CNBC reported on Wednesday that Tesla is working with AMD to develop its own AI chip for self-driving cars. The electric car maker has more than 50 employees involved in the project, according to a source.
"The Tesla/AMD move has disruptive implications to the multi-billion self-driving market," Rosenblatt Securities' Hans Mosesmann wrote in a note entitled "Tesla AI Move With AMD - Game Changer" on Wednesday.
"AMD has had zero play in the self-driving market. Also, AMD is the only player in the world that can offer both x86 CPU and strong GPU IP and expertise … The net/net here for AMD is that Tesla has confirmed AMD's CPU and GPU roadmaps in a field that nobody was considering as viable; it says that AMD's CPU/GPUs in PC and server markets are the real deal," he added.
AMD's stock is up 118 percent in the past 12 months through Wednesday compared with the S&P 500's 16 percent gain. That performance ranks No. 2 in the entire S&P 500, according to FactSet.
Mosesmann reiterated his buy rating on AMD shares and his $22 price target, representing 60 percent upside from Wednesday's close.