Shares of Advanced Micro Devices (NASDAQ:AMD) surged 61% higher in 2013. The processor designer easily crushed the S&P 500 benchmark index, while chief rivals Intel (NASDAQ:INTC) and NVIDIA (NASDAQ:NVDA) struggled to keep pace with the market. Can AMD keep the fires burning in 2014?

AMD Chart

AMD data by YCharts.

Before looking ahead, let me just remind you that AMD's 2013 jump was more of a bounce off the bottom than a healthy growth story. The stock plunged 57% in 2012 and AMD's trailing earnings haven't been positive since 2011. This is a turnaround story in the making, with all the tremendous potential gains and huge operating risks that entails.

That said, Wall Street analysts do expect AMD's turnaround story to continue. The average forecast for 2014 points to adjusted earnings of $0.12 per share, up from a $0.12 estimated loss per share in 2013. Revenue is supposed to spike 11% higher this year, which would be AMD's strongest annual sales growth since 2010.

Jefferies analyst Mark Lipacis supported his optimistic forecast this way: "We hosted client meetings with AMD's CFO over the last two days, and left thinking the Street was not giving credit to AMD's gaming solutions, nor to AMD's potential to win back share in both notebooks and discrete graphics."

So AMD's future isn't completely chained to the ailing PC market. Lipacis noted opportunities for AMD to steal market share from NVIDIA in graphics and from Intel in notebook systems, but the "gaming solutions" comment hints at a larger trend.

AMD may not design chips for smartphones and tablets, but the company did produce semicustom chips for all three of the next-generation gaming consoles. And outside the attractive but relatively low-volume console market, AMD is open to designing custom solutions for any embedded computing situation. Two years ago, only 5% of AMD's sales weren't tied to PC systems; today, that ratio has surged to 30% as AMD diversified. Expect this trend to continue.

So AMD is looking at a fine opportunity to execute on the semicustom market in 2014. To do that, the company must spread the word of its custom design services and win the trust of the world's major electronics manufacturers.

But it's a race against time. AMD is burning cash in almost every quarter and not paying down a crushing debt load that results in $178 million of annual interest payments. The company operates with five times more debt than shareholder equity.

AMD's dwindling cash reserves won't last forever, and banks might grow tired of underwriting big loans to this cash-burning company. If AMD's turnaround doesn't accelerate into reliable cash profits in 2014, the company might be done for.

AMD Free Cash Flow (Quarterly) Chart

AMD Free Cash Flow (Quarterly) data by YCharts.

This is an extremely high-risk and high-reward situation, sink or swim, and it's better suited for gamblers than serious investors. If you simply must buy AMD shares today, make sure to stick to an amount you could afford to lose.

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Fool contributor Anders Bylund owns shares of Intel. The Motley Fool recommends Intel and Nvidia. The Motley Fool owns shares of Intel. Try any of our Foolish newsletter services free for 30 days.

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