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Beleaguered chip maker Advanced Micro Devices (AMD) is making “substantial progress” writes Wells Fargo analyst David Wong today, in particular having possibly taken share in graphics chips from competitor Nvidia (NVDA).

Wong, who has an Outperform rating on AMD, and a $4 to $4.50 price target, and a Market Perform rating on Nvidia, writes that "We believe that market share gains in graphics chips have been a contributor to Nvidia’s top line performance and stock price value over the last two years."

"If AMD manages to build momentum in gaining graphics share in 2016, we think that this could be a risk to Nvidia’s stock."

Looking at the most recent quarterly reports, Wong sees a hint of share gain for AMD:

MD reported that in the March 2016 quarter it achieved double digits percent sequential increase in desktop discrete graphics unit shipments, and that professional graphics also grew. AMD guided for 15% sequential sales growth in the June quarter, driven by strong demand for its semi-custom and graphics products. The midpoint of Nvidia’s April 2016 quarter guidance implies an expectation of a 10% sequential sales decline. Following many quarters of impressive top line growth, in our view a normal seasonal decline does not reflect negatively on Nvidia’s business, but nevertheless, we think that Nvidia’s expectations and AMD’s graphics growth momentum suggest that AMD is beginning to regain graphics revenue share. We expect that Nvidia’s earnings data and commentary (scheduled for after close on 5/12), and Mercury Research’s next graphics chip market share update (expected May 13 or May 16) will help confirm that AMD is gaining graphics share, especially in the desktop segment.

Of course, the main event for both companies is the forthcoming new tech, the “Polaris” chip from AMD, and the “Pascal” part, which Nvidia introduced in its “GTX1080” card last Friday:

On April 21, 2016, AMD said it remains on track to introduce its 14-nanometer FinFET (Fin Field Effect Transistor) Polaris GPUs mid-2016. On May 6, 2016, Nvidia said its first next generation Pascal products will be available on May 27th and June 10th. We think that it will be important for AMD to bring out Polaris in a timely way if it is to continue its graphic share progress which we believe began in the March quarter.

AMD shares today are down 6 cents at $3.60. Nvidia stock is

down 89 cents, or 2.5%, at $35.17.