief that investors could start to consider a next-gen game console cycle as a positive on AMD's Semi-Custom segment, we're increasing our AMD target price to $34," he wrote.

Su will be featured in an interview with Real Money founder and AAP portfolio manager Jim Cramer tonight on CNBC, wherein she will detail her plan to sustain the company's turnaround.

Pumping the Brakes?

With such a meteoric rise for a company that not too long ago was teetering on the brink of being a penny stock, not all analysts and experts are ready to jump on board.

Some are wary that the euphoria surrounding the company's climb might precede a fall back to earth.

For example analysts from both Deutsche Bank AG (DB) and BMO Capital Markets are slating price targets 50% of more below the current share price, leaving a precipitous plunge a possibility should their suspicions be warranted.

Further, as the company still faces an uphill struggle in GPUs against stalwarts like NVIDIA Corporation  (NVDA) , there is reason still for caution on the hot stock.

Intel Corporation declined 0.9% and NVIDIA Corporation dropped 0.3%.