When it comes to chipmaker Advanced Micro Devices (NASDAQ:AMD), I have played the part of both the bull and the bear. When AMD stock dropped below $10 in early April 2018, I played the part of the bull, seeing the sell-off as a big buying opportunity for long-term investors into a company with broad exposure to multiple secular growth markets.

But, when AMD started trading sideways around $17 in July 2018, the bull disappeared and I played the part of the bear. Despite long-term growth drivers, I thought the valuation on AMD was maxed out at $17.

I was wrong. AMD proceeded to report robust quarterly numbers thereafter and popped to $20. Ever since, the stock has remained impressively resilient despite broader weakness in the tech sector.

Big picture, AMD increasingly looks like a winner in the near-term. This is a company that is going to steal dramatic server share from rival Intel (NASDAQ:INTC) over the next several quarters, and those big market share increases will drive improved financials and sentiment. Improved financials and sentiment should drive AMD stock higher during that stretch.

Inevitably, Intel will hit back, and the playing field will be more competitive. But, that won’t happen until deep into 2019. Thus, for the next twelve months, AMD stock increasingly looks like the chip stock with the most firepower.

The Next 12 Months Look Good For AMD

In a nutshell, the bull thesis on AMD over the next twelve months is pretty simple and straightforward.

Intel controls the server market, which is the big-growth market that comprises sales to data-centers. By most accounts, Intel controls 99% of this market, leaving AMD with less than a percent share.

But, AMD’s new line of processors, headlined by EPYC, are really good, and arguably better than Intel’s current line of server processors.

Moreover, whereas AMD is pushing new chips to market rather quickly, Intel continues to delay production of their next-gen chips until 2019.

What does all that mean? Over the next several quarters, AMD, equipped with a new line of competitive products, will steal significant server market share from Intel. AMD is aiming for mid single-digit share of this market by the end of 2018, and Intel wants to keep AMD below 15-20% share in the long-term.

Regardless, AMD will inevitably ramp server market share from less than a percent in 2017 to likely 10% or more over the next twelve months. This is a huge and rapidly growing market with tons of firepower through sustained strong demand from data-centric end-markets (data-centers, AI, automation, so on and so forth). Thus, AMD is stealing market share it matters.

Overall, over the next twelve months, AMD will see massive improvements in its financials and investor sentiment as the company ramps share in the critical server market. This will ultimately drive AMD higher as such massive share gains have done in the past; AMD controlled 25% of the server market in 2006, and during that ramp, AMD stock went from $5 to $40.

Still Cautious About 2019 and Beyond

Although AMD looks like a winner over the next twelve months, I am still cautious about out-sized gains for this stock persisting in the back half of 2019 and after.

Inevitably, Intel will punch back. They are, after all, the 800 pound gorilla in this market. Whenever the 800 pound gorilla punches back, the other guy tends to get hurt. Indeed, historically speaking, Intel punching back isn’t a great thing for AMD (see the stock price collapse in 2006 after AMD gained huge server market share).

Intel will punch back in late 2019 with its own next-gen chips. I don’t think those chips will outright dominate AMD’s offerings, nor that AMD stock will lose all of its momentum. Instead, I reasonably believe that Intel launching next-gen chips will simply put the two companies on level playing field, and cause the era of huge market share expansion for AMD to end.

In other words, I see AMD server market share ramping from less than 1% in 2017 to ~20% by the end of 2019, and then stagnating in the 20% range thereafter. In such a scenario, I think AMD stock is a big winner during the ramp from 1% to 20% from 2017 to 2019, and a less exciting stock when market share stagnates in the 20% range after 2019.

Bottom Line on AMD Stock

I turned bearish on AMD in July because I thought valuation was maxed out. That was the wrong move. Instead, it looks increasingly likely that AMD will take significant market share from Intel over the next twelve months. During that stretch of huge share expansion, AMD stock will be a winner.

Looking out past the next twelve months into 2020 and beyond, I think AMD stock will cool off as Intel punches back. But, those risks are far off, and a lot could change between now and then.

As of this writing, Luke Lango was long AMD and INTC.