The competition with Intel rages on, but one analyst says AMD should continue capturing market share, creating opportunity for the long run. By Katy Marquardt, Staff Writer September 5, 2006 The nation's number-two computer-chip manufacturer, Advanced Micro Devices, has been steadily gaining ground against archrival Intel over the past few years. But the battle between the two semiconductor titans has become especially intense in the past few months. Advanced Micro made an aggressive move in July when it announced its plans to acquire graphics chipmaker ATI Technologies. The deal will give Advanced Micro (symbol AMD) the capability to design its own chipsets, something Intel has been doing for years. Also in July, Dell -- a former Intel-only customer -- announced plans to use AMD's chips in its lineup of high-end servers. Advanced Micro will continue to capture business from Intel, and that represents a long-term opportunity for investors, says Thomas Weisel Partners analyst Eric Gomberg. "We believe that AMD has built up solid momentum over the past couple of years, enough to continue growing its market share in the face of highly competitive products from Intel," Gomberg wrote on Tuesday. He upgraded Advanced Micro shares from "peer perform" to "outperform." He also raised his 2007 earnings estimate to $1.52 per share from $1.45 per share. At $26, shares of the Sunnyvale, Cal., company are trading at 24 times the $1.09 per share that Gomberg expects the company to earn in 2006, and 17 times his new 2007 estimate. Advanced Micro and Intel are locked in a vicious price war that has hurt results of both companies. Consider AMD's second-quarter results, released in late July: Profits fell to $89 million from $185 million in the first quarter, and sales dropped to $1.2 billion from $1.3 billion. The stocks of both Advanced Micro and Intel are down about 20% so far this year. But over the past two years, AMD has eaten Intel's lunch. AMD shares have more then doubled, while Intel's have fallen slightly. Intel (INTC) closed at $20 on Tuesday, as investors awaited the company's announcement of sweeping job cuts. Advanced Micro's stock closed at $26, after the analyst upgrade helped send its stock up more than 6%.