AMD's stock (NASDAQ:AMD) recently hit a historic high on widespread optimism regarding the growth of its CPU and GPU businesses. However, investors sitting on multibagger gains are probably wondering if the chipmaker still has room to run in 2020. Let's weigh the bullish and bearish cases for AMD to decide.

What the bulls think about AMD

AMD once struggled to effectively compete against Intel (NASDAQ:INTC) in x86 CPUs and NVIDIA (NASDAQ:NVDA) in discrete GPUs. But that all changed after industry veteran Lisa Su took the CEO job in late 2014.

AMD CEO Lisa Su.

Image source: AMD.

Su plowed AMD's rising cash flows, which mainly came from sales of APUs for the PS4 and Xbox One, into the development of new CPUs and GPUs that would match the performance of Intel and NVIDIA's chips at lower price points.

That bold strategy succeeded. AMD's Ryzen CPUs gained ground against Intel in the PC and data center markets, and Intel fumbled its counterattack with an abrupt CEO change and a chip shortage. AMD's new Radeon GPUs also held NVIDIA's GeForce GPUs at bay throughout the first half of 2019.

Between the first quarters of 2015 and 2020, Intel's share of the CPU market fell from 76.4% to 63.6%, according to PassMark. AMD's share grew from 23.5% to 36.3%.

Between the third quarters of 2015 and 2019, NVIDIA's share of the discrete GPU market slipped from 81.1% to 72.9%, according to research firm JPR. AMD's share grew from 18.8% to 27.1%. Moreover, AMD's gross margin actually expanded over the past five years, indicating that the chipmaker hasn't been swapping margins for sales growth.

AMD Gross Profit Margin (Quarterly) Chart

Source: YCharts

AMD also remained the main chipmaker for Sony's (NYSE:SNE) PS5 and Microsoft's (NASDAQ:MSFT) Xbox Series X, both of which will launch in late 2020. The bulls believe that all these tailwinds will continue throughout the year and lift the stock to fresh highs.

Analysts expect AMD's revenue to rise just 4% this year, then accelerate to 27% growth next year. They expect its earnings to grow 35% this year, then grow another 79% next year. Those forecasts justify its forward P/E of 44, and indicate that the stock still has room to run before overheating.

What the bears think about AMD

Meanwhile, the bears believe that it's only a matter of time before Intel and NVIDIA strike back. AMD is currently producing 7nm chips as Intel struggles to fix its 14nm production issues and ramp up its production of 10nm chips. However, Intel could catch up to AMD with 7nm chips by 2021.

GPUs being used to mine bitcoin.

Image source: Getty Images.

NVIDIA's new Turing GPUs slightly beat AMD's latest Navi GPUs in head-to-head performance benchmarks, but AMD's GPUs only offer marginally less horsepower at much lower prices. However, NVIDIA has been actively targeting the low-end market with impressive cards like the GTX 1650 Super, which only costs about $160, and it could continue to pursue budget gamers this year.

Intel and NVIDIA both have deeper pockets than AMD, and could significantly ramp up their R&D and marketing efforts to throttle AMD's growth. Intel also recently announced its first discrete GPU, DG1, which could eventually compete against NVIDIA and AMD's GPUs.

AMD could also face 7nm production bottlenecks at its foundry TSMC as other chipmakers, including Apple, ramp up their production of 7nm chips. A disruption of AMD's supply chain could soften its defenses against Intel and NVIDIA.

Lastly, the bears will note that AMD's insiders sold nearly 39 million shares over the past 12 months but didn't buy a single share on the open market. That lack of insider interest strongly suggests that AMD's stock has gotten ahead of its business.

Should you chase AMD's rally?

I think there are compelling reasons to both buy and sell AMD's stock. However, I believe that AMD's CPU and GPU businesses will continue to flourish as long as Lisa Su leads the company. Intel and NVIDIA will inevitably strike back, but AMD will likely hold its ground with new Ryzen, Eypc, and Radeon chips.

The PS5 and Xbox Series X will give its EESC (enterprise, embedded, and semi-custom) business a big boost in late 2020, and AMD will likely funnel that cash into its development of new CPUs and GPUs. Therefore, I strongly believe investors can still accumulate shares of AMD at its all-time high.