Analysts are increasingly more bullish on AMD's technology and potential in the critical artificial intelligence market after the news that Tesla is using the company's intellectual property.

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.