AMD plunges on weak guidance, but Baird says $6 EPS possible in two years
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AMD (NASDAQ:AMD) shares plunged nearly 10% on Wednesday after the semiconductor company reported weaker-than-expected guidance for the second-quarter, but investment firm Baird said a reacceleration is possible, going so far as to say earnings could jump over the next two years.
Analyst Tristan Gerra, who has an outperform rating and per-share price target of $100 on AMD (AMD), noted that the company could generate $6 per share in earnings in two years, making shares "inexpensive" due to the ongoing improvement in fundamentals and outlook for a recovery in the back half of 2023.
"Channel feedback is very supportive of AMD's strong [second-half] outlook, with notably an acceleration in market share gains driven by Genoa," Gerra wrote in an investor note.
"Improved mix into a recovering enterprise segment should also contribute to the [second-half] expected revenue and gross margin momentum, along with emerging visibility about improving China demand." 
A consensus of analysts expect AMD (AMD) to earn $2.90 per share in 2023 and $4.14 for 2024.
Delving deeper, Gerra added that AMD's Genoa server chip could eventually account for 40% of the market next year, up from 22% in 2022 and an estimated 30% this year.
For the PC market, Gerra added that the second-half of the year and a return to inventory normalization could result in "low-teen revenue increase" in AMD (AMD), with a better pricing environment and a recovery in gross margins.
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