What happened

Shares of Advanced Micro Devices (AMD -0.43%) gained 16.8% in October 2021, according to data from S&P Global Market Intelligence. The semiconductor designer reported robust results near the end of the month, but that particular event didn't move share prices very far. Instead, the stock made several smaller leaps based on product launches, contract wins, and analyst reports.

So what

AMD's good times started rolling when the Radeon RX 6600 graphics card hit store shelves on Oct. 13. Reviewers hailed the card as an effective combination of robust performance and low power draws at an attractive price point, especially under the price-boosting influence of the ongoing shortage of chip manufacturing services. Of course, it isn't AMD's highest-end graphics processor, but gamers get a lot of bang for the buck here. AMD shares rose 4% on Oct. 14 due to this release.

A 2% gain followed the next day, powered by a bullish report from analyst firm Goldman Sachs. AMD kept its spot on Goldman's "conviction list" and was analyst Toshiya Hari's best idea in the semiconductor industry. Hari expected a strong earnings report with share gains in server products and an improved supply chain.

Next, AMD's Ryzen Threadripper PRO processors found their way into the server side of cloud-based gaming service GeForce NOW. The GeForce brand is the time-honored archrival of AMD's Radeon graphics, so it raised some eyebrows in the gaming community when GeForce maker Nvidia selected an AMD component. However, Nvidia doesn't make x86-compatible processors of its own, so it had to pick one of its chief rivals to play that role. Hence, AMD plays an essential part in Nvidia's gaming service ambitions. AMD shares rose 3% on this announcement.

A microchip peeks out from a pile of dollar bills in large denominations.

Image source: Getty Images.

Now what

The backdrop to this chain of modest pops was a generally rising stock chart, as investors got more comfortable with high-priced growth stocks like AMD. Ultrasafe investments were pushed back by a halt to the rising yield rates on U.S. Treasury notes. And, of course, AMD cemented its gains with a solid earnings report on Oct. 26. Earnings increased by 78% year over year, landing at $0.73 per diluted share. Revenue surged 54% higher to $4.3 billion.

The report exceeded Wall Street's expectations across the board as Goldman's projections turned out to be on target -- and AMD shares closed 0.5% lower the next day. The good news had been priced into the stock well in advance.

AMD sure is making the most of the supply shortage and other quirks of the current semiconductor market. I'm still not completely convinced that the company should be worth $181 billion on the open market, but the overheated valuation sounds less and less crazy with each analyst-stumping earnings report.