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Why AMD Stock Surged to a New All-Time High Today

By Joe Tenebruso – Updated Aug 4, 2020 at 4:36PM

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The now $100 billion chipmaker is poised for massive market share gains.

What happened

Shares of Advanced Micro Devices (AMD -1.17%) jumped 9.5% to a new closing high of $85.04 on Tuesday, following bullish analyst commentary and the launch of a new product.

So what 

Jefferies analyst Mark Lipacis reiterated his buy rating on AMD's stock and boosted his target price from $86 to $95. Lipacis expects AMD to rapidly gain share in the coveted server market, due in part to Intel's (INTC 0.02%) struggles with its transition to new 7-nanometer chips. Lipacis predicts that Intel's delays will help AMD capture 30% of the server market within the next three years and as much as 50% within the next half-decade, up from about 10% today. 

A person is pointing to an upwardly sloping digital stock chart.

Advanced Micro Devices' stock hit a record high on Tuesday. Image source: Getty Images.

While Intel struggles to bring its new 7nm chips online, AMD is marching ahead. On Monday, AMD announced that its new 7nm AMD Radeon Pro 5000 series graphics processing units (GPUs) for Apple's updated 27-inch iMac were available for purchase.  

AMD Vice President Scott Herkelman said the following in a press release:

The new AMD GPUs offer the optimal combination of compute performance, energy efficiency and outstanding graphics features to power a wide range of applications -- from consumer to pro -- wherever graphics matter the most.

Now what 

When your competitors stumble, it's wise to press your advantage. AMD knows this, and it's making all the right moves to wrestle away market share from the once-mighty Intel. Investors, in turn, are growing more optimistic about AMD's growth prospects, and its stock price is rising in kind.

Moreover, if Lipacis is correct and AMD gains control of half the server market, shareholders could enjoy fortune-building gains in the coming years.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.

Stocks Mentioned

Advanced Micro Devices Stock Quote
Advanced Micro Devices
AMD
$69.64 (-1.17%) $0.82
Intel Stock Quote
Intel
INTC
$28.45 (0.02%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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