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(Reuters) – Chipmaker Advanced Micro Devices Inc snatched more share in the lucrative data center market from rival Intel Corp in the third quarter, drawing praise from analysts and sparking a near 5% jump in its stock on Wednesday.

The company’s continued expansion into server processors helped it cushion a deepening slump in the personal computer market, which makes up nearly a third of its revenue.

“(AMD) is delivering on their datacenter story, and Intel’s rolling collapse has removed some of the constraints on the narrative,” Bernstein analyst Stacy Rasgon wrote in a note.

Santa Clara, California-based AMD’s forecast for a 14% rise in fourth-quarter sales while below analysts’ estimates also contrasted with expected declines at Intel and Nvidia Corp.

“We expect AMD’s share gains to continue, as the company’s upcoming, next-generation server CPUs are expected to outperform Intel’s lineup across price/performance metrics,” YipitData analyst Nathaniel Harmon said.

But growth is slowing even in the data center business, echoing remarks from U.S. tech giants Amazon.com and Microsoft that decades-high inflation and weak consumer demand were taking a toll on cloud and datacenter spending.

The PC industry, reeling from a downturn after its pandemic boom, pressured AMD’s earnings and the company also lost market share there to Intel.

A recovery in the business seems distant, with Chief Executive Lisa Su saying that AMD expects the PC market will decline by another 10% in 2023.

Some analysts, however, said the company was undershipping products even in a weak market and could see some upside next year.

“The team is significantly undershipping to PC consumption to help flush channel inventories, which should help client revenues to start to inflect to the upside,” according to J.P. Morgan analysts.

AMD’s shares were trading at $62.38 before the bell. They have lost more than half their market value this year.

(Reporting by Akash Sriram and Chavi Mehta in Bengaluru; Editing by Maju Samuel)

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