This is a tale of millions being bet on what may well be another of Wall Street's perennial pipe dreams.

For the past several years, sputtering American Motors Corp., a sick number four among the auto industry's producers, has displayed all the get-up-and-go of an impending obituary case. For a would-be corpse, though, a real-life version of Jack Benny's Maxwell, it's hardly adhering to the death script.

Recently, the shares of the $2.2 million auto producer have sizzled in the marketplace, jumping over 35 percent in the past seven weeks to a two-year high of 6 1/4 on rapidly swelling trading volume.

One big reason: Sudden and substantial buying by Morgan Guaranty Trust, an influential and trendsetting force in the investment field. Morgan, I've learned, has bought over a million AMC shares in recent weeks.

Another strong stimulant: Wall Street's vision of an earnings explosion - a booming $5 a share in pretax profits - over the next two or three years.

Aggressively pushing the AMC turnaround story are two brokerage firms with considerable investment clout - Goldman Sachs, in particular, and Sanford C. Bernstein. It's no wonder, then, that a growing number of impressionable investors are ready to believe that the seventy-six-year-old patient (AMC) has not only been taken off the terminal list but stands an excellent change of recovery.

Such a view has been given a good deal of credence, at least in the minds of some Wall Streeters, as a result of a proposed affiliation between AMC and Renaut, the giant French auto maker. The two companies are presently thrashing out an agreement that would include joint distribution in the United States and Canada, eventual manufacture of one or more Renault cars in AMC assembly plants, sale of AMC Jeeps through Renault dealers in selected international markets, and stepped-up shipments of Renault's subcompact "Le Car" to the U.S. for sale through AMC and Renault dealers.

The proposed deal is widely viewed as a boom to AMC. And for good reason. It should boost sales and earning prospects, eliminate certain overhead, and give AMC access to important front-wheel-drive technology.

Another plus: It would provide AMC with sufficient and much needed cash flow - currently being guzzled up by the unprofitable passenger car business - to develop new and acceptable products.

In brief, as one analyst bluntly lays it out: "The Renault deal could save AMC's . . . by enabling them to stay in the passenger car business" - a hemmorrhaging AMC operation that in fiscal 1977 turned in an estimated pretax loss of about $90 million.

One leading auto analyst examined the proposed deal and did some pencil pushing. His calculations include AMC's plans to expand its booming Jeep business by about 50,000 units a year also, the cost-saving consolidation of AMC's auto passenger business in one plant (production presently covers two plants).

Another of his assumptions - a mighty big one - is that AMC will be successful in its efforts to obtain a government-backed loan guarantee for some $100 million in financing. This money would be used initially to tool up for the assembling in the U.S. of the five-passenger Renault 18 car, which would be sold here by AMC and Renault dealers.

Put it all together and the analyst's estimates - which assume a good auto year - run $1 to $1.25 a share pretax from passenger cars, $2.75 to $3.25 a share from Jeeps, and 80 cents from other company operations. The bottom line: An imposing $4.50 to $5.25 a share pretax, or $2.50 to $2.75 net.

It all sounds wonderful - which is what Morgan's buying spree and Wall Street dreams are all about. But one shouldn't ignore the abundance of overpowering negatives.

There has been no dividend since 1974. The company will incur write-offs from plans to ditch the Matador, and it may well scrap the Gremlin as well, leading to additional write-offs. In total, they could penalize net $1 a share.

Some analysts also don't rule out possible bankruptcy if AMC fails to get it's loan guarantee (which could kill the Renault deal). Further, there could be a surplus of front-wheel subcompacts, minimizing any sales impact for "Le Car." And Jeep competition will surely intensify.

But even if everything goes right, who's to say that AMC won't suffer - and suffer badly - in the event, as some economists expect, a prolonged and significant business slump develops in 1979.

After wading through AMC's inept public relations staff, I got to chat for a while with company boss Gerald C. Meyers. He made one thing clear right off the bat - no merger with Renault. "We're keeping clear of each other from an investment standpoint. We're our own independent company."

In other words, a working relationship, but no take-over of AMC.

A sixteen-year veteran of AMC who became its president in June of 1977 and chief executive last October. Meyers told me talks were running smoothly with Renault and that he expected a final agreement in the not too distant future. But what happens if AMC doesn't get that crucial financing? "Were at the court of last resort and I don't know where else I'd go," Meyers replied. "An alternative is not to build Renault-designed cars in the U.S., or else hang in there until we find the dough someplace."

A tough business, but one, alas, who is said to lack product creativity, Meyers told me: "I see good things coming." But he offered nothing in the way of supporting evidence, other than to point to a management restructuring over the past year and a directional change in what the company is building and rebuilding.

Meyers did tell me Jeep sales were busting all records; further, that the Concord, the best-selling car the company has had in three years, in continuing at a lively sales pace.

Meyers wouldn't address himself to those glowing $5 earnings estimates, but I can tell you - and I don't mean to be a killjoy or cause the good folks at Morgan any sleepless nights - that AMC's management thinks the $5 figure is blue sky.

Another influential auto analyst I know - one of the very best in the country - thinks the same way. And he could be a walking time bomb because he's planning to strongly recommend sale of the stock should it rise to slightly higher levels.

The phony bull story, he says, is twofold: (1) passenger cars (with impetus from Renault models) will return to the black; (2) Jeep sales will jump another 50,000 units a year. The analyst disputes both arguments.

The Renault 18 model, he observes, is supposed to provide the sales impetus for AMC's passenger car business. However, the Renault 18 (which he has seen) is a fine, competitive car, but not a great one, he tells me. Further, by the time AMC would be out with it (in 1980), it would run smack into stiff competition from General Motors and Chrysler, which will also be offering five-passenger cars. Thus, a break-even for AMC passenger cars by 1980 or 1981 seems absurd, the analyst insists. He also views the Jeep craze as a fad. And fads, he adds, draw competition and often die.

While this analyst views a tie-in with Renault as favorable, he sees non-dividend-paying AMC, at best, earning a bit over $1 a share in 1981. And at $6, the stock is selling at six times projected 1981 earnings. But Ford and GM, both of which pay annual dividends of 7 to 11 per cent, are only selling at three to four times estimated 1981 earnings, says the analyst. And neither is a potential bankruptcy.

Summing up his bear case, the analyst tells me: "Wall Street sees a $6 stock and starts dreaming. And the AMC story is a pipe dream for anyone who thinks $5 a share is possible. But I love it. Enough people will believe it. The stock should go a bit higher, perhaps to $8 or $10. And then I ought to do a lot of commission business on the sell side when the myth is exploded."