Updated from 12:03 p.m. EST

Shares of

Advanced Micro Devices

(AMD) - Get Report

shot up 15% Monday on news the chip maker is shipping a one-gigahertz microprocessor before its rival

Intel

(INTC) - Get Report

.

AMD rose 6 1/4 to close at 47 3/4, while Intel fell 1 3/4, or 1.4%, to 117 3/8.

Both AMD and Intel were originally expected to start shipping the processors at the end of March. However, as part of the ongoing rivalry between No. 1 Intel and No. 2 AMD, AMD effectively preempted a similar announcement by Intel that's expected to be made later this week.

"This is an indication of AMD's ability to execute," said analyst Mona Eraiba of

Gruntal & Co.

"The significant thing for AMD delivering at this high speed means the company's process technology is scaling up and working." She rates AMD an intermediate outperformer and a long-term market performer and her firm has done no underwriting for the company.

AMD, based in Sunnyvale, Calif., shipped its first one-gigahertz Athlon processors Monday, available on personal computers manufactured by

Compaq Computer

TST Recommends

(CPQ)

and

Gateway

(GTW)

.

Intel's one-gigahertz, or 1,000-megahertz, processor is expected to be available on

Hewlett-Packard

(HWP)

computers.

A one-gigahertz processor speeds up a computer's performance, but "there's little basis in functional reality to the average user, who's not going to notice any difference," said analyst Drew Peck of

SG Cowen

. He rates both AMD and Intel neutral and his firm has done no underwriting for either company.

"The challenge for both companies now is to deliver the microprocessors in large volumes, consistently," Eraiba added. Large volume is defined as over 100,000 units per quarter, according to Peck. After all, Intel is not expected to ship its one-gigahertz processor in large quantities until the third quarter and AMD not until midyear.

Of AMD's blatant one-upsmanship, Peck said, "At this point, both companies are desperately trying to beat each other in marketing rather than real technology."

Both companies are masters of marketing. AMD was guilty of hyperbole in its press release today announcing the shipment of the one-gigahertz processor. In it, the company boasted, "Just as the achievement of Chuck Yeager signaled the beginning of a new ear in aviation, the 1GHz processor ushers in a new ear of information technology." AMD also compared itself to Neil Armstrong, Roger Bannister and Edmund Hillary, all in the same sentence.

AMD's processor is priced at $1,299 each in 1,000 unit quantities. AMD also announced the availability of a 950-megahertz processor, priced at $999 in 1,000 unit quantities, and a 900-megahertz processor, priced at $899.