Shares of Advanced Micro Devices Inc. (AMD), already up a whopping 173% year-to-date (YTD) compared to the S&P 500's 8% return over the period, will continue to outperform the broader market, according to one team of analysts on the Street.

AMD Valuation 'Compelling Relative to the Growth Opportunity'

Bank of America Merrill Lynch became AMD's biggest bulls on Tuesday, lifting their 12-month price target on shares of the chip maker to $35 from $25, as reported by CNBC. BofA analyst Vivek Arya issued a note to clients citing AMD's process manufacturing advantage over industry rival Intel Corp. (INTC), which has faced setbacks in the production of its next-generation chip technology. 

The analyst's new price forecast implies a 25% upside from Tuesday close and is the highest target of the 24 analysts who cover the chip stock on Wall Street, according to FactSet. 

Arya, who rates AMD at buy, expects the Santa Clara, Calif.-based company to benefit from Intel's manufacturing challenges. Intel has delayed the release of its 10-nanometer chip, now slated for the 2019 holiday season. Meanwhile, AMD is expected to offer its faster, more power-efficient 7-nanometer server chips next year.

"We anticipate continued positive news flow around customer traction (engaged with all top 7 cloud providers, only announced 3 thus far); and around the pipeline," wrote BofA. 

Arya also pointed to AMD's "compelling" valuation relative to its growth opportunity, noting that the firm's market value of roughly $25 billion is just 8% of the size of the cumulative market value of its two main rivals, Intel and Nvidia Corp. (NVDA). 

BofA's upbeat note echoes positive reports from analysts at Jefferies and Cowen on Tuesday, who both lifted their price targets for AMD to $30. 

Shares of AMD, the S&P 500's top performing stock in 2018, are down 2.7% on Thursday morning at $27.75.