NEW YORK (AP) -- Shares of Advanced Micro Devices Inc. climbed Monday following a Barron's report that said the chipmaker's stock could rise substantially if its acquisition of SeaMicro is a success.
THE SPARK: The report over the weekend said that SeaMicro could help AMD take share of the mainstream server-computer market, where rival Intel Corp. does the bulk of its business.
"SeaMicro's technology looks good; its management team, astute; and the market opportunities, promising," the article said.
THE ANALYSIS: Hans Mosesmann of Raymond James said in a client note Monday that AMD should be able to gain some share in the mainstream server-computer market and become a key player. But the analyst said that he doesn't think this will be the biggest opportunity for AMD, pointing out that SeaMicro probably makes up less than 5 percent of total sales as it stands today.
Mosesmann estimates that gaming consoles could be an approximately $1 billion revenue opportunity for AMD next year, as the company will be powering Sony Corp.'s new PlayStation 4 and Microsoft Corp.'s latest Xbox.
The analyst said that AMD is an undervalued stock whose server prospects are the best they've been in years, but still favors Applied Micro Circuits Corp.
Mosesmann maintained an "Outperform 2" rating.
A representative for AMD did not immediately respond to an email seeking comment.
SHARE ACTION: Up 11 cents, or 2.8 percent, to $4.05 in morning trading. Over the past year, the stock has traded in a range of $1.81 to $6.09. Year to date, shares are up 64.2 percent.