Cowen is more optimistic on AMD's future gains in the server chip market after meetings with the company's chief executive.
The firm raised its price target for AMD shares to $25 from $21, predicting the chipmaker will report better-than-expected profits in 2019. The stock closed at $18.94 Friday.
On Thursday AMD shares rose 14 percent, a day after it reported better-than-expected second-quarter sales and earnings results.
"Following AMD's strong 2Q18 results and de-risked 2H18 outlook posted last Wed, we hosted CEO Dr. Lisa Su for meetings in NYC on Thurs.," analyst Matthew Ramsay said in a note to clients Monday. "Investor interest was high and the message was upbeat but still unsatisfied, as management is determined to capitalize on share gain opportunities in datacenter and client markets. Dr. Su's message was AMD is just getting started; we agree."
AMD sells high profit margin server chips to data centers and cloud computing providers, which companies use to add capacity to serve their customers.
The company's shares rose 2.5 percent Monday. Its stock price has risen 88.9 percent this year through Monday versus the S&P 500's 4.8 percent gain. The year-to-date return is the second best stock performance in the S&P 500.
Ramsay also reiterated his outperform rating on AMD shares.
The analyst noted Intel's guidance last week that said its 10-nanometer chips will be released for holiday 2019 compared with AMD's 7-nanonmeter products' launch later this year.
One nanometer equals one-billionth of a meter. Smaller nanometer chipmaking technologies allow companies to create faster, more power-efficient chips.
"We believe investors have turned focus toward AMD's core businesses poised to benefit from substantial share gain opportunities against Intel in the PC and datacenter CPU markets (supplemented by modest datacenter GPU gains) as 7nm products ramp later this year and more fully in 2019," he said.
As a result, the analyst predicts AMD will generate earnings per share of 82 cents in 2019 versus the Wall Street consensus of 62 cents.
— CNBC's Michael Bloom contributed to this story.