Shares of Advanced Micro Devices (AMD 2.68%) rose 6.2% on Wednesday, following an analyst upgrade.
Goldman Sachs analyst Toshiya Hari raised his rating on AMD's stock from neutral to "conviction buy" and boosted his price forecast from $84 to $96. Hari's new target price represents potential gains to investors of roughly 18%, compared to the stock's closing price of $81.35 on Wednesday.
Hari highlighted AMD's market share gains in the massive personal computer and server markets, as well as the chipmaker's improving profit margins. He expects these trends to drive AMD's earnings growth above Wall Street's expectations. In turn, Hari says the stock's recent decline from its highs is offering investors a "compelling" investment opportunity.
AMD is benefiting from the struggles of its archenemy Intel (INTC 1.29%), which has suffered costly production delays for its next-generation chips. Hari acknowledged Intel's issues as part of the reason for his bullishness on AMD. He also reiterated his sell rating on Intel's shares and slashed his price forecast on the lumbering chip giant's stock from $46 to $38.
Intel's pain is likely to remain AMD's gain in the quarters ahead. And its stock appears poised to hit -- and perhaps, surpass -- Hari's new $96 target price in the coming year.