Advanced Micro Devices (AMD) designs and sells processors and graphics silicon for PCs, data centers and embedded systems and presents as a high‑growth semiconductor company with elevated margins, strong cash generation and very low financial leverage.
The company is posting robust revenue and earnings expansion on a per‑share basis: revenue per share rose to $21.17 most recently and 1‑year revenue‑per‑share growth was 34.3%, while diluted EPS reached $2.65 with 1‑year EPS growth of 164.2% and a 5‑year EPS CAGR of about 11.7% (EPS Diluted & Revenue per Share, Revenue & Net Income, Revenue & EPS Growth).
Profitability and cash generation are notable: gross margin is near 49.5%, operating margin about 37.6%, trailing twelve‑month operating cash flow was $7.71B, free cash flow margin is roughly 21.9%, and operating cash flow exceeds net income across recent TTM datapoints (OCF/NI ~1.78) (Profit Margin Trends, Earnings Quality Analysis, Strategic Capital Allocation).
The balance sheet is conservative with debt‑to‑equity around 0.051 and a current ratio near 2.85, indicating ample liquidity.
Areas of weakness include valuation and historical volatility. The trailing P/E has settled in the high‑70s to low‑80s, most recently about 81.4x, embedding elevated market expectations.
Earnings and net margins have been volatile: the firm posted a net loss of $139.0M in a 2023 quarter and EPS growth has swung from deeply negative readings (e.g., −100.8%) to extreme spikes (e.g., +5,516.0%), and trailing ROE remains modest at 6.9% despite recent improvement (Revenue & Net Income, EPS Diluted & Revenue per Share, Return on Equity (ROE)).
Key fundamentals to monitor going forward are quarterly revenue per share and diluted EPS trends (current levels $21.17 and $2.65) and sequential net income and top‑line progression (EPS Diluted & Revenue per Share, Revenue & Net Income); operating cash flow and free cash flow margin and any change in investing outflows (Strategic Capital Allocation, Earnings Quality); margin sustainability—gross, operating and net margins (49.5%, 37.6%, 12.5%)—and the evolution of trailing P/E and ROE (Profit Margin Trends, Price-to-Earnings (PE) Ratio Trend, Return on Equity (ROE)).
The foundation of business quality and long-term value creation
ADVANCED MICRO DEVICES INC's revenue shows sustained multi-year expansion, rising from the low‑single‑billion quarterly levels in 2018–2019 to a series of larger quarters in 2020–2021 and a further acceleration through 2024–2025. Revenue moved from roughly $5–6B quarters in 2021–2023 to above $7B in 2024, then increased sequentially through 2025, with a notable jump from $7.68B in 2025 Q2 to $9.25B in 2025 Q3 and $10.27B in 2025 Q4.
Net income has been more variable historically, including a net loss of $139.0M in the quarter ended 2023-04-01, but it has trended higher in the last year. Net income rose from $482.0M in the quarter ended 2024-12-28 to $709.0M, $872.0M, $1.24B and $1.51B across the successive 2025 quarters, showing consecutive quarterly improvement. The most recent quarterly revenue was $10.27B. The most recent quarterly net income was $1.51B.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Dec 2024 to Dec 2025, Advanced Micro Devices Inc converts approximately 50¢ of every revenue dollar into gross profit (gross margin: 49.5%).After accounting for operating expenses and taxes and expenses, the company retains 12.5% as net profit margin, resulting in $4.33B in net earnings.
Period Information
Report Type: Annual (10-K)
Period: Dec 2024 to Dec 2025
Revenue composition by disclosure category for the latest period
Analyzing long-term margin stability and competitive positioning
ADVANCED MICRO DEVICES INC's gross and operating margins have been elevated and relatively stable in recent quarters. Gross margin moved higher from the mid-40s in 2022–2023 to a 50.1% high in 2025 Q1 before easing slightly to the high-40s; operating margin rose from the low-to-mid 30s in 2022 to around 39% in early 2025 and sits in the high-30s most recently.
The most pronounced recent inflection for these metrics was the uptick through 2024 into early 2025, followed by a modest pullback by year-end 2025.
Net profit margin has been the most volatile series, peaking above 25% in 2020–2021, falling into negative territory in mid-2023, and then recovering through 2024–2025. That recovery accelerated across 2024 and 2025, moving from single-digit midpoints in 2024 to double digits by late 2025.
The most recent figures are:
Understanding Profit Margins
Between Dec 2024 and Dec 2025, Advanced Micro Devices Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Across the most recent quarters, ADVANCED MICRO DEVICES INC’s trailing twelve‑month operating cash flow and net income have shown a steady upward trend. Both series rose from early‑2024 levels ($1.70B CF and $1.12B NI at period end 2024‑03‑30) and accelerated through 2025 with TTM values at:
Operating cash flow has exceeded net income in each recent TTM datapoint, and the absolute gap widened during 2025 (approximately $1.23B at 2025‑03‑29 to about $3.38B at 2025‑12‑27). The most recent trailing twelve‑month operating cash flow was $7.71B and the most recent trailing twelve‑month net income was $4.33B.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
ADVANCED MICRO DEVICES INC's trailing twelve‑month ROE has risen steadily through 2025. After 3.8% for the period ending 2025-03-29, ROE increased to 4.7% (2025-06-28), 5.4% (2025-09-27) and 6.9% (2025-12-27), showing consistent quarter‑over‑quarter gains in the most recent year.
Over the full history shown the metric has been highly variable: very high ROE readings occurred in 2020–2021 (peaking at 55.6% on 2021-09-25) and there were extreme negative readings in 2014–2016 (for example −3311.8% on 2015-03-28). Recent levels remain above the low single digits recorded in 2023 (0.4% on 2023-09-30, 1.5% on 2023-12-30) but below the double‑digit peaks earlier in the decade. The most recent Return on Equity (ROE) was 6.9%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
Over 2025 ADVANCED MICRO DEVICES INC showed a clear rise in trailing‑twelve‑month operating cash flow, climbing sequentially from $3.46B at 2025‑03‑29 to $4.88B (2025‑06‑28), $6.41B (2025‑09‑27) and $7.71B (2025‑12‑27). Investing cash flow moved in the opposite direction over the same period, with increasing net outflows: -$1.32B (2025‑03‑29), -$4.01B (2025‑06‑28), -$5.21B (2025‑09‑27) and -$5.53B (2025‑12‑27). Financing cash flow in 2025 remained a net outflow but at much smaller magnitudes than the larger financing outflows recorded at the end of 2024 (‑$2.06B on 2024‑12‑28); 2025 values were -$267M, -$530M, -$274M and -$431M by the successive quarter‑ends.
The chart shows an inflection from late‑2024 into 2025 where operating cash generation accelerated while investing outflows deepened and financing outflows narrowed from the large year‑end 2024 level. The most recent trailing‑twelve‑month values were: Operating Cash Flow $7.71B; Investing Cash Flow -$5.53B; Financing Cash Flow -$431.0M.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
ADVANCED MICRO DEVICES INC's trailing P/E has stabilized in recent quarters after a large multi-quarter decline. From 2025-03 to 2025-12, the P/E ranged between 75.5x and 81.9x, showing limited variation and clustering in the high‑70s to low‑80s band with the most recent readings at 75.5x (2025-03), 81.9x (2025-06), 79.9x (2025-09) and 81.4x (2025-12).
Earlier there were pronounced peaks in 2023–2024: the ratio spiked to 812.3x in 2023-09, then declined through successive quarters (265.5x in 2023-12, 268.8x in 2024-03, 190.5x in 2024-06, 147.0x in 2024-09 and 122.1x in 2024-12) before settling in the current range. The most recent P/E ratio was 81.4x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.