Wall Street is growing more optimistic about the technological path Advanced Micro Devices (ticker: AMD) has laid out for itself.
On Tuesday, the company held a showcase that unveiled new details about the products it is planning. At the event, AMD also announced its EPYC server processors were now available for use on the leading cloud-computing provider, Amazon.com's (AMZN) Amazon Web Services. The company's stock rose 3.9% during Tuesday's trading session.
Jefferies analyst Mark Lipacis reiterated his Buy rating for AMD stock, saying the Amazon deal will spur more gains for the company's server chip business.
"We view the AWS announcement as particularly noteworthy and believe it could cause other cloud players to deploy AMD server MPU instances," he wrote on Tuesday. MPUs are microprocessor units.
AMD stock rose 4% on Wednesday to $21.50.
According to Gartner, Amazon Web Services was the leader in cloud computing with a 52% market share last year, followed by Microsoft (MSFT), Alibaba Group Holding (BABA), and Alphabet's (GOOGL) Google.
Lipacis predicts AMD's new server-chip offering, named "Rome," which the company said will be launched in the middle of next year, will lift the company's share of the server-chip market to a double-digit percentage by 2020 versus an estimated 5% at year-end.
The analyst reaffirmed his target of $30 for AMD's stock price.
In similar fashion, Cowen analyst Matthew Ramsay reiterated his Outperform rating for AMD shares. He has a $26 price forecast for the stock.
"We attended AMD's 7nm product event that showcased a strong roadmap that should align well with our share gain thesis," he wrote on Tuesday. "We've long believed that Rome would be a breakthrough product in terms of the competitive landscape between AMD and Intel, and the presentations gave no dent to the thesis."
Intel (INTC) has suffered from repeated delays in moving to 10-nanometer chip-manufacturing technology, while AMD, its chief rival, expects to produce 7nm server chips in volume next year.
One nanometer equals one-billionth of a meter. Smaller nanometer chipmaking technologies historically have allowed companies to create faster, more power-efficient chips.
AMD stock has rallied more than 100% this year on rising expectations it will gain market share from Intel due to its increasingly competitive chip technology.