Investing№ 05Nasdaq: AMD
AMD
AMD’s revenue has grown 26% a year for nine years, and Data Center is now 58% of it. The price is above my bull case, and two customers hold warrants for 320M shares.
Updated Fiscal year ends the last Saturday in December33 min readPedrum Shokouhi
Can be disrupted
Research, not investment advice. Figures as of .
Key numbers
- Market value$837.5B (calculated)$504.80 x 1.659B diluted shares [1][17][18]
- Revenue$41.3B (calculated)TTM to 27 Jun 2026 [6][4][17]
- Operating margin, GAAP15.7% (calculated)TTM; 26.0% on AMD's non-GAAP basis [6][4][17]
- Free cash flow$7.7B (calculated)TTM, before $1.9B of stock pay [6][4][17]
- Data Center share of revenue58% (calculated)Q2 2026; was 42% a year earlier [17]
- Warrant shares held by two customers320M (reported)OpenAI and Meta; none vested at 27 Jun 2026 [4][22][24]
(reported)Reported in a filing (calculated)Calculated from reported figures (estimate)My estimate
The answer
- AMD designs server, PC and AI chips and has TSMC build them; in the twelve months to June 2026 it turned $41.3B of revenue into $6.5B of GAAP operating income and $7.7B of free cash flow, $5.8B after stock pay.6417
- I value it at $194 a share at a 10% discount rate ($147 at 12%), in a range of $61 to $434: my base case takes revenue from $41B to $119B in five years, and six gigawatts from OpenAI and Meta cover at most 29% of its Data Center growth (estimate).22244
- At $504.80 the price is 16% above my bull case and needs free cash flow after stock pay to grow 33.2% a year for ten years; my base case returns 6.1% a year at this price against 5.00% on the ten-year Treasury, and the margin of safety starts below $81 (estimate).11753
Six questions, one line each
- Why
- It sells the server processor and an AI accelerator, and OpenAI, Meta and Anthropic have said they intend to deploy up to 14 gigawatts of it, which makes it the second source that the largest AI buyers want.2224354 →
- The moat
- A design and execution lead in server CPUs, widening in share but not locked in, and a second-source position in accelerators for which AMD has issued warrants for up to 320M shares.444 →
- The advantage
- Growth against Intel, whose data-center segment still earns the higher margin, 39.5% against 31.3%; none against NVIDIA, whose Data Center revenue is 13 times AMD’s (calculated).174751 →
- Management
- Lisa Su has run AMD for 12 years; the stock rose 72.1 times in ten, yet $100 became $234 against $547 for the semiconductor index over the proxy’s five years (calculated).161 →
The business
AMD designs processors and AI accelerators and owns no factories. TSMC makes every AMD wafer at 7 nm or smaller, and packaging and test run through partners such as Tongfu, SPIL and KYEC.6 It reports three segments. Data Center, 58% of revenue in the June 2026 quarter, holds EPYC server CPUs, Instinct GPUs, networking chips and FPGAs. Client and Gaming holds Ryzen PC chips, Radeon graphics and the chips in game consoles. Embedded holds the adaptive chips that came with Xilinx.176
In the twelve months to June 2026, gross margin was 53.2%, research and development was 22.7% of revenue and capital spending 4.1%. Operating margin was 15.7% on the GAAP basis and 26.0% on AMD’s own non-GAAP basis (calculated).6417192021
Revenue grew from $4.3B in 2016 to $34.6B in 2025, 26.0% a year.1413121110986 The annual figures tie to the SEC’s XBRL facts.15 AMD reported net losses in 2016 and 2017.146 Revenue fell in 2023, from $23.6B to $22.7B, and the Embedded segment fell 33% in 2024.98
Revenue and operating income
Fiscal years to the last Saturday in December, US$ billions
- Revenue $34.6B in 2025
- Operating income $3.7B
Show the numbers
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | TTM Jun 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue (reported) | $4.3B | $5.3B | $6.5B | $6.7B | $9.8B | $16.4B | $23.6B | $22.7B | $25.8B | $34.6B | $41.3B |
| Operating income (reported) | −$0.37B | $0.13B | $0.45B | $0.63B | $1.4B | $3.6B | $1.3B | $0.40B | $1.9B | $3.7B | $6.5B |
Data Center revenue more than doubled year-over-year
What it sells
- Data Center: EPYC CPUs, Instinct GPUs, networking chips and FPGAs for servers. Revenue was $6.72B in Q2 2026, up 107%, with a 31.3% segment operating margin. In the TTM it was $22.2B, up from $3.7B in 2021 (calculated).17610
- Client and Gaming: Ryzen chips for PCs, Radeon graphics and semi-custom chips for consoles. Q2 revenue was $3.84B: Client $3.06B, up 23%, and Gaming $779M, down 31%. AMD guides a significant double-digit decline in Gaming for Q3.174142
- Embedded: adaptive and embedded processors built on Xilinx. Q2 revenue was $977M, up 19%, which management calls its fastest growth in more than three years. It was $5.3B in 2023 and $3.5B in 2025.174196
Where the revenue came from, 2025
2025, US$ billions. Bar length is revenue; the share is of the segments' total.
- Segment revenue, 2025 $34.6B
- Segment operating income $7.7B
Show the numbers
| Segment | Revenue | Share | Operating income | Margin | Growth |
|---|---|---|---|---|---|
| Data Center (reported) | $16.6B | 48.0% | $3.6B | 21.7% | +32.2% |
| Client and Gaming (reported) | $14.6B | 42.0% | $2.9B | 19.6% | +50.8% |
| Embedded (reported) | $3.5B | 10.0% | $1.2B | 36.0% | −2.9% |
Segment revenue and operating income, 2021 to TTM June 2026
US$ millions. Same three-segment basis in every column.
| 2021 | 2022 | 2023 | 2024 | 2025 | TTM Jun 2026 | |
|---|---|---|---|---|---|---|
| Data Center: revenue | 3,694 | 6,043 | 6,496 | 12,579 | 16,635 | 22,214 |
| Client and Gaming: revenue | 12,494 | 13,006 | 10,863 | 9,649 | 14,550 | 15,434 |
| Embedded: revenue | 246 | 4,552 | 5,321 | 3,557 | 3,454 | 3,657 |
| Total revenue | 16,434 | 23,601 | 22,680 | 25,785 | 34,639 | 41,305 |
| Data Center: operating income | 991 | 1,848 | 1,267 | 3,482 | 3,603 | 6,528 |
| Client and Gaming: operating income | 3,022 | 2,143 | 925 | 1,187 | 2,855 | 2,749 |
| Embedded: operating income | 44 | 2,252 | 2,628 | 1,421 | 1,243 | 1,364 |
| All other: operating income | (409) | (4,979) | (4,419) | (4,190) | (4,007) | (4,153) |
| Total operating income | 3,648 | 1,264 | 401 | 1,900 | 3,694 | 6,488 |
| Data Center operating margin | 26.8% | 30.6% | 19.5% | 27.7% | 21.7% | 29.4% |
| Data Center share of revenue | 22% | 26% | 29% | 49% | 48% | 54% |
2021 and 2022 Client and Gaming add the Client and Gaming lines of the 2022 10-K. 2021 Embedded is $246M because Xilinx joined on 14 February 2022. 2022 had 53 weeks. TTM is calculated: 2025 less the first half of 2025 plus the first half of 2026. The first half of 2025 Data Center operating income of $777M includes the $800M MI308 inventory charge taken in the second quarter of 2025. Before 2021 AMD reported Computing and Graphics and Enterprise, Embedded and Semi-Custom; those cannot be mapped to today's segments, so there is no ten-year segment series. Source 10-K 2025; 10-K 2024; 10-K 2023; 10-K 2022; 10-Q Q2 2026; Q2 2026 release [6][8][9][10][4][17]. Figures as reported.
Who pays
No customer was 10% of revenue in 2025 or 2024, and one Client and Gaming customer was 18% in 2023.6 On the 4 August call management named OpenAI, Meta and Anthropic as the anchor customers for MI450. I found no official transcript; I read two unofficial ones that agree, and cite them as the call.414243
At $13B of revenue a gigawatt, my estimate, one gigawatt equals 15% of my year-2 base revenue (estimate). I use gigawatts as a cross-check on the base case and not as a driver: revenue in the model grows by segment, and the gigawatts test whether the growth is plausible. Management says only “double-digit billions” a gigawatt.4142 The NVIDIA page uses $25B to $40B a gigawatt for its own platform. I cannot say how much of that gap is price and how much is what each company counts, which is why the cross-check in Valuation runs from $10B to $20B around management’s “double-digit billions”.
By billing location in 2025, the United States was $11.4B, China including Hong Kong $7.8B (22%), Taiwan $5.2B, Singapore $4.3B and other countries $6.1B, which sum to $34.6B before rounding (calculated).6 Export controls reach into that number: AMD took $800M of charges on its MI308 chip in Q2 2025, released $360M in Q4 and shipped about $390M of MI308 to China in that quarter.620
The commitments below are evidence for part of the growth in my base case, not most of it: OpenAI and Meta cover at most 29% of the Data Center increase and Anthropic takes the total to 39% (table in Valuation) (estimate).2224354 They also differ in how binding they are.
Customer commitments AMD has disclosed
What is binding, what is 'up to', and what AMD gave the customer.
| Customer | Announced | Size | First deployment | Binding on the first gigawatt? | What AMD gave |
|---|---|---|---|---|---|
| OpenAI | 6 Oct 2025 | Up to 6 GW of Instinct GPUs; the 10-Q says the customer ‘intends to deploy’ up to 6 GW | First 1 GW of MI450 from 2H 2026 | Yes: a binding commitment to purchase the initial 1 GW, signed with the agreement (8-K Item 1.01) | Warrant for 160M shares at $0.01; vests with GPU purchases, share-price thresholds up to $600 and stock-performance thresholds; expires 5 Oct 2030 |
| Meta | 24 Feb 2026 | Up to 6 GW, with a custom MI450-based GPU; lead customer for ‘Venice’ and ‘Verano’ EPYC | First 1 GW from 2H 2026 | Yes: a binding commitment to purchase the initial 1 GW (8-K Item 1.01) | Warrant for 160M shares at $0.01; share-price thresholds escalate to $600; expires 23 Feb 2031 |
| Anthropic | 22 Jul 2026 | Up to 2 GW of MI450 in Helios racks | First GW beginning 1H 2027 | Not in the release. Anthropic’s S-1 commits it to a first block in calendar 2027, on conditions, with no fixed dollar amount61 | A commitment to invest up to $5B in Anthropic ‘in the future’; no warrant disclosed |
| Oracle Cloud Infrastructure | By 4 Nov 2025 | Initial deployment of 50,000 MI450 GPUs | Starting Q3 2026 | Not stated | None disclosed |
| Microsoft | Q2 2026 release | Helios racks at scale on Azure; two new EPYC VM series; more Pensando DPUs | Not given | Size not disclosed | None disclosed |
'Up to' sizes are ceilings. Beyond the first gigawatt, the 10-Q describes OpenAI and Meta as intending to deploy. AMD does not give revenue per gigawatt in a filing; on the Q2 2026 call management said 'double-digit billions' (unofficial transcript). Other customers named in the Q2 2026 release as deploying Helios: Cirrascale, HUMAIN, Oracle, Tensorwave and Vultr. Source 8-K OpenAI; OpenAI release; 8-K Meta; Meta release; Anthropic release; 10-Q Q2 2026; Q3 2025 release; Q2 2026 release [22][23][24][25][35][4][21][17]. Figures as reported.
For OpenAI and Meta, only the first gigawatt is binding. Anthropic’s S-1 commits it to a first block in calendar 2027, on conditions.61 Everything after that is “intends to deploy” or “up to”.22244 The first gigawatt of each deployment is powered by MI450.414
The cycle
Chip revenue is cyclical: AMD’s fell 4% in 2023, from $23.6B to $22.7B, and the 10-K says the industry has had severe downturns.69 The stock fell 65%, from a close of $161.91 on 29 November 2021 to $55.94 on 14 October 2022, and has since risen 9.0 times (calculated).1 The newer cycle risk is the buyers’ own funding. The 10-K warns that customers may lack the capital for their AI infrastructure and may ask vendors for alternative financing or deferred payment.6
The moat
I think AMD has a narrow moat, and it is two different things. In server CPUs it is a design and execution lead on a standard that Intel also builds to; it is widening in share and is not locked in. In AI accelerators it is a second-source position: the largest buyers want an alternative to NVIDIA, and AMD has issued them warrants for up to 320M shares to be it. That position is widening in volume and narrowing in price.
The moat, source by source
Evidence from the filings and releases, and the direction I read in it.
| Source | Evidence | Direction |
|---|---|---|
| Server CPU design lead | x86 server unit share was 34.5% in Q2 2026, from 27.3% a year earlier; EPYC against Xeon alone was 46.4%; AMD’s share of x86 server revenue was 46.2% in Q1 2026, the latest revenue figure I found. All from Mercury Research as reported by Tom’s Hardware; I did not read Mercury’s report444546 | Widening. AMD and Intel share one instruction set, so a lead has to be earned each generation |
| Chiplets and process access | TSMC makes every AMD wafer at 7 nm or smaller; AMD owns no fab; unconditional purchase commitments rose from $12.2B in December 2025 to $30.3B in June 202664 | A dependency that AMD shares with its rivals: they buy from the same foundry |
| Rack-scale product (Helios) | MI450 GPUs, ‘Venice’ EPYC, Pensando networking and ROCm in one Open Compute rack. AMD recorded ZT Systems at $4.4B and sold its manufacturing arm for $1.4B in cash net of adjustments plus Sanmina shares, keeping the design team17634 | Widening from a late start; the 15% and 30% advantages are company claims with no independent test41 |
| Software (ROCm) | The company says more than 3 million models run out of the box and ROCm downloads rose tenfold in a year; Anthropic will use Claude to optimize ROCm414035 | Widening from a low base. I treat it as the weak flank |
| R&D scale | $9.4B in the TTM, 22.7% of revenue, up from $1.0B in 2016. NVIDIA spent $7.1B in the June quarter alone, against AMD’s $2.5B641751 | Widening in dollars, narrowing against NVIDIA |
| Customer commitments | Binding orders for the first gigawatt each from OpenAI and Meta; a committed first block from Anthropic; intent to deploy up to 6 GW each and up to 2 GW from Anthropic. AMD issued warrants for up to 320M shares and committed up to $5B for Anthropic2224354 | Widening in volume, narrowing in price |
| Adaptive computing (Xilinx) | Embedded revenue was $3.5B in 2025 against $5.3B in 2023. AMD targets more than 70% of adaptive revenue share6940 | Flat. Revenue has not come back to its 2023 level |
| The x86 licence | The 10-K says Intel controls the instruction set and that AMD depends on Microsoft’s software support6 | A dependency that runs both ways |
Source Tom's Hardware, 22 Aug; Tom's Hardware, 14 May; HotHardware; 10-K 2025; 10-Q Q2 2026; Q2 2026 release; ZT sale release; Call transcript (EW); NVIDIA Q2 FY2027; Analyst Day release; Anthropic release; 8-K OpenAI; 8-K Meta; 10-K 2023 [44][45][46][6][4][17][34][41][51][40][35][22][24][9]. Judgements are my estimates.
Server CPUs: a lead that has to be re-earned
Mercury Research, as reported by Tom’s Hardware (I did not read Mercury’s report), puts AMD’s x86 server unit share at 34.5% in Q2 2026, from 27.3% a year earlier. Its share of server revenue is 46.2%, for Q1 2026; I found no Q2 revenue figure.444546 Against Intel’s Xeon alone, EPYC held 46.4% of units in Q2.44 A customer can swap an EPYC for a Xeon without rewriting software, because both run x86, so AMD can lose server share as easily as it won it. AMD’s lead is a design cadence: the sixth generation, “Venice”, is in production on a 2 nm process, and management says demand is stronger than for any prior EPYC generation.174142
Accelerators: a second source, paid for in shares
OpenAI and Meta each signed a binding order for the first gigawatt of MI450 and say they intend to deploy up to six. Anthropic plans up to two, and its S-1 commits it to a first block in calendar 2027, on conditions.61 OpenAI (October 2025) and Meta (February 2026) each hold a warrant for 160M AMD shares at one cent.2224354
This is an important step for Meta as we diversify our compute.
Set the warrant beside the order. For all six gigawatts a customer can earn 160M shares, worth $80.8B at today’s price and $96.0B at $600. At $13B of revenue a gigawatt, six gigawatts is $78B of revenue (estimate). The shares are worth 104% of that revenue at today’s price and 67% if a gigawatt brings $20B (calculated).2224411 The vesting schedule is redacted and the shares vest only as the share price clears thresholds that escalate to $600, so the real cost depends on the stock. If they vest evenly, each gigawatt hands over shares worth $13.5B against $13B of revenue.22244
What the warrants cost for each gigawatt
Each customer's warrant is for 160M shares at $0.01, and full vesting needs 6 GW of purchases. The vesting schedule is redacted, so the per-gigawatt column assumes the shares vest evenly.
| One customer, 6 GW | Per gigawatt, if vesting is even | |
|---|---|---|
| Warrant shares at $0.01 (reported) | 160M | 26.7M |
| Value of the shares at $504.80 (calculated) | $80.8B | $13.5B |
| Value of the shares at $600, the top threshold (calculated) | $96.0B | $16.0B |
| Revenue at $13B a gigawatt (my estimate; management says double-digit billions41) (estimate) | $78B | $13B |
| Revenue at $20B a gigawatt (my estimate) (estimate) | $120B | $20B |
| Gross profit at the 56% non-GAAP margin guided for Q3, $13B a gigawatt (estimate) | $43.7B | $7.3B |
| Shares at $504.80 as a share of revenue, $13B and $20B a gigawatt (calculated) | 104% and 67% | 104% and 67% |
OpenAI's first tranche vests after the delivery of the first gigawatt of MI450; every tranche is also subject to share-price thresholds that escalate to $600 and to technical and commercial conditions. Meta's warrant has the same size and the same $600 top threshold. None had vested at 27 June 2026. Source 8-K OpenAI; 8-K Meta; 10-Q Q2 2026; Call transcript (EW); Q2 2026 release; Nasdaq quotes [22][24][4][41][17][1]. Figures calculated from reported data.
I count vested warrant shares as a cost to shareholders, whichever way AMD books them. My base counts 160M of the 320M, which lowers its value from $213 with none to $194; the bull counts all 320M and the bear 53M.4 Vesting depends on the market price clearing the thresholds, and only the top one, $600, is public; it does not depend on my value. The reverse DCF below counts no warrant shares, so it flatters the price. AMD’s chief financial officer said the OpenAI deal was expected to be highly accretive to non-GAAP earnings per share.23 I cannot check that. The 10-Q does not say how a vested tranche will be booked, and as a matter of general accounting practice a payment to a customer usually reduces revenue, so reported revenue and margin may come out below my non-GAAP cases.4
AMD has issued warrants for up to 320M shares, 19.6% of the 1,632M outstanding, to win its place as the second source.
Shares that could be added to the count
Millions of shares. None of the warrant shares had vested at 27 June 2026.
| Item | Shares (M) | Share of 1,632M outstanding | Value at $504.80 | Condition |
|---|---|---|---|---|
| OpenAI warrant, $0.01 exercise price | 160 | 9.8% | $80.8B | Vests with GPU purchases up to 6 GW and share-price thresholds that escalate to $600; then technical and commercial conditions |
| Meta warrant, $0.01 exercise price | 160 | 9.8% | $80.8B | Same structure; thresholds escalate to $600; exercisable to 23 Feb 2031 |
| Both warrants | 320 | 19.6% | $161.5B | If both vest in full, they would be 16.4% of the enlarged count |
| World Labs purchase, $8.2B in AMD stock | 16.2 | 1.0% | $8.2B | Count is set by a ten-day average price before closing; the figure here uses today’s price |
| Unvested RSUs, PRSUs and options (27 Dec 2025) | 37 | 2.3% | $18.7B | 33M time-based RSUs, 2M PRSUs and 2M options at $117.60 average exercise price (rounded to millions) |
The vesting schedule (Exhibit E) and exercise conditions (Exhibit F) of both warrants are redacted in the filed exhibits. The 10-Q says the warrants are classified as liabilities until conditions for equity classification are met and that they had no effect on results through 27 June 2026. The 10-Q does not say how vested tranches will be booked. As general accounting practice (ASC 606), consideration payable to a customer is usually a reduction of revenue, so reported revenue and margin may come out lower than my non-GAAP cases; I count the shares instead, as a cost to shareholders whichever way they are booked. The value column is shares times price, gross of any exercise price: the 2M options carry a $117.60 average exercise price that is not deducted. The 2023 equity plan holds 153M authorised shares, of which 107M remained at 27 June 2026. Source 10-Q Q2 2026; 8-K OpenAI; 8-K Meta; 10-K 2025; 8-K World Labs; World Labs release; Nasdaq quotes [4][22][24][6][27][36][1]. Figures calculated from reported data.
Evidence it is widening
Data Center against Intel. AMD’s Data Center segment has been larger than Intel’s Data Center and AI group in each quarter since Q3 2025, after trailing it in each quarter from Q3 2024 to Q2 2025 (calculated).1719202147484950
AMD's Data Center against Intel's DCAI, by quarter
US$ billions. AMD's Data Center segment (bar) and Intel's Data Center and AI group (thin bar), on Intel's current basis.
- AMD Data Center
- Intel DCAI
Show the numbers
| Value | Intel DCAI | |
|---|---|---|
| Q3 2024 (reported) | $3.5B | $4.1B |
| Q4 2024 (reported) | $3.9B | $4.4B |
| Q1 2025 (reported) | $3.7B | $4.1B |
| Q2 2025 (reported) | $3.2B | $3.9B |
| Q3 2025 (reported) | $4.3B | $4.1B |
| Q4 2025 (reported) | $5.4B | $4.7B |
| Q1 2026 (reported) | $5.8B | $5.1B |
| Q2 2026 (reported) | $6.7B | $6.3B |
Product and software. Helios puts MI450 GPUs, “Venice” CPUs, Pensando networking and ROCm in one Open Compute rack, and the first shipments are guided for late Q3 2026.1741 AMD has also announced Helion, a rack for agentic AI work, with configurations planned for November 2026.38 Anthropic will use its Claude model to optimize ROCm.35 Management says open-source contributions to ROCm rose more than tenfold in a year.414243
Evidence it is narrowing
Custom silicon. Broadcom’s AI semiconductor revenue grew 221% to $16.7B in the quarter to 2 August, 2.5 times AMD’s whole Data Center segment (calculated).5217 Broadcom’s line includes AI networking and its release does not split it out, so 2.5 times is an upper bound for custom accelerators alone. It shows what a buyer can do instead of buying from AMD or NVIDIA.
Price. Every gigawatt carries shares. A second source that has to be paid in equity has a weaker moat than one that is simply chosen.
Supply. AMD depends on one foundry for every advanced wafer, and its unconditional purchase commitments rose from $12.2B to $30.3B in six months, all non-cancellable.654
The moat is widest where AMD’s rival is Intel and thinnest where its rival is NVIDIA.
The competitive advantage
AMD’s advantage over Intel is growth and a higher whole-company margin, 17.3% against 11.1% on a GAAP basis in the June quarter; in data centers Intel’s segment margin is higher, 39.5% against 31.3%. Over NVIDIA and Broadcom AMD has no advantage in scale or margin; what it has is a place as the second source (calculated).17475152
Data-center revenue of AMD and its three nearest rivals, latest reported quarter
Quarters end between June and August 2026. The segments are not the same shape.
| NVIDIA | Broadcom | Intel | AMD | |
|---|---|---|---|---|
| What is measured | Data Center: GPUs, CPUs, networking, systems | AI semiconductors, including AI networking | Data Center and AI (DCAI): Xeon, edge and networking CPUs, accelerators | Data Center segment: EPYC CPUs, Instinct GPUs, networking, FPGAs |
| Quarter ended | 26 Jul 2026 | 2 Aug 2026 | 27 Jun 2026 | 27 Jun 2026 |
| Revenue | $89.0B | $16.7B | $6.26B | $6.72B |
| Growth on the year | +117% | +221% | +59% | +107% |
| Segment operating margin | see the NVIDIA page | n/a | 39.5% | 31.3% |
| Earlier quarters, US$ millions | n/a | Q4 outlook $21.7B | Q1 2026 5,052; Q4 2025 4,737; Q3 2025 4,117; Q2 2025 3,939; Q1 2025 4,126; Q4 2024 4,351; Q3 2024 4,141; 2025 16,919; 2024 16,125 | Q1 2026 5,775; Q4 2025 5,380; Q3 2025 4,341; Q2 2025 3,240; Q1 2025 3,674; Q4 2024 3,859; Q3 2024 3,549; 2025 16,635; 2024 12,579 |
On Intel's current segment basis (it folded its networking and edge group into DCAI in Q1 2025 and recast earlier periods), AMD's Data Center segment first exceeded DCAI in the third quarter of 2025 ($4,341M against $4,117M) and has been larger in each quarter since; the lead was 7.3% in Q2 2026 (calculated). Intel's DCAI was larger in each quarter from Q3 2024 to Q2 2025 and for full-year 2025 ($16.9B against $16.6B). AMD's quarter equals 7.5% of NVIDIA's Data Center revenue (calculated). AMD does not report Instinct revenue separately, so no like-for-like GPU comparison is possible from filings. Source NVIDIA Q2 FY2027; Broadcom Q3 FY2026; Intel Q2 2026; Intel Q1 2026; Intel Q4 2025; Intel Q3 2025; Q2 2026 release; Q3 2025 release; Q4 2025 release; Q1 2026 release; 10-K 2025 [51][52][47][48][49][50][17][21][20][19][6]. Figures as reported.
Against Intel
AMD’s Data Center segment was $6.72B in Q2 2026 against $6.26B for Intel’s DCAI, up 107% against 59%. Intel’s segment earns the higher margin, 39.5% against 31.3%.1747 Both are growing fast, so AMD’s gains come from a rising market as well as from Intel’s share. Mercury says Intel’s CPU supply rose in Q2 2026, especially in mobile client, and Tom’s Hardware reports that Mercury expects server CPU supply constraints could limit gains in Q3, with Q4 stronger; it does not say whose supply.44 AMD’s 10-K says Intel uses its market position to price against it.6
In PCs AMD’s unit share is at records: 30.3% of client, 34.9% of desktop and 28.9% of mobile in Q2 2026.44 Client revenue was up 23% in the quarter, but management plans for a softer PC market in the second half on memory costs.1741 In 2025 Client unit shipments rose 15% and the average selling price 31%, as the corrected 10-K/A states.7
Against NVIDIA and custom chips
NVIDIA’s Data Center revenue was $89.0B in the quarter to 26 July 2026, up 117%. AMD’s segment, which also holds CPUs, was 7.5% of that (calculated).5117 AMD does not report Instinct revenue, so there is no like-for-like share, and I use none.
NVIDIA earned a 75.0% gross margin and a 66.2% GAAP operating margin in the quarter. AMD earned 54% and 17.3%, or 26.8% on its own non-GAAP basis (calculated).5117 NVIDIA spent $7.05B on research and development in the quarter, AMD $2.53B, or 36% as much (calculated).5117 Management says Data Center AI gross margin is slightly below the company average, and two customers hold warrants for up to 320M of AMD’s shares.414
AMD’s 10-K says NVIDIA leans on its position in data-center GPUs and its software, and flags NVIDIA’s September 2025 investment in Intel as a competitive risk.6 It also warns that customers develop their own chips for AI work.6 Broadcom guided $21.7B of AI revenue for its next quarter.52
Where AMD wins
Server CPUs. The share data above. Management expects server CPU revenue to grow more than 80% in the second half of 2026 and more than 70% in 2027, and targets more than 50% of server CPU revenue.414240
Openness. Helios follows the Open Compute Project design, and buyers who want a second source get a rack built to a shared standard.17 Management claims up to 15% more throughput at the same rack power and up to 30% more tokens per dollar than “the competition”; I found no independent test.41
Where it loses
Software. ROCm is catching up to a standard it did not set. I treat it as the weak flank.
Scale. AMD’s research and development is 36% of NVIDIA’s (calculated). The 10-K flags that competitors may have stronger market positions.65117
Gaming. The console cycle has turned. Gaming revenue fell 31% in Q2 and AMD guides a significant double-digit decline in Q3.1741
AMD gains share against Intel at a 31.3% segment margin and pays for its place against NVIDIA with warrants for up to 320M shares.
Management
Lisa Su joined AMD in January 2012, became chief executive in October 2014 and chair in February 2022. She is 56.16 The stock closed at $7.005 on 24 October 2016 and at $504.80 in Q4 2026, 72.1 times as much (calculated).1 That window starts two years after she became chief executive. Revenue went from $4.3B to $34.6B in nine years.146 The proxy’s comparison is less kind: $100 invested at the close of 24 December 2020 was worth $234 at the end of 2025, against $547 for the S&P 500 Semiconductor & Semiconductor Equipment index.16
Who runs it
Executive officers and the CEO's pay. Ownership is beneficial ownership at 19 March 2026, including options and RSUs that vest within 60 days.
| Name | Role | In role since | Shares owned | 2025 total pay | Notes |
|---|---|---|---|---|---|
| Lisa Su | Chair, President and CEO | CEO since Oct 2014; Chair since Feb 2022; joined AMD Jan 2012 | 4,305,973 | $55.2M | $41.7M stock, $9.0M options, $3.1M bonus, $1.3M salary. Special $75M target PRSU award approved 11 Feb 2026 with a 15 Mar 2026 grant date, earned only on share-price hurdles to 2031; $36M annual award on 15 Aug 2026; a Rule 10b5-1 plan adopted 8 Jun 2026 to sell 450,000 shares by 16 Jun 2027 |
| Jean Hu | EVP, CFO and Treasurer | Jan 2023 | 148,364 | $14.3M | CFO of Marvell Technology 2016 to 2023; a 10b5-1 plan to sell 30,000 shares |
| Mark Papermaster | EVP and CTO, Technology and Engineering | At AMD since Oct 2011; this role since Jan 2019 | 1,834,807 | $16.6M | Led development of the Zen CPU family |
| Forrest Norrod | EVP and GM, Data Center Solutions | At AMD since Nov 2014; this role since Jan 2023 | 424,965 | $13.5M | Ran Dell’s server business 2009 to 2014; a 10b5-1 plan to sell 116,784 shares |
| Darren Grasby | EVP, Chief Sales Officer and President EMEA | At AMD since 2007; this role since Jan 2025 | 184,596 | $18.2M | Includes a one-time promotion and retention award |
| Phil Guido | EVP, Chief Commercial Officer | Jun 2023 | not listed | not a named officer | More than 30 years at IBM before AMD |
| Ava Hahn | SVP, General Counsel and Corporate Secretary | Jan 2024 | not listed | not a named officer | Previously chief legal officer of Lam Research |
| Jack Huynh | SVP and GM, Computing and Graphics | Apr 2023 | not listed | not a named officer | Joined AMD in 1998 as a design engineer |
| Emily Ellis | Corporate VP and Chief Accounting Officer | 15 Dec 2025 | n/a | n/a | Previously controller at Palo Alto Networks and a PwC partner |
| Fei-Fei Li | To become EVP and Chief Scientist | On the close of World Labs, expected by end of 2026 | n/a | n/a | Reports to Su; World Labs is an $8.2B all-stock purchase |
| All 16 directors and executive officers | 8,107,566 | Less than 1% of the class. Largest holders: Vanguard 8.8%, BlackRock 7.7% (from 13G filings dated early 2024) |
Pay ratio: the CEO's 2025 total of $55,161,779 was 341 times the median employee's $161,780. Compensation actually paid to Su in 2025 was $146.7M against a summary-table total of $55.2M. 2022 performance units paid out at 96.84% of target because AMD's three-year return trailed the S&P 500 by 1.58 points. Executive bonuses use revenue, adjusted net income and adjusted free cash flow, with 30% on strategic milestones. At the 2026 meeting say-on-pay drew 924.3M for and 73.4M against, 92.6% of votes cast (calculated). Source Proxy 2026; 8-K CEO award; 8-K exec pay; 10-Q Q2 2026; 8-K CAO; World Labs release [16][28][29][4][33][36]. Figures as reported.
Pay and incentives
Su’s 2025 pay was $55.2M, 341 times the median employee’s $161,780, of which $41.7M was stock and $9.0M options. Pay “actually paid” under SEC rules, which marks awards to market, was $146.7M.16 The pay plan tracks relative return: the 2022 performance units paid out at 96.84% of target because AMD’s three-year return trailed the S&P 500 by 1.58 points. Bonuses use revenue, adjusted net income and adjusted free cash flow, with 30% on strategic milestones.16
In February 2026 the board approved a special award with a $75M target value. It can pay from 0% to 200% of the target in four tranches, and a tranche is earned when the 90-trading-day average closing price reaches its hurdle at any time to March 2031: 10%, 15% and 17.5% a year over five years from a baseline price, and $600 for the top tranche. The baseline is the average close over the 60 trading days to the 15 March 2026 grant date. The board set the hurdles with the all-time high of $267.08 at the grant date in view.28
100% performance-based, tied to four stock price hurdles
By my arithmetic on those rules the baseline is about $215, which puts the first three hurdles near $345, $435 and $480. The 90-day average close passed them between 30 June and 1 September and was $530.64 in Q4 2026, so only the $600 tranche is left (calculated).281 I did not find the company’s own baseline or hurdles, so these are my estimates. With a conversion price near $207, the 30-day average to the grant date, the target is about 363,000 units, and the 544,000 units of the first three tranches are worth about $275M at today’s price (calculated).281 Earned units vest in March 2029 and March 2031 if she is still chief executive or executive chair.28
The top hurdle, $600, is also the top threshold of both customer warrants.282224 A rising share price pays Su and the two customers at the same time. In August she received her annual award, a $36M target, 75% in units that pay on three-year relative return, and her base salary rose to $1,375,000 from 1 July.29 Say-on-pay support was about 85% in 2025 and 92.6% of votes cast in 2026.1630
Su owned 4,305,973 shares at 19 March 2026, including options and RSUs vesting within 60 days. That is 0.26% of the shares outstanding and about $2.2B at today’s price before option exercise costs (calculated).16 On 8 June 2026 she adopted a Rule 10b5-1 trading plan for up to 450,000 shares, 10.5% of that holding, to run to 16 June 2027, about $227M at today’s price (calculated).4
Put the incentives together. Su is paid for a higher share price over five years, and the top hurdle of her special award, $600, is the same line as the top of both customer warrants282224 That pays her to push the stock and the customer ramp up together. Her stake is 0.26%, but the proxy count includes options and units, so I cannot tell how much of it she bought with her own money16 Over 2021 to 2025 the capital went to Xilinx, which earns 2.5% to 2.8% a year on the price paid before amortization, to buybacks that did little more than offset stock pay, and since October 2025 to shares and guarantees for customers (calculated).1064
The bench and the board
Jean Hu has been chief financial officer since January 2023 and was Marvell’s before that. Mark Papermaster has been chief technology officer since October 2011. Forrest Norrod, who ran Dell’s server business, has led Data Center since January 2023. Darren Grasby became chief sales officer in January 2025. Emily Ellis became chief accounting officer on 15 December 2025; Hu had been acting.1633 Fei-Fei Li is to become chief scientist when the World Labs purchase closes.36
The board has eight directors, all independent except Su, who is both chair and chief executive. Nora Denzel has been lead independent director since November 2022 and a director since 2014. Joseph Householder, the audit chair, retired on 19 August 2026 after more than 11 years; KC McClure, formerly Accenture’s chief financial officer, joined in January 2026 and now chairs audit, and Tim Ryan, formerly the US chair of PwC, joined on 19 August.163132
The board
Eight directors after 19 August 2026. All but Su are independent.
| Director | Since | Role and committees | 2026 vote for / against (M) |
|---|---|---|---|
| Nora Denzel | Mar 2014 | Lead Independent Director since Nov 2022; chairs Nominating and Governance; Innovation and Technology; joined Audit and Finance Aug 2026 | 947.8 / 53.8 |
| Michael Gregoire | Nov 2019 | Chairs Compensation and Leadership Resources; Innovation and Technology | 981.4 / 19.8 |
| John Marren | Feb 2017 | Audit and Finance | 997.4 / 4.1 |
| KC McClure | Jan 2026 | Chairs Audit and Finance since Aug 2026; Nominating and Governance; former Accenture CFO | 999.3 / 2.3 |
| Lisa Su | Oct 2014 | Chair of the Board since Feb 2022 | 930.4 / 66.8 |
| Abhi Talwalkar | Jun 2017 | Chairs Innovation and Technology; Compensation | 918.1 / 83.4 |
| Elizabeth Vanderslice | Feb 2022 | Compensation; Nominating and Governance; on Xilinx’s board 2000 to 2022 | 998.0 / 3.6 |
| Tim Ryan | 19 Aug 2026 | Independent; Head of Technology and Business Enablement at Citi; US Chair of PwC 2016 to 2024 | appointed after the meeting |
Joseph Householder (director since Sep 2014) retired on 19 August 2026; Jon Olson did not stand in May 2026. Say-on-pay support at the 2025 meeting was about 85%. Source Proxy 2026; 8-K annual meeting; 8-K board change; 8-K McClure [16][30][31][32]. Figures as reported.
Capital allocation
Capital allocation has three items that matter: Xilinx, bought for $48.8B in stock; ZT Systems, recorded at $4.4B and mostly sold on; and, since October 2025, financing for customers.1064
The capital allocation record
Large decisions since 2021, what they cost and what is visible.
| Decision | When | Cost | What the filings show |
|---|---|---|---|
| Xilinx acquisition (reported) | 14 Feb 2022 | $48.8B in stock: 429M AMD shares at $113.18 | Goodwill $22.8B at purchase. Embedded revenue was $5.3B in 2023 and $3.5B in 2025; operating income $2.6B and $1.2B. Those 429M shares are worth $217B at $504.80 (calculated) |
| Pensando acquisition (reported) | 26 May 2022 | About $1.9B | Data-center networking (DPUs, AI NICs); no separate revenue disclosed |
| Share repurchases under the program (reported) | 2021 to 2025 | $8.6B for about 81M shares | About $107 a share on average (calculated, from share counts rounded to millions). Tax-withholding repurchases added $2.4B. $9.2B of the $14B authorisation remained at 27 Jun 2026; $221M was bought in the first half of 2026 |
| Net share count since the Xilinx deal (calculated) | End 2021 to 29 Jul 2026 | 1,207M to 1,632M shares | Up 425M, or 35% (calculated). Xilinx issued 429M and ZT Systems 9M, so the count fell about 13M without the two deals, while buybacks took back about 81M shares |
| ZT Systems acquisition and sale of its manufacturing arm (reported) | 31 Mar 2025; sale 27 Oct 2025 | $4.4B recorded ($3.2B cash, $0.86B stock, $0.36B contingent) | Manufacturing sold to Sanmina for $2.4B in cash before adjustments; AMD received $1.4B in cash net of cash divested and adjustments, 1.15M Sanmina shares ($154M) and up to $450M more by 2028 ($332M booked). AMD kept the design and customer-enablement teams |
| Silo AI acquisition (reported) | 9 Aug 2024 | $665M cash | AI software and model engineering, in Data Center |
| MEXT and Taalas acquisitions (reported) | Q2 2026; 6 Aug 2026 | Prices not disclosed | MEXT: predictive memory technology; Taalas: specialised AI inference silicon |
| World Labs acquisition (pending) (reported) | Agreed 26 Sep 2026 | About $8.2B in AMD stock | Close expected by end of 2026; about 16.2M shares at today’s price (calculated); Fei-Fei Li to become chief scientist |
| Equity stake in Anthropic (committed) (reported) | 22 Jul 2026 | Up to $5B | Paired with a commitment by Anthropic to deploy up to 2 GW of MI450 |
Source 10-K 2022; 10-K 2025; 10-K 2024; 10-K 2023; 10-Q Q2 2026; ZT sale release; Anthropic release; 8-K World Labs; World Labs release; Taalas release; Q2 2026 release; Nasdaq quotes [10][6][8][9][4][34][35][27][36][37][17][1]. Figures as reported.
Xilinx cost $48.8B in stock, 429M shares at $113.18. Those shares are worth $217B at today’s price (calculated).1 Embedded earned $1.36B of operating income in the TTM against $2.63B in 2023, and AMD books $2.2B a year of acquisition amortization on $25.5B of goodwill and $15.6B of intangibles, mostly from this deal.101796 Embedded’s operating income, before that amortization, is 2.5% to 2.8% a year on the $48.8B paid ($1.24B in 2025, $1.36B in the TTM) (calculated). Xilinx technology also sits inside Data Center and Helios, which the segment line does not show.
Buybacks were $8.6B for about 81M shares from 2021 to 2025, about $107 a share. The net share count rose 425M, from 1,207M to 1,632M, and Xilinx alone issued 429M and ZT Systems 9M. Without the two deals the count fell about 13M, so buybacks covered what stock pay issued and a little more (calculated).6104 In the first half of 2026 AMD bought 1.1M shares for $221M, about $201 a share, close to my base value of $194 (calculated); $9.2B of the authorisation remains.4 AMD pays no dividend.
On ZT Systems AMD recorded $4.4B in March 2025: $3.2B in cash, $0.86B in stock and $0.36B of contingent payments. When it sold the manufacturing arm to Sanmina in October 2025 it received $1.4B in cash net of cash divested and adjustments, 1.15M Sanmina shares worth $154M and up to $450M more by 2028, and kept the rack design and customer-enablement teams.634 Silo AI cost $665M, and AMD bought Taalas and MEXT for undisclosed prices in 2026.6374
Cash returned to shareholders
Fiscal years to the last Saturday in December, US$ billions
- Buybacks $1.3B
- Dividends $0B
- Stock-based pay, as a level $1.6B
Show the numbers
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Buybacks (reported) | $0B | $0B | $0B | $0B | $0B | $1.8B | $3.7B | $0.98B | $0.86B | $1.3B |
| Dividends (reported) | $0B | $0B | $0B | $0B | $0B | $0B | $0B | $0B | $0B | $0B |
| Total returned (calculated) | $0B | $0B | $0B | $0B | $0B | $1.8B | $3.7B | $0.98B | $0.86B | $1.3B |
| Stock-based compensation (reported) | $0.09B | $0.10B | $0.14B | $0.20B | $0.27B | $0.38B | $1.1B | $1.4B | $1.4B | $1.6B |
AMD has begun financing demand. It issued warrants for 320M shares in October 2025 and February 2026, guaranteed up to $4.1B of a partner’s data-center leases in 2026, agreed to acquire World Labs for about $8.2B in stock, and committed to invest up to $5B in Anthropic. It has $4.5B of data-center and other real estate leases not yet started at 27 June, up from $1.3B in December, and signed $9.5B more after quarter end. It also sold $4.75B of senior notes on 17 August.462224353626
Since October 2025 AMD has committed to give its biggest customers up to 320M shares ($162B at today’s price if all vest), guarantees of up to $4.1B, up to $5B of equity and $1B for Meta’s equity offering; cash on hand is $13.1B.
Financials
Free cash flow of $7.7B was 120% of net income in the TTM, and $2.2B of first-half cash came from payables.417 From 2025 to the TTM, revenue rose 19%, GAAP operating income 76% and free cash flow 40% (calculated).6417
GAAP gross margin went from 49.5% in 2025 to 53.2% in the TTM. GAAP operating margin went from 10.7% to 15.7%, and was 17.3% in the June quarter (calculated).6417 The difference between the GAAP and non-GAAP operating margins is acquisition amortization and stock pay, together 9.9 points of the 10.3-point gap (calculated).6417 On AMD’s non-GAAP basis the TTM gross margin was 55.7%, operating spending 29.8% and operating margin 26.0% of revenue; stock pay was 4.6% and free cash flow after it 14.1% (calculated).17192021
Margins
Fiscal years to the last Saturday in December, share of revenue
- Gross 49.5%
- Operating 10.7%
- Free cash flow 15.9%
Show the numbers
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | TTM Jun 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Gross margin (calculated) | 23.2% | 34.0% | 37.8% | 42.6% | 44.5% | 48.2% | 44.9% | 46.1% | 49.4% | 49.5% | 53.2% |
| Operating margin (calculated) | −8.6% | 2.4% | 7.0% | 9.4% | 14.0% | 22.2% | 5.4% | 1.8% | 7.4% | 10.7% | 15.7% |
| Free cash flow margin (calculated) | 0.1% | −1.9% | −2.0% | 4.1% | 8.0% | 19.6% | 13.2% | 4.9% | 9.3% | 15.9% | 18.7% |
Earnings quality
Three items flatter or depress the year-on-year comparison. A tax release of $853M raised 2025 net income and drops out of the TTM. An $800M inventory charge on MI308 cut 2025 gross profit, about $440M net after the Q4 release. And $549M of gains on long-term investments sit inside the first half of 2026 other income.61720
From GAAP profit to cash
US$ billions. First the twelve months to 27 June 2026, then the working-capital lines of the first half of 2026.
| US$B | |
|---|---|
| GAAP operating income, TTM (reported) | 6.49 |
| Acquisition amortization, non-cash (reported) | 2.21 |
| Stock pay (reported) | 1.90 |
| Other adjustments (calculated) | 0.13 |
| Non-GAAP operating income (AMD’s measure, sum of four quarters) (calculated) | 10.73 |
| Operating cash flow, continuing operations (calculated) | 9.41 |
| Capital spending (calculated) | 1.68 |
| Free cash flow (AMD’s definition) (calculated) | 7.74 |
| Less stock pay (calculated) | 1.90 |
| Free cash flow after stock pay (the base of my model) (calculated) | 5.84 |
| Net income, GAAP, with $0.55B of investment gains in the first half of 2026 (calculated) | 6.43 |
| Accounts receivable, first half of 2026 (reported) | −0.97 |
| Inventories (reported) | −0.55 |
| Prepaid expenses and other assets (reported) | −0.99 |
| Accounts payable (reported) | +2.17 |
| Accrued and other liabilities (reported) | +0.06 |
| Net working capital, first half of 2026 (calculated) | −0.27 |
The 10-Q attributes the $2.2B rise in payables to the timing of payments and the $1.0B rise in prepaid expenses and other assets mostly to prepayments under supply agreements. A minus is a use of cash. Payables were $5.4B at 27 June 2026 against $2.9B at 27 December 2025, and unconditional purchase commitments $30.3B against $12.2B. Source 10-K 2025; 10-Q Q2 2026; Q2 2026 release; Q1 2026 release; Q4 2025 release; Q3 2025 release [6][4][17][19][20][21]. Figures calculated from reported data.
Operating cash flow of $5.3B in the first half of 2026 includes $2.2B from payables, which the 10-Q attributes to the timing of payments. Working capital was a net use of $0.27B in the half: the rise in payables paid for rises in receivables ($0.97B), inventory ($0.55B) and prepaid expenses and other assets ($0.99B), the last mostly prepayments under supply agreements.4 Suppliers are not carrying the ramp on net, but payables are the line that reverses if revenue stalls.
Free cash flow
Fiscal years to the last Saturday in December, US$ billions
- Free cash flow $5.5B in 2025
Show the numbers
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | TTM Jun 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating cash flow (reported) | $0.08B | $0.01B | $0.03B | $0.49B | $1.1B | $3.5B | $3.6B | $1.7B | $3.0B | $6.5B | $9.4B |
| Free cash flow (calculated) | $0.00B | −$0.10B | −$0.13B | $0.28B | $0.78B | $3.2B | $3.1B | $1.1B | $2.4B | $5.5B | $7.7B |
| Capital spending (reported) | $0.08B | $0.11B | $0.16B | $0.22B | $0.29B | $0.30B | $0.45B | $0.55B | $0.64B | $0.97B | $1.7B |
The balance sheet
Cash and short-term investments were $13.1B at 27 June 2026 against $3.25B of senior notes, with a $5.0B revolver and a $5.5B commercial-paper programme undrawn.4 AMD sold $4.75B of notes on 17 August at coupons of 4.600% to 5.500% and has $875M of 4.212% notes due on 24 September; I could not verify the repayment.264 The new notes add cash and debt together and raise interest by about $0.24B a year (calculated).26 The 10-Q does not say what AMD’s own data-center leases are for. It does say AMD expects to use its multi-year cloud compute capacity in its operations or assign it to third parties.4
Obligations and claims on cash beyond the balance sheet
US$ billions at 27 June 2026 unless a date is given.
| Item | Amount | Date | What it is |
|---|---|---|---|
| Unconditional purchase commitments | $30.3B | 27 Jun 2026 | Wafers, substrates and components, multi-year cloud compute capacity from cloud providers (which AMD expects to use or assign to others), software and licences; $17.4B falls in the rest of 2026. Was $25.7B at 28 Mar 2026 and $12.2B at 27 Dec 2025 |
| Data-center and other real estate leases not yet commenced | $4.5B | 27 Jun 2026 | Aggregate future payments; terms of 6 to 11 years, starting from 2H 2026. Was $1.3B at 27 Dec 2025. The 10-Q says what the leases are (data center and other real estate), not what AMD uses them for |
| Data-center leases signed after quarter end | $9.5B | After 27 Jun 2026 | Aggregate future payments over terms of up to 16 years; commence in 2027 and 2028. Spread over those terms, the two sets of leases come to roughly $1.0B to $1.3B a year of rent once all have started ($4.5B over 11 to 6 years plus $9.5B over 16; my arithmetic) |
| Lease guarantees for a commercial partner | $4.1B | 27 Jun 2026 | Maximum gross exposure, up to 15 years; payable only on the partner’s default; may be issued in exchange for warrants; the partner is not named |
| Investment commitments made after quarter end | up to $5.0B | After 27 Jun 2026 | Subject to contingencies; through fiscal 2028; the 10-Q names no counterparty. AMD’s 22 July release commits up to $5B to Anthropic |
| Senior notes, principal | $3.25B | 27 Jun 2026 | Five series from 4.212% due 2026 to 4.393% due 2052; $875M falls due 24 Sep 2026. Principal was $0.3B at the end of 2021, $2.5B in 2022 and 2023, $1.75B in 2024 and $3.25B in 2025 |
| New senior notes closed 17 Aug 2026 | $4.75B | 17 Aug 2026 | 4.600% 2029 $1.25B; 5.000% 2031 $1.50B; 5.250% 2033 $1.00B; 5.500% 2036 $1.00B; general corporate purposes, which may include repaying debt |
| Revolving credit facility and commercial paper | $5.0B and $5.5B | May 2026 | Both undrawn at 27 Jun 2026; the revolver replaced a $3.0B facility |
| Cash and short-term investments | $13.1B | 27 Jun 2026 | Cash $5.086B plus short-term investments $8.025B. Was $3.6B at the end of 2021, $5.9B in 2022, $5.8B in 2023, $5.1B in 2024 and $10.6B in 2025 |
| Goodwill and acquisition-related intangibles | $25.5B and $15.6B | 27 Jun 2026 | Goodwill was $0.3B at the end of 2021 and $24.2B at the end of 2022, after Xilinx; intangibles were $16.7B at the end of 2025. Both are tested for impairment |
| Inventories | $8.5B | 27 Jun 2026 | $7.9B at 27 Dec 2025, $5.7B in 2024, $4.4B in 2023, $3.8B in 2022 and $2.0B in 2021 |
| Long-term investments | $2.9B | 27 Jun 2026 | $1.22B in marketable equity (about $1.1B restricted from sale until as late as October 2028) and $1.7B in private companies; not counted in cash |
The $4.75B of new notes and the $875M repayment fall after the balance sheet date and are not in the enterprise-value bridge. Whether the 4.212% notes were repaid on 24 September 2026 will show in the 10-Q for the third quarter, due after 3 November 2026. Source 10-Q Q2 2026; 10-Q Q1 2026; 10-K 2025; 8-K notes; 8-K annual meeting; Anthropic release; World Labs release [4][5][6][26][30][35][36]. Figures as reported.
Ten years of the income statement and cash flow
Fiscal years end on the last Saturday in December; 2016 and 2022 had 53 weeks. Money in US$ billions. 2016 and 2017 are the figures restated for ASU 2014-09 in the 2018 10-K, not the originals (2017 revenue was first reported as $5.329B and net income as $43M). From 2025 operating cash flow is from continuing operations: the $1.216B earned by the ZT Systems manufacturing business, sold in October 2025, is excluded (the cash-flow statement total is $7.709B). TTM Jun 2026 is the four quarters to 27 June 2026, calculated as 2025 less the first half of 2025 plus the first half of 2026; TTM diluted EPS is the sum of the four reported quarters, and TTM diluted shares are the second-quarter weighted average. Acquisition amortization is not separately reported before 2020 and was nil in 2020 and 2021.
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | TTM Jun 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue (reported) | $4.3B | $5.3B | $6.5B | $6.7B | $9.8B | $16.4B | $23.6B | $22.7B | $25.8B | $34.6B | $41.3B |
| Revenue growth (calculated) | – | 21.6% | 23.3% | 4.0% | 45.0% | 68.3% | 43.6% | −3.9% | 13.7% | 34.3% | – |
| Gross margin (calculated) | 23.2% | 34.0% | 37.8% | 42.6% | 44.5% | 48.2% | 44.9% | 46.1% | 49.4% | 49.5% | 53.2% |
| Research and development (reported) | $1.0B | $1.2B | $1.4B | $1.5B | $2.0B | $2.8B | $5.0B | $5.9B | $6.5B | $8.1B | $9.4B |
| Operating income (GAAP) (reported) | −$0.37B | $0.13B | $0.45B | $0.63B | $1.4B | $3.6B | $1.3B | $0.40B | $1.9B | $3.7B | $6.5B |
| Operating margin (calculated) | −8.6% | 2.4% | 7.0% | 9.4% | 14.0% | 22.2% | 5.4% | 1.8% | 7.4% | 10.7% | 15.7% |
| Operating income before acquisition amortization and stock pay (calculated) | – | – | – | – | $1.6B | $4.0B | $5.9B | $4.6B | $5.7B | $7.6B | $10.6B |
| Net income (reported) | −$0.50B | −$0.03B | $0.34B | $0.34B | $2.5B | $3.2B | $1.3B | $0.85B | $1.6B | $4.3B | $6.4B |
| Diluted EPS (reported) | −$0.60 | −$0.03 | $0.32 | $0.30 | $2.06 | $2.57 | $0.84 | $0.53 | $1.00 | $2.65 | $3.89 |
| Operating cash flow (continuing operations) (reported) | $0.08B | $0.01B | $0.03B | $0.49B | $1.1B | $3.5B | $3.6B | $1.7B | $3.0B | $6.5B | $9.4B |
| Capital expenditure (reported) | $0.08B | $0.11B | $0.16B | $0.22B | $0.29B | $0.30B | $0.45B | $0.55B | $0.64B | $0.97B | $1.7B |
| Free cash flow (calculated) | $0.00B | −$0.10B | −$0.13B | $0.28B | $0.78B | $3.2B | $3.1B | $1.1B | $2.4B | $5.5B | $7.7B |
| Free cash flow margin (calculated) | 0.1% | −1.9% | −2.0% | 4.1% | 8.0% | 19.6% | 13.2% | 4.9% | 9.3% | 15.9% | 18.7% |
| Stock-based compensation (reported) | $0.09B | $0.10B | $0.14B | $0.20B | $0.27B | $0.38B | $1.1B | $1.4B | $1.4B | $1.6B | $1.9B |
| Share repurchases under the program (reported) | $0B | $0B | $0B | $0B | $0B | $1.8B | $3.7B | $0.98B | $0.86B | $1.3B | $0.31B |
| Diluted shares (weighted average) (reported) | 835.0M | 952.0M | 1,064.0M | 1,120.0M | 1,207.0M | 1,229.0M | 1,571.0M | 1,625.0M | 1,637.0M | 1,636.0M | 1,659.0M |
| Inventories (year end) (reported) | $0.69B | $0.69B | $0.84B | $0.98B | $1.4B | $2.0B | $3.8B | $4.4B | $5.7B | $7.9B | $8.5B |
| Cash and short-term investments (year end) (calculated) | $1.3B | $1.2B | $1.2B | $1.5B | $2.3B | $3.6B | $5.9B | $5.8B | $5.1B | $10.6B | $13.1B |
(reported)Reported in a filing (calculated)Calculated from reported figures (estimate)My estimate
Source 10-K 2025; 10-K 2022; 10-K 2019; 10-K 2018; SEC XBRL facts; 10-Q Q2 2026; Q2 2026 release; 10-K 2023; Q4 2025 release; Q3 2025 release; Q1 2026 release [6][10][13][14][15][4][17][9][20][21][19]. Lines marked C are calculated from the reported lines above them.
Valuation
Values below are as of 27 June 2026, the last balance sheet, as on the NVIDIA page. Dated Q4 2026 they would be about 3% higher, and discounting cash flows at mid-year instead of at year end would add about 5% more: together my base would be $209, my bull $469 and my bear $66 (estimate).417 The price is above the bull case on every one of these bases, and no conclusion below depends on the date.
Before the numbers, I ask how an owner loses money here. I see three ways. The customers do not fund their orders, the build-out stops, and AMD is left with $30.3B of purchase commitments and a plant sized for demand that left4. The warrants hand two customers 320M new shares, about a fifth of today’s count, so growth is shared before it reaches me (calculated).41 And the price already pays for the best outcome, so a good result that falls short of my bull case still loses money.
What an owner can take out is smaller than the headline. Free cash flow in the TTM was $7.7B, and it is already after capital spending. Take off $1.9B of stock pay and $5.84B is left, about $3.52 a share, against non-GAAP earnings of $5.76 (calculated).174 That is 61% of the headline figure, and the price is 143 times it (calculated).1 Part of the first-half cash also came from suppliers not yet paid4.
Two things I cannot know. Nobody discloses what a gigawatt earns AMD, so I show $10B to $20B instead of one figure. And I cannot tell which customers will fund what they have said they intend. So the answer on this page is a range, $61 to $434, and the $221 weighted value is only an average of three stories.
What the price implies
Start with earnings. At $504.80 AMD trades at $837.5B on 1.659B diluted shares, 87.6 times its TTM non-GAAP earnings of $5.76 and 106 times after stock pay (calculated).117192021 The company targets non-GAAP earnings above $20 a share within three to five years of November 2025, and in August management said it expects to exceed that target significantly.404142 The price is 25.2 times $20, or 30 times if the same profit is spread over the 1.98B shares that exist when all the warrants vest (calculated).401
The return comes first. At $504.80 my cash flows return 3.8% a year in the bear case, 6.1% in the base and 9.2% in the bull, against 5.00% on the ten-year Treasury (estimate).153 The base case beats the risk-free rate by about one point, and the price is 8.3 times my bear value.
Ways to read the price
What $504.80 needs to be true. Multiples and returns are my arithmetic on reported figures and my cash flows.
| Reading | What the price needs |
|---|---|
| Return on my cash flows at today’s price (estimate) | Bear 3.8%, base 6.1%, bull 9.2% a year, against 5.00% on the ten-year Treasury and the 10% I discount at. The base case beats the Treasury by about one point |
| Constant growth from today’s free cash flow (calculated) | 33.2% a year for ten years, to $103B of free cash flow after stock pay in year 10, against $83B in my bull. This counts no warrant shares, which flatters the price: on the base case’s 1.82B shares it needs 34.6% |
| Price to TTM non-GAAP earnings (calculated) | 87.6 times AMD’s $5.76; 106 times after stock pay ($4.77: $5.76 less $0.99, which is $1.9B of stock pay taxed at 13% over 1.659B shares) |
| My non-GAAP earnings per share, years 1, 2, 3 and 5 (estimate) | Bear $7.82, $7.64, $5.65, $5.99; base $8.90, $13.26, $16.93, $18.26; bull $9.38, $17.71, $25.73, $35.18. Each on its own share count: 1.71B, 1.82B, 1.98B. The price is 57 times my base year-1 earnings and 38 times year 2 |
| Price to the company’s earnings target (calculated) | 25.2 times $20 on 1.66B shares; 30 times if the same profit is spread over 1.98B shares, with all 320M warrant shares |
| A 10% return to June 2031 (estimate) | A share price of $787: 43 times my base year-5 earnings ($18.26), or 22 times my bull ($35.18) |
| 25 times my base year-5 earnings (estimate) | $457 in mid-2031 on 1.82B shares, a return of −2.1% a year from today’s price; 20 times gives $365, −6.7% a year. On 1.66B shares, before any warrant shares, 25 times the company’s $20 is $500, about today’s price |
| Revenue on my margins (estimate) | $410B in year 10 on my base margins, 2.7 times my base; or $353B on my bull margins and shares, 1.2 times my bull. NVIDIA’s June quarter, annualised, is $385B |
Source Nasdaq quotes; Q2 2026 release; Q1 2026 release; Q4 2025 release; Q3 2025 release; Analyst Day release; NVIDIA Q2 FY2027; Treasury yield curve; 10-Q Q1 2026 [1][17][19][20][21][40][51][53][5]. Judgements are my estimates.
One constant rate is a blunt tool for a business that has just started to compound, so the table reads the price several ways. Solved as one rate, from TTM free cash flow of $5.84B after stock pay and with no warrant shares counted, the price needs 33.2% a year for ten years, to about $103B in year 10 (calculated).4617 AMD’s free cash flow after stock pay grew 8.1% a year from 2021 to 2025 (calculated).611 Read as revenue, the price needs $410B in year 10 on my base margins, 2.7 times my base. Read as a return, a holder at 25 times my base year-5 earnings loses 2.1% a year.
What the price assumes
The free cash flow growth per year that today's price needs, next to what the business has done and my base case.
Show the numbers
| Rate | |
|---|---|
| What the price implies, years 1 to 10 (calculated) | 33.2% |
| Free cash flow after stock pay, 2021 to 2025 (calculated) | 8.1% |
| My bull case, years 1 to 10 (estimate) | 30.4% |
| My base case, years 1 to 10 (estimate) | 18.7% |
| My bear case, years 1 to 10 (estimate) | 4.1% |
Reverse DCF: what the price needs
Solve the model for today's price instead of for value.
| Starting free cash flow, after stock pay (calculated) | $5.84B (TTM to June 2026: free cash flow $7.74B less stock pay $1.90B) |
|---|---|
| Discount rate (estimate) | 10.0% |
| Growth after year 10 (estimate) | 3.5% |
| Cash and long-term investments, less debt (calculated) | $12.8B (27 June 2026) |
| Diluted shares (reported) | 1.659B (Q2 2026); no warrant shares counted, which flatters the price |
| Price (reported) | $504.80 (close, Q4 2026) |
| Dating (calculated) | Cash flows start from the 27 June 2026 balance sheet; the price deflated to that date needs 32.7% |
| What the price implies, years 1 to 10 (calculated) | 33.2% |
Source Nasdaq quotes; 10-Q Q2 2026; 10-K 2025; Q2 2026 release; Damodaran ERP [1][4][6][17][54]. Inputs from the filings and my model; the implied rate is calculated.
At $504.80 the price needs free cash flow after stock pay to reach about $103B in year 10; my bull case reaches $83B.
What the market is paying for
There is a case for the price, and it is about the size of the market. Management gives about $1.4 trillion for data-center AI accelerators in 2030, growing above 45% a year, and about $220B for server CPUs, where it targets more than 50% of revenue.414240 My base case has AMD’s Data Center segment, which includes CPUs, at 6.8% of the $1.4 trillion in year 5, my bull at 13.5%, and the price at about 16% (calculated). AMD’s segment is about 7% of what NVIDIA’s and AMD’s data-center segments report today (calculated).1751 A 50% share of $220B would be $110B on its own, more than my base year-5 Data Center revenue of $95B (calculated). If the $1.4 trillion arrives, the price needs about 16% of it, a little above my bull’s 13.5% and 2.3 times my base’s 6.8%.
Put as one set of assumptions, the price needs my bull case with revenue about 1.2 times as high in every year: $252B in year 5 (my bull $216B, my base $119B), $353B in year 10, my bull margins and all 320M warrant shares. Year-5 Data Center revenue of $221B would be 10.2 gigawatts a year at $13B and 60% accelerators, against 4.4 in my base and 8.7 in my bull (estimate). I give that case under 25% weight because my bull already has the two warrant holders buying every gigawatt they named, and delivers management’s August outlook in full.41
The price needs three things at once: the two customers take all 12 gigawatts, the operating margin passes 35%, and revenue runs 1.2 times my bull path. If I give each one chance in two, all three together are one in eight (calculated). I weight my bull case under 25%, and the price asks for more than that.
Seven months of price and filings
The stock closed at $190.95 on 3 March 2026, almost exactly my base value, and at $649.42 on 6 October. The table lists AMD’s 8-Ks in that span and the Anthropic, Helion and Meta releases, with the close before and after each. I read AMD’s list of press releases only from 22 July onward, so releases between March and July that were not 8-Ks may be missing.156
Seven months of price and filings
Closes on the session before the news and on the first session that had it, from Nasdaq's daily history. Filing times are EDGAR acceptance times. The rows are AMD's 8-Ks in the span and the Anthropic, Helion and Meta releases. AMD's list of press releases was read only from 22 July onward, so releases before then that were not 8-Ks may be missing; Taalas (6 August), the notes (17 August) and the HUMAIN release (31 August) are not listed.
| Date | What AMD filed or released | Close before | Close after | Change |
|---|---|---|---|---|
| 6 Oct 2025 | OpenAI: up to 6 GW and a warrant for 160M shares (8-K filed 7:04 am ET) | $164.67 | $203.71 | +23.7% |
| 3 Feb 2026 | Q4 2025 results (8-K after the close) | $242.11 | $200.19 | −17.3% |
| 17 Feb 2026 | CEO award of $75M target value (8-K filed 4:21 pm ET) | $203.08 | $200.12 | −1.5% |
| 24 Feb 2026 | Meta: up to 6 GW and a warrant for 160M shares (8-K filed 7:01 am ET) | $196.60 | $213.84 | +8.8% |
| 3 Mar 2026 | Lowest close of the past year; no AMD 8-K between 24 Feb and 5 May | $190.95 | ||
| 3 Mar to 5 May | No 8-K; the proxy statement was filed on 27 March | $190.95 | $355.26 | +86% |
| 5 May 2026 | Q1 2026 results (8-K after the close) | $355.26 | $421.39 | +18.6% |
| 6 May to 21 Jul | Annual meeting and a new credit agreement (15 May); executive pay (1 Jul); no other 8-K | $421.39 | $544.43 | +29% |
| 22 Jul 2026 | Anthropic: up to 2 GW and a commitment of up to $5B (AMD release, 9:00 am ET) | $544.43 | $552.33 | +1.5% |
| 4 Aug 2026 | Q2 2026 results (8-K after the close) | $518.58 | $482.05 | −7.0% |
| 28 Sep 2026 | World Labs, about $8.2B in AMD stock (8-K after the close) | $607.87 | $607.57 | 0% |
| 6 Oct 2026 | Highest close | $649.42 | ||
| 12 Oct 2026 | AMD Helion rack announced (AMD release, 9:00 am ET) | $608.10 | $594.24 | −2.3% |
| 27 Oct 2026 | Meta: Helios running at Meta, and AMD to invest $1B in Meta’s equity offering (AMD release, 9:20 am ET)57 | $531.28 | $560.26 | +5.5% |
| 6 Oct to the Q4 2026 close | No 8-K; only the Q3 date release (6 Oct), the Helion release (12 Oct) and the Meta release (27 Oct) | $649.42 | $504.80 | −22.3% |
From the low close of $190.95 on 3 March to the high close of $649.42 on 6 October the price rose $458, or +240%. Four sessions in that span carry a listed event (6 May, 22 July, 5 August and 29 September) and net to $37. The rest came on sessions with none of them. I do not use press or analyst attributions. 6 October 2025 is outside the seven months and is shown because the OpenAI warrant started the share-count story. Source Nasdaq quotes; SEC filing times; 8-K OpenAI; 8-K Meta; 8-K CEO award; Q1 2026 release; Q2 2026 release; Anthropic release; 8-K World Labs; World Labs release; Helion release; Meta release; Q4 2025 release; Proxy 2026; 8-K exec pay; 8-K annual meeting [1][56][22][24][28][19][17][35][27][36][38][20][16][29][30][57]. Figures calculated from reported data.
Four sessions carry a listed event and net to $37 of the $458 rise; the rest came on sessions with none of them. My model uses the filings through Q4 2026. I did not run it event by event, so I cannot say how much each event changed my value, and I offer no cause for the rest of the move (calculated).156
The discount rate
I use 10%, the rate I use for a large business with net cash, which is also what the capital asset pricing model gives for a beta of about 1.2 (calculated). The model with AMD’s measured betas gives more: the 5.00% ten-year Treasury yield plus Damodaran’s 4.20% equity risk premium, times betas of 2.24 over ten years of monthly returns and 2.48 over five, gives 14.4% and 15.4% (calculated).5354551 Ten percent is generous for a stock with a ten-year beta of 2.24, and it raises every value: at 12% my base is $147, my bear $49 and my bull $314, and at 14.4% the base is $113 (estimate). I keep 10% so the page compares with the others, and put the cyclical risk into the cash flows, where it can be seen. The bear case is that risk.
My cases at other discount rates
Value per share. Each case keeps its own growth after year 10 (3.0%, 3.5%, 4.0%) and its own share count, except in the row that sets all three to 3.5%.
| Discount rate | Bear | Base | Bull |
|---|---|---|---|
| 14.4%, CAPM with AMD’s ten-year beta of 2.24 (estimate) | $40 | $113 | $232 |
| 12.0% (estimate) | $49 | $147 | $314 |
| 11.0% (estimate) | $54 | $167 | $365 |
| 10.0%, my rate (estimate) | $61 | $194 | $434 |
| 9.0% (estimate) | $70 | $230 | $530 |
| 8.0% (estimate) | $83 | $283 | $676 |
| 7.0% (estimate) | $103 | $366 | $920 |
| 10.0%, with 3.5% growth after year 10 in every case (estimate) | $64 | $194 | $411 |
| 6.1%, the rate at which the base case equals the price (estimate) | $505 | ||
| 9.2%, the rate at which the bull case equals the price (estimate) | $505 |
CAPM: the 5.00% ten-year Treasury plus Damodaran's 4.20% implied equity risk premium (1 October 2026; the Treasury yield is Q4 2026) times a beta. AMD's beta against the S&P 500 was 2.24 over ten years of monthly returns (119 returns), 2.48 over 60 months and 3.35 over 36 (calculated). A beta of 1.2 gives 10.0%. At 10% a change of half a point in growth after year 10 moves my base by about $10 (3.0% gives $186, 4.0% gives $204). Source Treasury yield curve; Damodaran ERP; S&P 500 monthly; Nasdaq quotes [53][54][55][1]. Judgements are my estimates.
Three cases
I build each case from the income statement down: revenue by segment, non-GAAP gross margin, operating spending, stock pay as a cost, tax of 15% rising to 17%, capital spending of 3.0% to 3.5% of revenue against depreciation of 1.6% to 2.8%, and working capital at 15% of revenue (calculated).6417 Each case divides by its own share count: today’s 1.659B diluted shares plus the warrant shares that vest in that case. The base counts 160M of them, which lowers it from $213 to $194.
Growth after year 10 is 3.0%, 3.5% and 4.0% in the three cases. With 3.5% in all three the values are $64, $194 and $411. After year 10 comes 54% of the bear value, 59% of the base and 66% of the bull. In my base the ten explicit years are worth $77 a share, the terminal value $110 and net cash $7 (estimate).4
Three cases
Each case is built from revenue down to free cash flow after stock pay; years run from July, so year 1 ends June 2027.
| Bear | Base | Bull | |
|---|---|---|---|
| Revenue, year 1 (to June 2027) (estimate) | $56.2B | $62.7B | $67.0B |
| Revenue, year 2 (estimate) | $58.1B | $87.3B | $113B |
| Revenue, year 3 (estimate) | $51.9B | $108B | $160B |
| Revenue, year 5 (estimate) | $55.1B | $119B | $216B |
| Revenue, year 10 (estimate) | $65.0B | $153B | $302B |
| Data Center growth, years 1 to 3 (estimate) | +65%, +5%, −15% | +93%, +55%, +30% | +110%, +95%, +50% |
| Data Center growth, years 4 and 5 (estimate) | +3%, +4% | 0%, +10% | +24%, +12% |
| Data Center growth, years 6 to 10 (estimate) | 4% a year | 8% falling to 4.5% | 10% falling to 5% |
| Data Center growth in calendar 2027 (my interpolation) (estimate) | +42% | +86% | +116% |
| Client and Gaming, Embedded growth (estimate) | About 0% to 3% a year | 3% a year; 12% falling to 5% | 5% a year; 16% falling to 6% |
| Non-GAAP gross margin, years 1 to 3 (estimate) | 54.5%, 52.5%, 50.0% | 55.0%, 54.0%, 53.5% | 56.0%, 56.0%, 55.5% |
| Non-GAAP gross margin, year 10 (estimate) | 48.0% | 50.0% | 55.0% |
| Operating spending, share of revenue, years 1 to 3 (estimate) | 27.5%, 27.0%, 29.0% | 25.7%, 22.5%, 21.0% | 24.5%, 20.5%, 19.0% |
| Operating spending, share of revenue, year 10 (estimate) | 27.0% | 20.5% | 18.0% |
| Non-GAAP operating margin, year 10 (estimate) | 21.0% | 29.5% | 37.0% |
| Stock pay, share of revenue, year 10 (estimate) | 4.0% | 3.0% | 2.8% |
| Tax rate (estimate) | 15%, rising to 17% from year 4 | 15%, rising to 17% from year 4 | 15%, rising to 17% from year 4 |
| Free cash flow after stock pay, years 1, 2, 3 and 5 (estimate) | $5.7B, $3.6B, $7.8B, $7.3B | $7.1B, $14.1B, $22.8B, $26.4B | $8.6B, $20.8B, $37.0B, $56.7B |
| Free cash flow after stock pay, year 10 (estimate) | $8.7B (13.4% of revenue) | $32.5B (21.2% of revenue) | $82.9B (27.5% of revenue) |
| Loss on supply commitments (estimate) | $6B in year 2, 20% of $30.3B | None | None |
| Warrant shares vested (estimate) | 53M: first gigawatt each | 160M: 3 GW each | 320M: all 6 GW each |
| Shares used (estimate) | 1.712B | 1.819B | 1.979B |
| Year-5 Data Center revenue as capacity (a cross-check) (estimate) | 1.6 GW a year at $13B a gigawatt, 60% accelerators | 4.4 GW a year at $13B a gigawatt, 60% accelerators | 8.7 GW a year at $13B a gigawatt, 60% accelerators |
| Discount rate (estimate) | 10.0% | 10.0% | 10.0% |
| Growth after year 10 (estimate) | 3.0% | 3.5% | 4.0% |
| Share of value from after year 10 (estimate) | 54% | 59% | 66% |
| Value with 3.5% growth after year 10 in every case (estimate) | $64 | $194 | $411 |
| Return a year at $504.80 (estimate) | 3.8% | 6.1% | 9.2% |
| Weight (estimate) | 25% | 50% | 25% |
| Value per share (estimate) | $61 | $194 | $434 |
| Versus the price, Q4 2026 (calculated) | −88% | −62% | −14% |
Source 10-Q Q2 2026; 10-K 2025; Q2 2026 release; 8-K OpenAI; 8-K Meta; Analyst Day release; Call transcript (EW); Treasury yield curve; Damodaran ERP; Nasdaq quotes [4][6][17][22][24][40][41][53][54][1]. Assumptions and values are my estimates.
The base case takes the company’s near-term outlook and then assumes a normal cycle.
- Year 1 revenue of $62.7B, about what $13.0B in Q3 and growth of 12.7% a quarter after it gives; Data Center up 93% (estimate).1718
- Year 2 revenue of $87.3B and year 3 of $108.2B, with Data Center up 55% and 30%. My interpolation puts Data Center up 86% in calendar 2027, a little under management’s “more than double” (estimate).4142
- A flat year 4, with Data Center unchanged, as customer spending meets customer funding (estimate). Then Data Center up 10% and 8% falling to 4.5% by year 10.
- Non-GAAP gross margin from 55.0% in year 1 to 50.0% in year 10, as rack-scale systems carry less margin than CPUs and rivals respond. Operating spending falls from 25.7% to 20.5% of revenue, so the non-GAAP operating margin peaks at 32.5% and ends at 29.5%. AMD targets above 35%.40
- The customers take 6 of the 12 gigawatts, so 160M warrant shares vest. The table in Valuation shows what that explains: 29% of the Data Center growth, or 39% with Anthropic, and the rest is server CPUs and buyers not named (estimate).
What the named customers explain in my base case
Base-case Data Center revenue is $377B over years 1 to 5. Today's $22.2B run rate for five years is $111B, so growth adds $266B. Revenue per gigawatt is the one input nobody discloses, so the columns run from $10B to $20B.
| $10B a gigawatt | $13B (my estimate) | $15B (an analyst's) | $20B a gigawatt | |
|---|---|---|---|---|
| Growth over the run rate, years 1 to 5 (calculated) | $266B | $266B | $266B | $266B |
| OpenAI and Meta, 6 GW, if all five years (estimate) | $60B | $78B | $90B | $120B |
| Anthropic, 2 GW (estimate) | $20B | $26B | $30B | $40B |
| Share of the growth covered by OpenAI and Meta (estimate) | 23% | 29% | 34% | 45% |
| Share covered by all three (estimate) | 30% | 39% | 45% | 60% |
| Everything else: server CPUs and buyers not named (estimate) | $186B | $162B | $146B | $106B |
| Gigawatts a year in year 5, if 60% of Data Center revenue is accelerators and racks (estimate) | 5.7 | 4.4 | 3.8 | 2.9 |
| Gigawatts over years 1 to 5, same assumption (estimate) | 22.6 | 17.4 | 15.1 | 11.3 |
| Gigawatts the three customers say they intend to deploy (reported) | 14 | 14 | 14 | 14 |
Gigawatts are a cross-check in my model, not a driver: revenue grows by segment at the rates in the cases table, and the table asks whether those rates are plausible. The 60% accelerator share is my estimate; AMD does not report Instinct revenue. $15B a gigawatt is the figure an analyst put to management on the August call, and Lisa Su answered that the range is still double-digit billions. A gigawatt is counted in full if it arrives inside five years, so the shares covered are ceilings. Source 10-Q Q2 2026; 8-K OpenAI; 8-K Meta; Anthropic release; Call transcript (EW); Q2 2026 release [4][22][24][35][41][17]. Judgements are my estimates.
Year-5 Data Center revenue in the base is 4.4 gigawatts a year at $13B each if three-fifths of it is accelerators and racks; at $10B it is 5.7 and at $20B 2.9. Over five years the base needs 17 gigawatts at $13B, more than the 14 the three customers named, so buyers not named supply part of it or revenue per gigawatt is higher than I assume (estimate). My base calendar-2030 revenue is about $114B, 27% a year from 2025, below the 35% a year of the company’s long-term model (calculated).406
My base-case non-GAAP earnings reach $20.0 a share in year 5 on 1.66B shares, and $18.3 on the 1.82B shares that include the warrants. The company’s target is above $20 within three to five years of November 2025, so my base case reaches it about seven months after that window closes, and management said in August that it expects to exceed it significantly.404142 A buyer at $504.80 pays 25 times $20. At 25 times my base year-5 earnings of $18.26 on 1.82B shares the share would be worth $457 in mid-2031, which is 2.1% a year below today’s price (calculated).401
The bear case is stranded capacity. The customers take only the first gigawatt each is bound to purchase. Data Center grows 65% in year 1 on the current ramp, then 5%, then falls 15% as funding and power stop the build-out, and AMD books a $6B write-down, 20% of its $30.3B of purchase commitments (estimate).4 Gross margin falls to 48% and the non-GAAP operating margin to 21%, the range AMD earned from 2023 to 2025 (calculated).698 Revenue is $65B in year 10 and free cash flow $8.7B. The bear value of $61 is 9% above the $55.94 close of October 2022.1
The bull case is AMD delivering its August outlook in full. Data Center more than doubles in 2027 (up 116% in calendar 2027 on my interpolation) and nearly doubles again in year 2, the two warrant holders take all 12 gigawatts they named and the 320M warrant shares vest, and the operating margin reaches 37%, above the 35% target.4041 Calendar 2030 revenue of about $205B is 43% a year from 2025 and a third above the $155B that 35% a year gives; management said in August that revenue would grow substantially above 35% (calculated).40641 Year-5 earnings are $35 a share on 1.98B shares and $42 on 1.66B, well above the target of $20 (calculated).40 Weighted 25%, 50% and 25%, the three cases give $221 a share (estimate), against a price of $504.80.1
What it is worth, against the price
Value per share in US dollars. My bear, base and bull cases against the closing price in Q4 2026.
- Bear to bull range
- Base case $194
- Price, Q4 2026 close $504.80
- Margin-of-safety zone below $81
Show the numbers
| Per share | Against the price | |
|---|---|---|
| Bear case (estimate) | $61 | 88% below price |
| Base case (estimate) | $194 | 62% below price |
| Bull case (estimate) | $434 | 14% below price |
| Margin-of-safety price (calculated) | $81 | 84% below price |
| Price, Q4 2026 (reported) | $504.80 |
What closes the gap
No single change gets there. The largest lever is the discount rate: my base case is $230 at 9%, $283 at 8% and $366 at 7% (estimate). The largest operating lever is the bull revenue path, which takes the base to $324 even after the 320M warrant shares (estimate). Bull margins on base revenue give $244. Skipping the flat year adds $18, to $212 (estimate).1
From my base value to the price, one change at a time
Base-case value per share when one assumption changes; everything else as in the base case.
| Change | Value | Against the price |
|---|---|---|
| My base case (estimate) | $194 | −62% |
| Bull revenue path and the 320M warrant shares; base margins (estimate) | $324 | −36% |
| Bull margins on base revenue (estimate) | $244 | −52% |
| Gross margin held at 56% in every year (estimate) | $231 | −54% |
| Data Center up 14% in year 4 instead of flat; every other year as in the base (estimate) | $212 | −58% |
| No warrant shares vest (estimate) | $213 | −58% |
| Growth after year 10 of 4.5% (estimate) | $215 | −57% |
| Discount rate of 9% (estimate) | $230 | −54% |
| Discount rate of 8% (estimate) | $283 | −44% |
| Discount rate of 7% (estimate) | $366 | −27% |
| My bull case (estimate) | $434 | −14% |
| My bull case at a 9% discount rate (estimate) | $530 | +5% |
| My bull case at an 8% discount rate (estimate) | $676 | +34% |
Source Nasdaq quotes [1]. Judgements are my estimates.
The price is my bull case at a 9.2% discount rate (calculated). It is also year-10 revenue of $410B on my base margins, or $353B on my bull margins and shares (calculated). NVIDIA’s June quarter, annualised, is $385B.51
The same dollar has other uses. On my NVIDIA page the base case returns 9.3% a year, and here it returns −1.6% (calculated). How good the business is and how good the price is are separate questions. Nine years of 26% growth answer the first; a price above my bull case answers the second.
What the model leaves out
The model counts the dilution that comes with customer revenue, and none of the cash flows of World Labs, Taalas or MEXT. It treats the stakes and the guarantees as small. The table prices each in dollars a share. The largest item is AMD’s own data-center leases: $14.0B of aggregate future payments with no stated purpose, or about $1.0B to $1.3B a year of rent by my arithmetic. If that rent is not already in my operating spending it costs $6 to $8 a share, 3% to 4% of my base (estimate).4
What the cases leave out
Effect on my base value per share. The obligations are from the 10-Q at 27 June 2026 and the 8-Ks after it.
| Item | Size | Effect on the base value |
|---|---|---|
| Investment commitment after quarter end (the 10-Q names no counterparty; AMD’s 22 July release commits up to $5B to Anthropic435) (estimate) | Up to $5.0B | −$2.75 if it were worth nothing |
| Lease guarantees for one unnamed partner4 (estimate) | $4.1B maximum | −$0.23 for a 10% chance of full payment |
| Purchase commitments, non-cancellable; they include multi-year cloud compute capacity as well as wafers4 (estimate) | $30.3B | −$3.33 for a 20% loss, as the bear case takes |
| Data-center and other leases not yet started ($4.5B) and data-center leases signed after quarter end ($9.5B): aggregate future payments, purpose and rent not given4 (estimate) | $14.0B | −$5.63 for each $1B a year of pre-tax rent that is not already in my margins; about −$6 to −$8 at my estimate of $1.0B to $1.3B a year. Counted as debt instead: −$7.70 |
| World Labs, an all-stock purchase of about $8.2B; 16.2M shares at today’s price, no cash flows added2736 (estimate) | 16.2M shares | −$1.72 |
| Taalas and MEXT, prices undisclosed37 (estimate) | Not disclosed | None counted |
| Long-term investments counted at carrying value, $1.1B restricted until as late as October 20284 (estimate) | $2.9B | Adds $1.61 |
| Senior notes sold on 17 August and notes due on 24 September; repayment not verified264 (estimate) | $4.75B and $0.875B | Net cash roughly unchanged; interest rises about $0.24B a year |
| A tax rate of 21% in every year instead of 15% rising to 17% (estimate) | n/a | −$10 |
| One point less gross margin in every year (estimate) | n/a | −$7 |
Source 10-Q Q2 2026; Anthropic release; 8-K World Labs; World Labs release; Taalas release; 8-K notes [4][35][27][36][37][26]. Judgements are my estimates.
The margin of safety
- Price$504.80Close, Q4 2026 [1]
- Base value$194My estimate (estimate)
- Margin of safety below$81set from my bear case (calculated)
I set the margin of safety from the bear case, because the same customers and the same cycle drive this business. Below $81, my bear value of $61 is at least three-quarters of the price paid, and my base case would return about 19% a year (estimate). That is 9 times my base earnings for the next year. At $81 the bear case still loses 24%. The cushion is the 58% discount to my base value, and it has to cover what the model does not hold: a customer failing to fund its order, a supply shock at TSMC, the loss of the chief executive, and my own error. The margin-of-safety price is 45% above the October 2022 low close of $55.94 and 58% below the March 2026 low close of $190.95; the price is 6.2 times it and 8.3 times my bear value (calculated).1
What the price buys in each case
Value against price, and the yearly return my cash flows give at that price.
| At a price of | Bear value | Base value | Bull value | Return a year: bear, base, bull |
|---|---|---|---|---|
| $504.80, the close in Q4 2026 (estimate) | −88% | −62% | −14% | 3.8%, 6.1%, 9.2% |
| $190.95, the low close of the past year (3 March 2026) (estimate) | −68% | +2% | +127% | 5.1%, 10.1%, 16.3% |
| $81, the margin-of-safety price (estimate) | −24% | +139% | +436% | 8.2%, 18.6%, 28.8% |
Source Nasdaq quotes [1]. Judgements are my estimates.
Where this could be in 5 and 10 years
Value per share at year 5 and year 10
Year 5 ends June 2031 and year 10 ends June 2036. Dollars of that year, per today’s share count in each case.
| Case | Value per share, June 2031 | Value per share, June 2036 | Owner cash paid out per share, to June 2036 | Return a year from $504.80 to June 2036 |
|---|---|---|---|---|
| Bear (estimate) | $76 | $94 | $42 | −13.4% |
| Base (estimate) | $250 | $303 | $135 | −1.6% |
| Bull (estimate) | $596 | $743 | $267 | +8.0% |
Included Value at each date is the present value then, at 10%, of the owner cash after it, plus today’s net cash carried forward at 10%. Owner cash is free cash flow after stock pay, counted as paid out. The return adds price growth and that cash over ten model years. The same run reproduces $61, $194 and $434 today within 1%. Judgements are my estimates.
For my base to be right at five years, revenue has to reach $119B by June 2031 and free cash flow after stock pay $26.4B, a 22% margin (calculated). It is right at ten years if revenue is $153B at a 21% margin, $32.5B (estimate). The value climbs from $194 today because the cash comes nearer, at 10% a year, and not because I add anything.
The bear and the bull differ on growth and margin. In the bear, revenue stays near $55B to $65B and free cash flow is 13% of it. In the bull, revenue reaches $302B at a 27.5% margin. The discount rate is 10% in all three, so the gap between them is the cash. At 12% my base is $147 today.
The most likely way my base is wrong is the build-out. If the large customers cannot fund their orders, Data Center stalls early, and the five-year value moves toward the bear’s $76. The price is above my base value at both dates.
These are estimates of value, not forecasts of the share price. The market price can sit above or below value for years.
The case for the price
What most people miss
AMD’s July release did not say whether Anthropic’s order was binding.35 Anthropic’s S-1 of 26 October does. Anthropic committed to a first block of Helios capacity in calendar 2027, subject to deployment conditions. It cannot cancel unless AMD breaches the deal and fails to fix it.61 There is no fixed dollar amount, but if it takes the full block it expects to spend more than $20.0B. That money goes through manufacturers or third parties, so it is not all AMD revenue. No warrant appears. AMD instead commits to purchase up to $5.0B of Anthropic stock as delivery milestones are met.61
Intel’s 10-Q of 30 October shows server revenue up $2.5B in Q3. Volume rose 10%, and the average price rose 54%, mostly on a richer mix. Demand for some data-center products is above supply, and Intel expects the shortage to last into next year.62 That could limit AMD too.
The bull case
The first engine is the server CPU. On 6 October Citi’s Atif Malik raised his target to $800, TIKR reported. His reason is AI agents such as Meta’s Muse. He sees the CPU market going from $29B in 2025 to $300B in 2030, with AMD “the key beneficiary”.67 AMD says about $220B for server CPUs, and expects its server revenue up more than 70% in 2027.41
The second engine is AMD as the other supplier of AI systems. BNP Paribas’s Karl Ackerman went to $960 the same day, 24/7 Wall St reported. He sees AMD taking at least 8% of a GPU market above $1 trillion by 2030.66 I read both reports, not the notes. Frank Downing of ARK wrote on 25 March that AMD’s GPUs are “competitive with Nvidia on small model inference” for the cost, while Nvidia keeps a big lead on large models.63 ARK Innovation’s AMD weight fell from 4.99% at 30 June to 1.82% in its 30 October file.6465 Lisa Su in August: Data Center growth “well over 100%” in 2027, and earnings that “significantly exceed” her $20-a-share target.41
Against reality
If AMD delivers that outlook in full, OpenAI and Meta take all 12 gigawatts, and the non-GAAP operating margin reaches 37%, the price is possible. That is my bull case: $434 at my 10% rate, or 9.2% a year from $504.80 (estimate). To earn 10% from here, revenue also has to run about 1.2 times that path, to $252B in year 5 (estimate).
Today is a long way from that. Revenue was $41.3B in the twelve months to June, so $252B takes about 44% a year for five years (calculated). The past nine years gave 26%. Data Center was $22.2B and has to reach $221B (estimate). The non-GAAP operating margin was 26.0%.17 No warrant share had vested by 27 June.4
In October 2025 Brad Gerstner of Altimeter called the OpenAI deal “a bet-the-farm bet by Lisa Su” on the All-In podcast, Benzinga reported. He said AMD’s last chip could not compete with Nvidia’s and that AMD is out if MI450 is not adopted. If it works, he said, OpenAI alone could bring $150B.68 That test is still open: first shipments were guided for late Q3.41
Q3 is guided at $13.0B. To reach June 2027, the next three quarters must average $16.6B on my base, $18.0B on my bull and about $21.7B on the price’s path (calculated).
What they have to hit
The thresholds match my signposts below.
The numbers the price needs
Five of these come out every quarter from a named source. Server revenue share does not always appear: see that row. “My bull” is the third case in Valuation; the larger figures are the price’s path, about 1.2 times that case.
| Indicator | Today | What the case needs | Where to track it | Next check |
|---|---|---|---|---|
| Total revenue | $11.5B in Q2; about $13.0B guided for Q317 | Q3 above $13.3B. Then about $21.7B a quarter on average to June 2027, against $18.0B on my bull (estimate) | AMD quarterly earnings release, “Total net revenue” line | Q3 results, 3 November 2026 |
| Data Center revenue | $6.7B in Q2, up 107%17 | Above $8B in Q3. About $54B in the year to June 2027, against $47B on my bull, then about $106B (estimate) | Same release, Segment and Disaggregated Revenue Information table, “Data Center Segment” line | Q3 results, 3 November 2026 |
| Server CPU revenue share | 46.2% of x86 server revenue in Q1 2026, the latest I found; 34.5% of units in Q24544 | Above 50% of revenue, AMD’s own target | Mercury Research’s quarterly figures, reported free by Tom’s Hardware. Unit share comes every quarter. Revenue share was in the Q1 report, not the Q2 one45 | Q3 share figures, expected November |
| Non-GAAP gross margin | 56% in Q2; about 56% guided for Q317 | 55% or better through the Helios ramp. My bull has 56.0% through year 2 (estimate) | Earnings release, GAAP to non-GAAP table, “Non-GAAP gross margin” line | Q3 results, 3 November 2026 |
| Warrant shares vested | None of 320M at 27 June4 | All 320M, which means all 12 gigawatts bought and AMD’s stock-price targets met, with no new warrant, guarantee or equity on orders past the first gigawatt | AMD 10-Q, Note 12, warrant paragraph; new deals appear in 8-Ks | Q3 10-Q, expected after the 3 November results |
| Free cash flow after stock pay | $5.84B over twelve months: $7.74B less $1.90B of stock pay4617 | About $103B by year 10, or 33.2% a year. My bull has $8.6B in year 1 and $20.8B in year 2 (estimate) | Earnings release, “Free cash flow” line, less “Stock-based compensation” in the same release. Add four quarters | Q3 results, 3 November 2026 |
Source Q2 2026 release; 10-Q Q2 2026; 10-K 2025; Tom's Hardware, 14 May; Tom's Hardware, 22 Aug; Analyst Day release [17][4][6][45][44][40]. Today values are reported or calculated from reported figures. What the case needs is my estimate.
Where I come down
The S-1 moved me on one point. Anthropic’s order is firmer than the release showed, and AMD takes its stock instead of giving away its own, so the warrants OpenAI and Meta got may not be the going rate. My $61, $194 and $434 did not move: the price still needs more than my bull, and one filing says nothing about the other two customers. Data Center more than doubling in calendar 2027, where my base has 86%, with orders past the first gigawatt on no new warrant, guarantee or equity, would raise my values.
Risks, and what would change my view
- Customer funding and concentration. The 10-K warns that customers may lack the capital for their AI infrastructure and may ask for deferred payment.6 One gigawatt at $13B is 15% of my year-2 base revenue (estimate). OpenAI’s and Meta’s orders are binding for one gigawatt each, Anthropic has committed to a first block on conditions, and the rest is intent.22244
- Financing the buyers. AMD gives warrants, guarantees up to $4.1B of a partner’s leases that are payable if the partner defaults, and has committed up to $5B to Anthropic. On 27 October it said it will invest $1B in Meta’s equity offering.43557 The size is small against $13.1B of cash and large if several things go wrong together.
- Dilution. The warrants cover up to 320M shares, 19.6% of the shares outstanding. Add 37M unvested awards, about 16.2M shares for World Labs at today’s price, and a larger equity plan with 107M shares left.46273036 My base counts 160M of the warrant shares.
- Supply and cost. TSMC makes every advanced wafer, the 10-K reports an industry-wide memory shortage, and $30.3B of purchase commitments cannot be cancelled. An analyst put Helios at almost 50% more high-bandwidth memory than the competing rack; Su called the larger memory footprint an advantage and said AMD can trim it.6441
- Execution. MI450 and Helios ship in volume from the fourth quarter of 2026, MI500 follows in 2027, and AMD is adding a new rack-scale product each year.174138 A one-quarter slip moves the first-gigawatt revenue into the next year.
- NVIDIA, Broadcom and Intel. NVIDIA’s cadence, custom chips from Broadcom’s customers, Intel’s supply recovery and pricing, and Arm-based CPUs all aim at the same budgets.65244
- China and export controls. China including Hong Kong was 22% of 2025 revenue by billing location, and the MI308 charges showed how fast a licence can change.620
- Accounting. Goodwill of $25.5B and acquisition intangibles of $15.6B could be impaired, the warrants are liabilities until equity-classification conditions are met, and the 10-Q does not say how vested tranches will be booked; a payment to a customer usually reduces revenue.174
- One leader. Su is chair and chief executive and, in the board’s words, the principal architect of AMD’s strategic plan. The $75M award vests only while she remains chief executive or executive chair.28
- A volatile share price. The stock rose 240% in seven months to a close of $649.42 on 6 October 2026 and fell 22.3% from that close to $504.80. It fell 10.9% on 30 October alone, the day after Intel forecast Q4 revenue of $15.0B to $16.0B against $16.5B in Q3, in a sector fall: the PHLX Semiconductor index lost 7.2% and the Nasdaq Composite 2.9%. AMD filed and released nothing that day, and I offer no other cause for the move that a filing does not show.156585960
What would change my view
The figures I will check each quarter, today's reading, and the thresholds.
| Signal | Today | Raises my value | Lowers my value |
|---|---|---|---|
| Q3 2026 results, 3 November1739 | Guided to about $13.0B of revenue, plus or minus $0.3B; Data Center up 107% in Q2 | Revenue above $13.3B, Data Center above $8B | Revenue below $12.7B |
| Helios and MI450 shipments1741 | Initial shipments guided for late Q3 2026; ramp in Q4 and 2027; first Helios racks installed and in test at Meta57 | First-gigawatt deliveries on time; Anthropic starting in 1H 202735 | A slip of a quarter or more |
| Non-GAAP gross margin17 | 56% in Q2; about 56% guided for Q3 | 55% or more through the Helios ramp | Below 52% |
| Customer terms435 | Warrants for up to 320M shares, $4.1B of lease guarantees, up to $5B of equity; $1B more for Meta’s equity offering, a new commitment57 | Orders beyond the first gigawatt with no new warrant, guarantee or equity | Any new warrant, guarantee or equity commitment |
| Purchase commitments and inventory456 | $30.3B, from $12.2B in December; inventories $8.5B | Commitments growing slower than revenue | Commitments above $40B with flat guidance, or an inventory charge |
| Server CPU share444540 | 34.5% of x86 server units; 46.2% of revenue in Q1 2026 | Revenue share above 50%, AMD’s own target | Unit share below 30% |
| Data Center margin17 | 31.3% segment operating margin in Q2 | Above 33% as Helios ramps | Below 28% |
| Payables4 | Up $2.2B in six months, a source of cash | Flat or falling with cash flow holding | A $2B outflow that cuts free cash flow |
Source Q2 2026 release; Q3 date release; Call transcript (EW); Anthropic release; 10-Q Q2 2026; 10-Q Q1 2026; 10-K 2025; Tom's Hardware, 22 Aug; Tom's Hardware, 14 May; Analyst Day release [17][39][41][35][4][5][6][44][45][40]. Judgements are my estimates.
What would raise my base value: Q3 and Q4 deliveries on the first-gigawatt schedule, Data Center margin above 33%, orders beyond the first gigawatt with no new warrant, guarantee or equity commitment, and server revenue share above 50%.17404445 What would lower it: any new warrant or guarantee, a Q3 revenue figure below $12.7B, purchase commitments above $40B with flat guidance, a gross margin under 52%, or payables unwinding.1745 AMD’s $1B for Meta’s equity offering is a new equity commitment, so that test has already gone against it. It costs my base $0.55 a share if it were worth nothing, so $194 stands until the Q3 report.57
The first test comes on 3 November 2026, when AMD reports Q3. It guided revenue of about $13.0B, plus or minus $0.3B, a non-GAAP gross margin of about 56% and operating expenses of about $3.65B, which implies non-GAAP earnings of about $1.93 a share (calculated).171839
What I could not verify
- Instinct revenue is not disclosed in any filing, so I use no share of the AI-accelerator market.17
- The warrant vesting schedule and exercise conditions are redacted, and how a vested tranche will be booked is not stated.22244
- The 10-Q’s $5.0B investment commitment names no counterparty. AMD’s release names Anthropic for up to $5B, and Anthropic’s S-1 describes the same size from July 2026. They are probably one item, and I count it once.43561
- What AMD’s own data-center leases are for, and their annual rent. The rent range is my arithmetic on the aggregate payments and lease terms.4
- Repayment of the $875M of notes due on 24 September.4
- Mercury Research’s report itself, and its Q2 2026 revenue shares; I used Q1 2026 for revenue and Q2 for units.444546
- AMD’s own call transcript. The server growth rates, the $1.4 trillion and $220B markets, “double-digit billions” a gigawatt, the Data Center AI margin remark, the memory exchange and the outlook above the $20 target come from two unofficial transcripts and a summary that agree. They anchor my year-1 and year-2 growth: without “more than double” for 2027 I would have no company statement past Q3 guidance for year 2. The filed release and slides do not carry them.414243
- The accelerator share of Data Center revenue (60% in the cross-check) and revenue per gigawatt ($13B) are my estimates; neither is disclosed.41
- The CEO award’s baseline and hurdles, which are my arithmetic on the 8-K’s rules, and the company’s own count of tranches earned.28
- Taalas and MEXT prices, and the holdings of Vanguard and BlackRock after early 2024.3716
- The close. The price rests on Nasdaq’s 4:00 pm closing print, and Yahoo’s chart feed shows the same close. Nasdaq’s daily history had not posted the row when I checked.123
- The beta. It uses the S&P 500 monthly series I pulled for my Microsoft analysis, because Yahoo refused my own requests.55
Sources
- 1AMD daily quotes, the ten-year daily history (opens in a new tab)
- 2AMD chart feed, daily closes: 30 October 2026 close $504.80, previous close $566.42 (opens in a new tab)
- 3AMD quote summary: 52-week range $188.22 to $658.52; next earnings date 3 November 2026 (opens in a new tab)
- 4AMD Form 10-Q, quarter ended 27 June 2026 (opens in a new tab)
- 5AMD Form 10-Q, quarter ended 28 March 2026 (opens in a new tab)
- 6AMD Form 10-K, fiscal year ended 27 December 2025 (opens in a new tab)
- 7AMD Form 10-K/A, fiscal year ended 27 December 2025 (Amendment No. 1) (opens in a new tab)
- 8AMD Form 10-K, fiscal year ended 28 December 2024 (opens in a new tab)
- 9AMD Form 10-K, fiscal year ended 30 December 2023 (opens in a new tab)
- 10AMD Form 10-K, fiscal year ended 31 December 2022 (53 weeks) (opens in a new tab)
- 11AMD Form 10-K, fiscal year ended 25 December 2021 (opens in a new tab)
- 12AMD Form 10-K, fiscal year ended 26 December 2020 (opens in a new tab)
- 13AMD Form 10-K, fiscal year ended 28 December 2019 (opens in a new tab)
- 14AMD Form 10-K, fiscal year ended 29 December 2018 (opens in a new tab)
- 15SEC XBRL companyfacts API, CIK0000002488 (latest-filed value per period) (opens in a new tab)
- 16AMD DEF 14A proxy statement for the 13 May 2026 annual meeting (opens in a new tab)
- 17AMD press release, Q2 2026 financial results (Ex. 99.1 to 8-K, 4 Aug 2026) (opens in a new tab)
- 18AMD Q2 2026 earnings slides (Ex. 99.2 to 8-K) (opens in a new tab)
- 19AMD press release, Q1 2026 financial results (Ex. 99.1 to 8-K) (opens in a new tab)
- 20AMD press release, Q4 and full-year 2025 financial results (Ex. 99.1 to 8-K) (opens in a new tab)
- 21AMD press release, Q3 2025 financial results (Ex. 99.1 to 8-K) (opens in a new tab)
- 22AMD Form 8-K, OpenAI product purchase agreement and warrant (Items 1.01, 3.02, 7.01) (opens in a new tab)
- 23AMD and OpenAI Announce Strategic Partnership to Deploy 6 Gigawatts of AMD GPUs (Ex. 99.1) (opens in a new tab)
- 24AMD Form 8-K, Meta warrant and Master Purchase Agreement amendment (Items 1.01, 3.02, 7.01) (opens in a new tab)
- 25AMD and Meta Announce Expanded Strategic Partnership to Deploy 6 Gigawatts of AMD GPUs (Ex. 99.1) (opens in a new tab)
- 26AMD Form 8-K, $4.75B senior notes offering closed 17 August 2026 (Items 1.01, 2.03) (opens in a new tab)
- 27AMD Form 8-K, agreement to acquire World Labs for about $8.2B in stock (Item 3.02) (opens in a new tab)
- 28AMD Form 8-K, fiscal 2025 bonuses and CEO Value Creation Equity Award (Item 5.02) (opens in a new tab)
- 29AMD Form 8-K, executive salaries and long-term incentive awards (Item 5.02) (opens in a new tab)
- 30AMD Form 8-K, 2026 annual meeting results and credit agreement (Items 1.01, 5.02, 5.07) (opens in a new tab)
- 31AMD Form 8-K, Tim Ryan appointed director; Joseph Householder retires (Item 5.02) (opens in a new tab)
- 32AMD Form 8-K, KC McClure appointed director (Item 5.02) (opens in a new tab)
- 33AMD Form 8-K, Emily Ellis appointed chief accounting officer (Item 5.02) (opens in a new tab)
- 34AMD completes sale of ZT Systems manufacturing business to Sanmina (Ex. 99.1) (opens in a new tab)
- 35AMD and Anthropic Announce Strategic Partnership to Deploy Up to 2 Gigawatts of AMD Instinct MI450 Series GPUs (opens in a new tab)
- 36AMD to Acquire World Labs to Advance the Future of AI Compute (opens in a new tab)
- 37AMD Acquires Taalas to Advance Compute Solutions for Rapidly Growing AI Inference Market (opens in a new tab)
- 38Introducing AMD Helion, Agentic AI Compute at Rack Scale (opens in a new tab)
- 39AMD to Report Fiscal Third Quarter 2026 Financial Results on 3 November 2026 (opens in a new tab)
- 40AMD Unveils Strategy to Lead the $1 Trillion Compute Market and Accelerate Next Phase of Growth (Financial Analyst Day) (opens in a new tab)
- 41AMD Q2 2026 earnings call transcript (unofficial, third-party) (opens in a new tab)
- 42AMD Q2 2026 earnings call transcript (unofficial, third-party), second copy used to cross-check (opens in a new tab)
- 43AMD Q2 earnings call highlights (opens in a new tab)
- 44Desktop CPU shipments crater 20%... but AMD gains record share (Mercury Research Q2 2026), Anton Shilov (opens in a new tab)
- 45AMD reaches 46% of server x86 CPU revenue (Mercury Research Q1 2026), Anton Shilov (opens in a new tab)
- 46AMD Hits Record x86 Market Share To Cut Into Intel's Chip Lead In Every Segment, Paul Lilly (opens in a new tab)
- 47Intel press release, Q2 2026 results (Ex. 99.1 to 8-K) (opens in a new tab)
- 48Intel press release, Q1 2026 results (Ex. 99.1 to 8-K) (opens in a new tab)
- 49Intel press release, Q4 and full-year 2025 results (Ex. 99.1 to 8-K) (opens in a new tab)
- 50Intel press release, Q3 2025 results (Ex. 99.1 to 8-K) (opens in a new tab)
- 51NVIDIA press release, Q2 fiscal 2027 results (Ex. 99.1 to 8-K) (opens in a new tab)
- 52Broadcom press release, Q3 fiscal 2026 results (Ex. 99.1 to 8-K) (opens in a new tab)
- 53U.S. Treasury Daily Par Yield Curve Rates, 2026 (10 Yr 5.00%, 30 Yr 5.33% on 10/23/2026) (opens in a new tab)
- 54Aswath Damodaran, implied equity risk premium: 4.20% on 1 October 2026 (opens in a new tab)
- 55Yahoo Finance chart API, ^GSPC monthly, ten years (beta calculation; series pulled for my Microsoft analysis on 23 October 2026) (opens in a new tab)
- 56SEC EDGAR submissions API, CIK0000002488 (filing dates and acceptance times of AMD's 8-Ks, 10-Ks and 10-Qs) (opens in a new tab)
- 57AMD and Meta Advance Strategic Partnership to Power Meta’s Superintelligence Infrastructure (opens in a new tab)
- 58AMD close on 30 October 2026, $504.80 (opens in a new tab)
- 59PHLX Semiconductor and Nasdaq Composite daily closes, 30 October 2026 (opens in a new tab)
- 60Intel third-quarter 2026 earnings release (Form 8-K exhibit) (opens in a new tab)
- 61Anthropic, PBC Form S-1 registration statement (opens in a new tab)
- 62Intel Form 10-Q, quarter ended 26 September 2026 (opens in a new tab)
- 63The State Of AI Infrastructure: Demand, Costs, And Custom Silicon, Frank Downing (opens in a new tab)
- 64ARK ETFs quarterly report, Q2 2026 (opens in a new tab)
- 65ARK Innovation ETF daily portfolio file (opens in a new tab)
- 66BNP Paribas Just Hiked AMD’s Price Target 60% to $960, Rich Duprey (opens in a new tab)
- 67Citi Predicts 25% Upside for AMD as “the Key Beneficiary” of an Expanded $300 Billion CPU Market, David Beren (opens in a new tab)
- 68Altimeter Capital CEO Brad Gerstner Breaks Down AMD-OpenAI GPU Bet, Says Lisa Su Is Betting The Farm To Catch Up To Rival Nvidia, Ananya Gairola (opens in a new tab)
How the figures are labelled
(reported)Reported: taken from a filing or a price feed, as printed.
(calculated)Calculated: arithmetic on reported figures, such as a margin or a growth rate.
(estimate)Estimate: my judgement, such as a case value or a growth assumption.
The price
Close in Q4 2026: $504.80, from Nasdaq [1]. Retrieved in Q4 2026.
Fiscal years end on the last Saturday in December: 2025 ended on 27 December 2025 and had 52 weeks; 2016 and 2022 had 53 weeks. TTM is the four quarters to 27 June 2026, calculated as 2025 less the first half of 2025 plus the first half of 2026. The third-quarter report is due after the close on 3 November 2026, after the price date, so the latest balance sheet is 27 June 2026. Per-share figures use 1.659B diluted shares (the Q2 2026 weighted average); basic shares outstanding were 1,632,475,042 on 29 July 2026.
The valuation
Ten-year discounted cash flow on free cash flow after stock pay. Each year is built from revenue by segment, non-GAAP gross margin, operating spending, stock pay, tax, depreciation, capital spending and working capital, discounted at 10%, then growth in perpetuity. Each case divides by its own share count: 1.659B diluted shares plus the warrant shares that vest in that case. Cash and long-term investments less debt are added at carrying value; guarantees, leases not yet started and purchase commitments are not deducted, except a $6B write-down in the bear case. Years run from July: year 1 ends June 2027. Values are as of 27 June 2026, the last balance sheet, as on the NVIDIA page. Dated Q4 2026 they would be about 3% higher (bear $63, base $200, bull $447), and discounting cash flows at mid-year instead of at year end would add about 5% more (together bear $66, base $209, bull $469). The price is above the bull case on every one of these. The page check reproduces the reverse DCF; the three cases are reproduced by model/valuation.py because each uses its own share count.
The margin-of-safety price is $81, set from my bear case. No rating: the page states a range and the price, and leaves the decision to the reader.
Research, not investment advice. Figures as of .
Legal information and disclosures
These are my own views as of the update shown on this page. They can change without notice, and I have no duty to update them. Past performance does not indicate future results, and any investment can lose money.
This is for education only. It is not investment, legal, tax or accounting advice, and it is not an offer to sell or a solicitation to buy any security in any jurisdiction. It does not consider your goals or circumstances.
Figures from company filings and other third parties are believed to be reliable, but I have not independently verified them and cannot guarantee them. Bear, base and bull values, and anything marked as an estimate, are my own and rest on assumptions that may prove wrong.
Please do not copy or republish this material without my written consent.