Bank of America believes AMD will be the next $100 billion chip company

Published Mon, Aug 3 20208:33 AM EDTUpdated Mon, Aug 3 202012:54 PM EDT

(This story is for CNBC Pro subscribers only.) AMD could be the next $100 billion chip company, according to Bank of America. Following AMD's strong earnings last week, the Wall Street firm hiked its 12-month price target on AMD to $100 per share from $77, implying about 30% upside from AMD's current level. The share gains imply a $100 billion market cap for the chip company led by Lisa Su. On Friday, the stock closed with a market value of $90.9 billion. "AMD [is a] triple threat," Bank of America analyst Vivek Arya told clients. "Share gains, ASP upside" and "secular growth." Shares of AMD have soared nearly 70% this year, compared with the S & P 500's just breaking even in 2020 due to the coronavirus crisis. Last week, shares of AMD popped after the company raised its revenue outlook for the year as a part of its second-quarter earnings results . AMD now expects 32% revenue growth for the year, up from 25% the company predicted in April . Analysts polled by Refinitiv had expected 25% growth. The company now expects the PC market to grow, rather than decline, in the second half of the year, Su said on a conference call with analysts on Tuesday. "Upside was broad across PCs (stronger Ryzen notebook mix), gaming (new consoles), and server (more instances)," said Arya. Bank of America said the company is heading toward higher share gains in the PC and server space as AMD's largest competitor, Intel, struggles with next generation processing technology. Intel delayed its next-generation chips last month. For the second quarter, AMD reported earnings of 13 cents per share on revenue of $1.93 billion. Analysts polled by Refinitiv expected earnings of 16 cents per share on revenue of $1.86 billion. AMD"s $100 per share price target is based on a 41 times 2023 price-to-earnings ratio. That may seem lofty, but the analyst thinks it is justified given the pace of earnings growth expected the next three years as well as the company's "ability to take share in large markets." Shares of AMD was up 0.6% on Monday afternoon. — with reporting from CNBC's Michael Bloom.

Lisa Su, president and CEO of Advanced Micro Devices, speaks during a launch event in San Francisco on Aug. 7, 2019.

David Paul Morris | Bloomberg | Getty Images

(This story is for CNBC Pro subscribers only.)

AMD could be the next $100 billion chip company, according to Bank of America.