Low Debt Levels Indicate Financial Flexibility
Strong Gross Profit Margin
Strong Liquidity Position
Strong Revenue Growth
Market Share Gains
Diverse Product Portfolio
Strong AI Business Growth
New Product Launches
Positive Market Outlook
High Price-to-Earnings Ratio Indicates Overvaluation
High Price-to-Sales Ratio Raises Concerns
Low Return on Equity
Gaming Segment Decline
Mixed Demand in Embedded Segment
Potential Seasonality Impact
Overall, AMD showcases a strong business model with significant growth in key segments, particularly data center and client, despite challenges in gaming and embedded sectors. The company's future prospects appear bright with robust AI growth, new product launches, and a positive market outlook, although seasonality may pose short-term challenges.
Analysis Date: February 4, 2025
Last Updated: March 11, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$13.53
Current Market Price: $96.37
IV/P Ratio: 0.14x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-612.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for AMD
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (96.15)
P/B ratio ≤ 1.5 (2.74)
Current ratio ≥ 2.0 (2.62x)
Long-term debt < Net current assets (0.04x)
Margin of safety (-612.0%)
AMD does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
AMD's gross profit margin of 51.14% reflects efficient production and pricing power, which is significantly higher than industry averages.
The return on equity (ROE) of 2.89% is quite low, indicating that the company is not effectively generating profits from its equity capital.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
2.89%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
0.70%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
51.14%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
6.36%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
With a current ratio of 2.62 and a quick ratio of 1.83, AMD demonstrates effective liquidity management, ensuring it can cover its short-term obligations.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.01x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
2.62x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
AMD delivered record annual revenue of $25.8 billion, representing a 14% growth year-over-year, driven by significant increases in the data center (94%) and client (52%) segments.
AMD gained significant server and PC market share, particularly in the data center segment which contributed roughly 50% of annual revenue with strong demand from cloud and enterprise customers.
AMD has a robust portfolio of EPYC processors, optimized for various workloads, which positions the company strongly in both cloud and enterprise markets.
AMD's gaming segment revenue declined 59% year-over-year, primarily due to reduced semi-custom sales as Microsoft and Sony focused on inventory reduction.
The embedded segment faced a 13% year-over-year decline amid mixed demand conditions, indicating vulnerabilities in this area.
AMD established a multi-billion dollar data center AI franchise, with expectations to grow data center AI revenue from over $5 billion in 2024 to tens of billions in the coming years.
Upcoming product launches, including the MI350 series, are anticipated to drive further growth and customer adoption in the data center GPU business.
AMD expects strong demand growth across all business segments in 2025, with projections for double-digit percentage revenue and EPS growth.
The company anticipates a sequential revenue decline in Q1 2025 due to typical seasonality, which may temporarily impact financial performance.