Advanced Micro Devices (AMD -4.24%) stock has headed south in 2021, as investors seem to be concerned about the stiff competition the chipmaker may face from rivals Intel (INTC -5.16%) and NVIDIA (NVDA -2.68%). But Wall Street analysts believe that the sell-off isn't justified.

Analysts from Raymond James and Bank of America have an outperform rating on AMD stock with a price target of $100. Both firms have reminded investors that the chipmaker will continue to hold a competitive edge over Intel for the next few years. AMD has been eating into Intel's market share in 2021 thanks to its technological superiority, and the situation is unlikely to change anytime soon.

Here's why you should consider taking Wall Street's advice and go long on AMD stock.

Person pressing the buy button on a keyboard.

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AMD's advantage is here to stay

Raymond James predicts that AMD will hold an advantage over Intel in the CPU (central processing unit) market through 2024. Bank of America analysts also have a similar view, estimating that Intel may not be able to catch up to AMD for at least a couple of years until its 7-nanometer (nm) chips arrive.

BofA estimates that AMD could build an unassailable lead over Intel by then and take away more market share from Chipzilla. The firm expects Chipzilla to cede at least three percentage points of market share to AMD over the coming years.

On the other hand, Raymond James analyst Chris Caso cites the uncertainty surrounding Intel's plans for chip manufacturing and its ability to overcome the product development setbacks it has faced over the past few years. This is the reason why Caso is telling investors to buy AMD over Intel.

It is easy to understand why Wall Street is gunning for AMD to take away more market share from Intel. The company's latest Ryzen 5000 series processors have been selling like hotcakes even though they carry premium pricing. Additionally, AMD is on track to place its Ryzen 5000 processors inside 50% more notebooks and laptops this year, compared to the Ryzen 4000 chips that went into 100 laptop and notebook designs last year.

AMD has already taken a big chunk of the x86 processor market away from Intel over the past few years. The trend is likely to continue over the next few years as Intel plays catch-up, giving customers an incentive to buy AMD's processors because of their superior performance.

NVIDIA's data center entry shouldn't be a concern

NVIDIA's entry into the server processor market has spooked AMD investors. The chipmaker has launched the Grace CPU to attack the massive opportunity in the server processor market, where Intel is the dominant player right now and AMD is climbing up the charts.

But it may be too early to worry about NVIDIA's entry into this market, as the chipmaker specializes in graphics cards and not CPUs. AMD's server processors are now in their third generation after the launch of the EPYC 7003 series, so NVIDIA will have to catch up on this front. AMD claims that the new EPYC processors have been selected for use by top cloud service providers and server OEMs (original equipment manufacturers).

The chipmaker anticipates that the EPYC processors will power 400 cloud instances by the end of 2021. AMD had pointed out in its January earnings conference call that its cloud instances doubled in 2020 to just over 200, which means that the company anticipates another two-fold jump this year. Additionally, the chipmaker expects the new EPYC processors to be on 100 new server OEMs by the end of 2021.

According to data from Mercury Research, AMD had finished the fourth quarter of 2020 with a 7.1% server market share. Intel held the rest of the market, but it ceded 2.6 percentage points of market share to AMD during the year. It remains to be seen how NVIDIA's entry affects AMD's data center momentum this year, but the latter could keep gaining market share considering the partnerships it claims to have struck.

So, AMD stock could reverse course and start heading north as potential market share gains translate into a stronger financial performance. This is why Wall Street is bullish about AMD and anticipates substantial upside from this tech stock.