Shares of chipmaker Advanced Micro Devices (NASDAQ:AMD) have been on a wild roller coaster ride over the past year. At one point in 2018, AMD stock was below $10. Within five months, it had more that tripled to above $30. Two months later, the price was halved, falling back to $15. AMD stock quickly rebounded to $20 in November, and has been trading largely range-bound around $20 ever since.

With that roller-coaster ride behind it, there’s reason to be optimistic on AMD stock at current levels. This company is gaining share everywhere it counts.

In the CPU world, AMD’s Ryzen and Radeon products are seeing wide adoption. In the Server market, AMD’s EPYC product has nabbed significant share from long-time Server dominator Intel (NASDAQ:INTC). Also, on the gaming front, AMD is positioning itself to steal market share from GPU giant Nvidia (NASDAQ:NVDA).

Given all this market share expansion across the entire portfolio, there’s reason to expect big things from AMD’s revenue and earnings growth over the next several years. Usually, stocks with really good revenue and earnings growth trend higher. That should be the case for AMD stock.

Yet, there’s also reason to be cautious on AMD stock. The market sees and understands the market share expansion dynamic underlying AMD stock. And what the market sees and understands, the market prices in.

The forward earnings multiple on AMD stock hovers around 33x. That is about three times the semiconductor industry average forward multiple of 11x. Even if you assume huge earnings growth over the next several years, you’d also need to make some aggressive assumptions about valuation in order to justify buying here.

As such, the best way to look at AMD stock presently is with cautious optimism. Market share expansion will drive earnings way higher in the long run. But, valuation will cap the upside AMD stock sees as a result of that explosive earnings growth.

Optimism Is Warranted

The bull thesis on AMD stock boils down to two words: market share. Everywhere it counts, AMD is growing market share. If this expansion persists, AMD should benefit from explosive revenue and earnings growth over the next several years.

On the CPU front, AMD is gradually stealing share from Intel. Intel has long dominated the Chromebook market, with their chips being in essentially every Chromebook in the world. But, for the first time ever, AMD processors are being used in those laptops. Specifically, HP’s Chromebook 14 and Acer’s Chromebook 315 both feature AMD chips. This could mark the beginning of a multi-year expansion of AMD chips into the Chromebook market. More broadly, it could mark a continuation of AMD’s CPU market share expansion narrative.

On the Server front, AMD is also making inroads onto Intel’s turf. The traditional chipmaker giant has historically controlled upwards of 99% of the market. But, AMD’s EPYC product is making some noise, and is now being used by some of the biggest hyperscale data center operators in the world. AMD could grow its Server market share from less than 1% to 15%, or more. If AMD can control that share in a secular growth Server market with solid cloud and data drivers, then that implies huge growth ahead for AMD’s earnings.

Meanwhile, on the GPU front, Nvidia should be nervous. While the chipmaker has been offering the best-in-class solutions in this market, AMD turned heads at CES by announcing a new 7nm graphics chip called the Radeon VII, which management argues is competitive with Nvidia’s market-leading GPUs. Broadly speaking, this lays the groundwork for AMD to start stealing GPU market share, and if that catches fire, it will provide a major boost to AMD’s earnings.

Caution Is Warranted, Too

While optimism about AMD stock is warranted, so is caution. The flip-side of the optimism coin is that the valuation already accounts for a lot of this market share expansion narrative and potential earnings growth.

With AMD stock trading at 33x forward earnings, it’s a big number — more than double the market average forward of 14x. It’s also about three times the semiconductor average 11x. Nvidia trades at 20x forward earnings; Intel at 10x.

In other words, AMD stock has a big valuation. Some of that is warranted. At $20.2 billion, the company has a small market cap, and is rapidly gaining share in big and valuable markets. But, there are also risks to this huge growth lasting forever, including a global semiconductor industry slowdown (this is happening right now) and a punch-back from Intel (this has happened before, and it’s usually disastrous for AMD stock).

Bottom Line on AMD Stock

Overall, my math suggests that AMD stock is fairly valued around $20 today, based on $1.50 EPS in five years. Thus, at current levels, risks seem to offset rewards, and a neutral rating seems most appropriate.

From a trading perspective, the best thing to do with AMD stock if it stays above $20 is stay away until the next earnings report (expected on Jan. 29) adds clarity as to how much market share AMD is actually stealing. But, if the stock drops below $20 in the meantime, that dip will be one worth buying.

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