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NEW YORK (TheStreet) -- Shares of Advanced Micro Devices (AMD) were gaining 9.5% to $2.02 on heavy trading volume Friday following a report that Microsoft (MSFT) is interested in buying the chipmaker.

Microsoft is "seriously talking" to AMD about potentially buying the CPU and GPU chipmaker, according to Fudzilla. It is unclear if the software giant will reach a deal to acquire the company.

The news site added that Intel (INTC) might also be interested in acquiring AMD.

In late June KitGuru reported that Microsoft was interested in acquiring AMD, saying the software company approached the chipmaker "several months" ago.

Earlier today analyst firm Bernsteinupgraded AMD to "market perform" from "underperform."

About 27 million shares are AMD were traded by 3:37 p.m. Friday, above the company's average trading volume of about 16.1 million shares a day.

TheStreet Ratings team rates ADVANCED MICRO DEVICES as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate ADVANCED MICRO DEVICES (AMD) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, poor profit margins, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 402.8% when compared to the same quarter one year ago, falling from -$36.00 million to -$181.00 million.
  • The gross profit margin for ADVANCED MICRO DEVICES is currently lower than what is desirable, coming in at 32.91%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -19.21% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$58.00 million or 107.14% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 57.28%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 360.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • ADVANCED MICRO DEVICES has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ADVANCED MICRO DEVICES reported poor results of -$0.53 versus -$0.11 in the prior year. This year, the market expects an improvement in earnings (-$0.47 versus -$0.53).
  • You can view the full analysis from the report here: AMD Ratings Report