When analysts speak, markets move. Their notes often become self-fulfilling prophecies, at least in the short term. The analyst firm's clients make investments based on these research notes, and then those voices echo across the Street.

Sometimes the analyst is wrong, and the ripples of the latest upgrade or downgrade disappear like words written in running water. And sometimes the analyst action makes sense, with long-lasting effects.

Today, Jefferies upgraded Advanced Micro Devices (NYSE: AMD) to a buy with a  $10.50 price target. Shares of the oft-overlooked processor designer jumped as much as 6.3% on the news.

Turning 180 degrees
AMD is listed in Jefferies' CAPS page as a longtime "underperform" call and easily the most pessimistic semiconductor call in the firm's active portfolio. This is a whole new direction in the company's AMD coverage. So what's the fresh insight that drove Jefferies to this dramatic change of heart?

There's no single massive catalyst here, but rather a combination of factors. The firm notes that AMD is trading at a very low valuation, comparable to the enterprise value to sales ratios seen when AMD buckled under a $4 billion debt load. But that debt is long gone, reducing the risk of owning these shares. Consequently, AMD should trade at higher multiples nowadays.

The value angle is supported by market share gains against industry giant Intel (Nasdaq: INTC), particularly in the consumer notebook market. "We think share gains continue and improving manufacturing yields could translate to upside surprises," says Jefferies.

All in all, the firm's verdict is that AMD's risk/reward ratio looks terrific. Jefferies is not wrong there.

The other side of the coin
But I do find it curious that the firm turns bullish on a PC chip maker while a different analyst at the same firm slashed his outlook for the PC market as a whole.

Jefferies cut its earnings estimates for both Dell (Nasdaq: DELL) and Hewlett-Packard (NYSE: HPQ), noting that system sales should fall about 3% in 2012. That analyst cites a plethora of roadblocks to success in the PC segment this year, including the launch of systems running Windows on chips based on ARM (Nasdaq: ARMH) technologies rather than Intel's or AMD's. Both of Jefferies' analysts' views can't be right, unless AMD really does steal a lot of market share from its larger rival.

All things considered, I think that both halves of Jefferies are onto something. I agree that AMD is undervalued, but I also agree that the PC market is risky. I'd be comfortable owning AMD at these prices but you might sleep better at night after stocking your portfolio with post-PC alternatives instead. Check out these three hidden winners of the iPhone, iPad, and Android revolution, for example.