AMD's 87/100 score is supported by rapid revenue growth, strong free-cash generation and a solid balance sheet. The weaker links are low capital returns, receivables or inventory growing faster than sales, dilution and a high approximate valuation.
What does AMD do?
AMD designs processors, graphics chips and AI accelerators for data centres, personal computers, gaming systems and embedded devices. Manufacturing is largely outsourced. EPYC server processors and Instinct accelerators sit at the centre of data-centre growth.
What do the FY2025 financials show?
Revenue increased 34% to $34.64 billion. Data Centre produced $16.64 billion, Client and Gaming $14.55 billion, and Embedded $3.45 billion. Gross profit was $17.15 billion, operating income $3.69 billion and net income $4.34 billion.
Total operating activities provided approximately $7.7 billion of cash; after roughly $1.0 billion of property and equipment expenditure, the model calculates about $6.7 billion of free cash. Cash, equivalents and short-term investments were $10.6 billion at year-end.
Why do the five categories produce this result?
Growth 88/100: Five-year compound revenue growth was 20.5% and net-income growth 8.2%. Revenue rose in 80% of measured years. Strong sales momentum should be read alongside slower profit growth.
Profitability 36/100: The 49.5% gross margin is strong, but the 10.7% operating margin and approximate 4.8% return on capital are more limited. Sales growth still needs to convert into higher operating profit per unit of capital.
Cash flow 100/100: An approximate 19.4% free-cash margin and cash conversion equal to 155% of net income are strong. The composite result is capped at 100 for readability.
Balance sheet 100/100: A 2.85 current ratio, net-cash position and roughly 28-times interest coverage are strong. However, receivables or inventory growing 21.4 points faster than sales is a working-capital item to monitor.
Shareholder policy 41/100: Stock compensation was 4.7% of revenue and repurchases equalled about 19.5% of free cash flow. Five-year share-count growth and the approximate SEC-based 53.6-times earnings multiple limit the score.
Critical combinations
- Data-centre growth + rising operating profit
- High free cash + net-cash balance sheet
- Broad product range + growing AI demand
- Rapid sales growth + low capital return
- High expectations + valuation premium
- Inventory growth + export restrictions
Q2 2026 current context
AMD increased Q2 2026 revenue by 50% year on year to $11.54 billion. GAAP gross margin was 54%, operating income $1.99 billion and net income $2.30 billion. Data Centre revenue more than doubled to $6.7 billion.
The results show stronger AI and server demand, but the export-control inventory charge in Q2 2025 affects the comparison. The current period is not mixed into the FY2025 score and does not assume growth will continue at the same pace.
AMD combines strong growth, cash generation and balance-sheet capacity. The long-term test is whether AI demand converts into sustainable operating profit despite rising inventory and investment needs. This is not investment advice.
Where the figures come from
- AMD FY 2025 Form 10-K, SEC — fiscal year ended 27 December 2025; primary source for the score.
- AMD Q2 2026 Form 10-Q, SEC — interim period ended 27 June 2026.
- AMD Q2 2026 results — official investor-relations summary; not included in the FY2025 score.
- Free cash flow is operating cash flow less property and equipment expenditure. Approximate valuation uses 10-K public-float data, not a live price.