AMD is nearing its best level in 13 years after Microsoft says it'll use its chips in the next Xbox

AMD chipA technician of computer microprocessors maker AMD poses for the media with a wafer at the chip plant in Dresden October 24, 2006. AMD celebrated its 10th anniversary of the AMD plant in the eastern German city of Dresden on Tuesday.Fabrizio Bensch/REUTERS

  • AMD is nearing a 13-year high after Microsoft announced its new Xbox console will be powered by the chipmaker's graphics and computer chips.
  • Shares gained more than 2% early Monday, and were closing in on their best level March 2006.
  • Watch AMD trade live.

AMD's stock price is closing in on levels not seen for 13 years. Shares of the chipmaker traded as high as $33.95 Monday, less than 1% below their March 2006 peak of $34.14. A move above there would make for the highest print since March 2006.

At the Electronic Entertainment Expo held in Los Angeles, Microsoft announced the details of its next Xbox console, dubbed "Project Scarlett," which will be powered by AMD graphics and computer chips. Rival game-maker PlayStation has also announced it will use AMD's chips.

The resurgence in AMD's shares, up nearly 20 times from their September 2015 level of about $2, has been driven by a series of product-win announcements in the red-hot cloud-gaming market.

Wells Fargo analyst Aaron Rakers wrote the announcement, while previously expected, "should still be considered a positive as it reinforces AMD's positioning in the high-end processor and graphics market for game consoles."

At least one analyst, Morgan Stanley equity analyst Joseph Moore, has shifted their view on the company amidst the spate of product announcements. "Being cautious on the stock has obviously been the wrong call, even though we were right on some aspects," he wrote.

Moore upgraded the company's shares Thursday to "equal-weight" from "underweight" while also raising the price target from $17 to $28.

AMD is up 81% this year.

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