Advanced Micro Devices Inc. shares rallied to their highest price in 10 months Friday after one analyst hiked his price target on the chip maker and Cisco Systems Inc. announced it was using AMD chips in a line of servers that had previously used Intel Corp. chips exclusively.

AMD AMD, -3.82% shares surged 4.9% to end at $14.40, their highest close since July 26, when shares finished at $14.76. The rally followed a price target hike from Stifel analyst Kevin Cassidy, who has a buy rating on AMD. Cassidy raised his price target on the stock to $17 from $14. The last time shares even ventured past the $14 mark was back in late October.

In comparison the PHLX Semiconductor Index SOX, -2.45% rose 2.3% on Friday and the S&P 500 index SPX, -2.37% gained 1.1%.

AMD’s stock has gained 40% on the year, compared with the nearly 13% rise in the SOX index, but over the past 12 months the performance of AMD and the SOX is closer with AMD up 32% and the SOX up 29%.

Cassidy backed his price hike on the view that “AMD’s EPYC server CPU is winning server designs and AMD’s broader PC CPU offering will allow AMD to outperform the market.”

“We believe AMD’s EPYC processor will begin to gain traction in the second half of the year to meet management’s target of exiting 2018 with mid-single digit market share compared to less than 1% in the second half of 2017,” Cassidy said.

As an example of growing traction for EPYC chips, Cassidy pointed to their use in one of Cisco Systems Inc.’s CSCO, -2.64% new server platforms.

Read: AMD stock jumps after analyst upgrades 2 months after turning bearish

On Thursday, Cisco announced in a blog post that its new multi-node server, the UCS C125 M5 Rack Server Node, was built using EPYC chips. For its part, Cisco’s stock finished up 2.2% on Friday.

“We chose AMD EPYC server processors for the first node of the UCS 4200 platform due to the architectural synergy with the workloads our customers want to power with this type of form factor,” said Kaustubh Das, vice president of strategy and product development for storage at Cisco, in the blog post.

“[Cisco and AMD] expect the platform to be available in the second half of 2018,” Stifel’s Cassidy said. “We believe other server OEMs have realized the benefits of EPYC and will be making similar announcements soon.” In addition to the target price hike, Cassidy raised his adjusted earnings estimate for the year to 50 cents a share on revenue of $6.73 billion from 47 cents a share on revenue of $6.65 billion.

Analysts surveyed by FactSet estimate full-year adjusted earnings of 46 cents a share on revenue of $6.7 billion, according to FactSet.

Following Cowen & Co.’s annual Technology, Media & Telecom conference this past week, analyst Matthew Ramsay, who has an outperform rating and $18 price target on AMD, said he was also encouraged by Cisco’s use of AMD chips in servers that had, up until now, exclusively used Intel Corp. INTC, -2.26% chips. Intel shares also showed strong gains, finishing up 3.4% on Friday.

Opinion:New AMD chip goes after $10 billion market that Intel dominates

“While AMD’s targets to double PC market share, and achieve double-digit server unit share are aggressive, we believe this important new competitive dynamic between AMD’s and Intel’s manufacturing base make these targets much more realistic,” Ramsay said in a note.

“Further, with AMD manufacturing base more diversified, we believe a sustainable product roadmap, without execution hiccups, is significantly more likely and remains a keen focus of AMD management,” he said. Ramsay is expecting full-year earnings of 51 cents a share on revenue of $6.96 billion.

Of the 31 analysts who cover AMD, 13 have overweight or buy ratings, 13 have hold ratings, and five have underweight or sell ratings. With the Stifel target price hike, the average target price from analysts is now $14.16 a share.