NEW YORK (CNN/Money) - Shares of chipmaker Advanced Micro Devices shot up at the market open on Monday following a Barron's report on Saturday that projected the company's shares could reach $50 in two years.

After the market open, AMD (up $0.39 to $23.37, Research)'s shares were trading up about 5 percent from Friday's closing price of $22.98. The stock is up about $10 from a year ago and has tripled in the past three years. AMD is number two chipmaker trailing its larger rival, Intel.

Barron's cited AMD's market share gains in the high-end processor business, coupled with its plans to spin off its flagging flash memory business, as reasons it is bullish on AMD, which it called a "plucky upstart."

Analysts say AMD has gained market share over Intel by making technologically superior microprocessors for the server market, which boasts higher profit margins than the PC market. Intel still maintains a comfortable lead in the PC market.

Intel and AMD have also been fighting a bitter legal battle. AMD filed an antitrust complaint against Intel in a U.S. federal district court in June, claiming Intel used its heft, as well as cash payments, to coerce computer makers like Dell and Hewlett-Packard into not using AMD chips.

Intel says its business practices are fair and lawful and that AMD "seeks to shield itself from the competition and impede Intel's ability to lower prices."

Shares of chipmaker American Micro Devices have been trading up in the five percent range on Monday, which analysts believe is in part a response to a Barron's report on Saturday that projected AMD's shares could reach $50 in two years.

After the market open, AMD's shares were trading up about 5 percent from Friday's closing price of $22.98. The stock is up about $10 from the range it was trading in a year ago and has tripled in the past three years. AMD is number two behind its much bigger rival, Intel.

Barron's cited AMD's market share gains in the high-end processor business, coupled with its plans to spin off its flagging flash memory business, as reasons it is bullish on AMD, which it called a "plucky upstart."

Analysts say AMD has gained market share over Intel by making technologically superior microprocessors for the server market, which boasts higher profit margins than the PC market. Intel still maintains a comfortable lead in the PC market.

Intel and AMD have also been fighting a bitter legal battle. AMD filed an antitrust complaint against Intel in a U.S. federal district court in June, claiming Intel used its heft, as well as cash payments, to coerce computer makers like Dell and HP into not using AMD chips.

AMD gained market share over Intel when it introduced its Opteron chips to the server market. Opteron chips were not only more powerful, but were also designed to consume less power than other chips. Analysts say power consumption is now a big issue for IT managers, because conserving power also provides cost savings to companies.

With the introduction of the Opteron chip, AMD began snagging big clients like Sun Microsystems and Hewlett-Packard to put chips in their servers because of the architectural improvements and performance advantages over Intel's server chips, analysts say.

AMD's technological advantage over Intel in the server market is important not because of the size of the business, but because of its margins.

"The server side is not the largest part of the PC market by units, but it's very profitable," said Christopher Caso, senior vice president and analyst at Friedman, Billings, Ramsey & Co. "That is where AMD has an advantage."

Added Mona Eraiba, an analyst at Rosetta Group Research, "The Opteron server chips are creating a lot of the momentum behind AMD. It's a powerful chip. From a point of view of architecture, it's pretty impressive. It's been adopted by a lot of server suppliers and is gaining share over Intel in that marketplace."

AMD also tripped up Intel by rolling out a 64-bit processor that did not require customers still using software designed for 32-bit processors to upgrade all of their software. When Intel introduced a 64-bit processor, it was the Itanium chip, which required users to get new software. For that reason, analysts say, Itanium tanked and AMD gained share.

The two companies have also been in a neck-and-neck race to be first with dual core processors, which are more efficient that single-core processors.

Intel was first to introduce dual-core processors in PCs, rolling out the Pentium Extreme processor in April, but AMD was first to bring dual-core chips to servers, also debuting its dual-core processors for the server market in April. It has been aggressively trading on that advantage ever since.

Of course, Intel is not taking this lying down. Having been caught flat-footed both on the 64-bit processor front as well as the server market, Intel knows it has to act fast.

"AMD has Intel's attention right now, and Intel has a competitive response they have put together," said Caso.

response from Intel?

As part of that competitive response, Caso said that at its developers' forum in August, Intel announced a number of different products coming out over next three or four quarters, which are aimed at putting Intel back on top by mid-2006.

"It'll be a question of how well they execute," Caso said. "AMD will have an opportunity to refresh their product line as well, and they haven't detailed for us at this point."

Intel still maintains its competitive advantage in the PC market, particularly in the notebook space, which is a fast-growing area of the PC market.

"Intel's strongest position is still in notebooks," said Caso. "They have created a strong brand, and its notebook processors are quite good. Intel developed a set of processors that were specifically designed for notebooks. When they brought out (notebook line) Centrino not quite two years ago, they understood what consumer was looking for," he said, adding that this is exactly what AMD did with the server market – and what chip makers and system makers will have to do to continue to gain market share.

Mark Stahlman, technology analyst at Caris & Co., has written about what he calls the "AMD effect." He thinks consumers are starting to look at quality more than price, which could give AMD a boost in the PC market because of the technological superiority of its chips, he said.

Analysts say AMD is putting a lot of its eggs in the server basket, using its current momentum in the market to try to capture more customers than Intel.

So far, it's working. But can AMD ever really be a rival to Intel? Maybe, analysts say, but the company does need to clear some considerable hurdles.

For starters, it is opening a massive new plant in Dresden, Germany, early next year; analysts say this will put pressure on profit margins and increase expenses in the short term. But the plant will give the company a much-needed production capacity boost, which will help when the company switches to 65-nanometer processors in mid-2006.

Also, AMD is looking to spin off Spansion, its sluggish flash memory business. Intel has handily trounced AMD in flash memory, a technology used in mobile phones. AMD has filed an IPO to spin out Spansion, which is now a joint venture with Fujitsu.

But the ultimate hurdle will be Intel's determination to play catch up.

"Intel is not going to just surrender the server market," said Rosetta Group's Eraiba. "We have seen that several times before. (AMD) starts executing, makes a lot of money and then, boom -- Intel reacts. Intel has a wakeup call; that's why they jumped into dual core and are working to revamp their architecture. It all depends on Intel's reaction."

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Is AMD David to Intel's Goliath? Click here.

Friedman, Billings, Ramsey Co. does or seeks to do investment banking business with Intel and TI and makes a market in the securities of Intel.

Eraiba does not own shares of Intel or AMD, and her firm does not have banking ties to the companies.

Stahlman does not cover AMD.