French bank BNP Paribas supports AMD (AMD.US): Target price aims for $300 in the wave of AI, with earnings per share expected to reach $20.

On Analyst Day, AMD (AMD.US) announced its outlook for the next 3-5 years. According to BNP Paribas, this plan may enable the company to achieve earnings of $20 per share or higher in the near future. In a report to clients, BNP Paribas analyst David O'Connor wrote, "AMD expects its greatest growth opportunities to come from the data center market, with a compound annual growth rate (CAGR) of 40%, reaching $1 trillion by 2030. This market falls under the silicon total addressable market (TAM), covering central processing units (CPU), graphics processing units (GPU), high bandwidth memory (HBM), and network silicon products." O'Connor set a target price of $300 for AMD, stating that the company's progress in the server CPU market, AI accelerator market, and other areas paves the way for earnings of $20 per share in the next 3-5 years. "The DRIVE behind this target includes: a compound annual revenue growth rate of around 35%; as AI GPU optimization scales up, gross margin will increase to 55%-58%; operating leverage will drive EBIT margin above 35% and free cash flow (FCF) margin to 25%," O'Connor explained. "We are more optimistic about AMD. The AI GPU market presents larger opportunities, a broader scope of demand, and deeper collaboration with customers, which also boosts management confidence. In our target model, if AMD achieves earnings per share (EPS) of around $20 in the next 3-5 years, calculated at a 25x price/earnings ratio (P/E), its fair value could reach $500 within a few years." AMD's stock price rose nearly 9% on Wednesday, with a cumulative increase of over 110% since the beginning of the year.