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Why Did AMD Stock Pop on Wednesday Morning?

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After starting the day relatively flat, shares of Advanced Micro Devices (AMD - Free Report) suddenly popped more than 8% in morning trading Wednesday. The sudden spike seems to be linked to an unsubstantiated rumor that the trendy chipmaker could be the subject of a takeover.

Details about this supposed takeover chatter are sparse. Investors throughout the financial social media space seem to be crediting the rumor for today’s bounce, but no specifics have emerged yet. The chatter has garnered very little coverage from established media sources, although Seeking Alpha editor Clark Schultz said that the talks have started to “circulate around trading desks.”

This is not the first time that AMD has been the subject of rumors based on thin evidence. A few months ago, a report suggesting that the company was working with Tesla (TSLA) on AI processors for self-driving vehicles led some to speculate that Elon Musk’s electric car giant could be interested in the semiconductor brand. However, confirmation that the two companies were even working together never came (also read: Investors Bullish on AMD's AI Partnership with Tesla).

But unsubstantiated rumors are not the only reason to be optimistic about AMD on Wednesday. In a more verifiable report, DigiTimes said that Taipei-based motherboard manufacturer ASRock is planning to introduce a graphics card product using AMD Radeon-based chips as early as April.

Meanwhile, even more rumors and leaks could be fueling AMD’s bullish surge today. On a South Korean tech forum, a user published leaked benchmarks for what could be a second-generation AMD Ryzen processor. The reported CPU speeds were impressive, and considering that the Ryzen brand is AMD’s strongest challenge to rival Intel (INTC - Free Report) , a new high-end processor on the way soon is probably good news for investors.

AMD is currently sporting a Zacks Rank #3 (Hold), as well as an “A” grade for Growth in our Style Scores system. The Zacks Consensus Estimate for the company’s full-year earnings has moved four cents higher over the past 60 days, and we now expect AMD to witness EPS growth of nearly 124% this fiscal year. Total revenues are also projected to expand by about 15%.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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