AMD – Advanced Micro Devices Inc. FY 2024 Financial Analysis Report

Key Metrics (Historical Comparisons)

Executive Summary

AMD delivered a robust fiscal year 2024, with revenue reaching $25.79 billion, reflecting a 13.8% growth over 2023. The company’s gross profit increased by 21.7%, driven by strong demand in data center and client segments, alongside effective cost management. Net income nearly doubled year-over-year, reaching $1.64 billion, with EPS at $1.00, highlighting improved profitability. Balance sheet strength remains solid, with total assets of $69.22 billion and equity of $57.57 billion, supported by manageable debt levels of $1.72 billion. Cash reserves slightly declined but remain ample for operational needs and strategic investments. Overall, AMD’s growth strategy and innovation focus position it favorably, although macroeconomic risks and supply chain uncertainties persist.

Management Discussion and Analysis (MD&A)

AMDu2019s fiscal year 2024 was marked by a focus on expanding its data center and gaming product lines, which contributed significantly to revenue growth. The companyu2019s strategic acquisitions, including Silo AI and ZT Systems, enhanced its AI and infrastructure capabilities, respectively. Cost containment and operational efficiencies, combined with high-margin product mix, led to improved gross margins and operating income. R&D investments increased by approximately 10%, emphasizing AMDu2019s commitment to technological leadership in CPUs, GPUs, and AI accelerators. The company also pursued disciplined capital allocation, including share repurchases totaling $862 million and maintaining a strong liquidity position. Despite macro headwinds, such as geopolitical tensions and global supply chain disruptions, AMD remains confident in its long-term growth prospects driven by innovation and expanding market share.

Income Statement Analysis

Revenue for FY 2024 was $25.79 billion, up from $22.68 billion in FY 2023, primarily driven by higher sales in data center and client segments. Gross profit increased to $12.73 billion, yielding a gross margin of approximately 49.3%, up from 46.1%, reflecting better product mix and cost efficiencies. Operating income soared to $1.9 billion from $401 million, with operating margin improving to roughly 7.4%. Net income reached $1.64 billion, nearly doubling YoY, translating into an EPS of $1.00, compared to $0.53 in FY 2023. The YoY growth underscores AMDu2019s successful execution on its product and strategic initiatives, although QoQ trends show some seasonal variability in revenue and margins, typical for the industry.

Balance Sheet Analysis

As of December 28, 2024, AMDu2019s total assets stood at $69.22 billion, a modest increase from $67.88 billion at FY 2023 year-end. Cash and equivalents decreased slightly to $3.81 billion, while receivables increased significantly to $6.19 billion, reflecting higher sales volumes. Inventories rose to $5.73 billion, indicating inventory build-up aligned with new product launches. Total liabilities were approximately $13.65 billion, with long-term debt stable at $1.72 billion. Shareholdersu2019 equity rose to $57.57 billion, representing a healthy equity cushion. Liquidity ratios remain strong, with current assets exceeding current liabilities by a comfortable margin, supporting operational flexibility.

Cash Flow Analysis

Operating cash flow for FY 2024 was robust at $3.04 billion, driven by higher net income and working capital improvements. Capital expenditures totaled $636 million, focused on manufacturing facilities and R&D infrastructure, indicating ongoing investment in capacity and innovation. The company used $862 million for share repurchases and paid $1.39 billion in dividends, demonstrating disciplined capital return policies. Debt repayment was minimal, with debt levels remaining essentially flat, reinforcing AMDu2019s balanced approach to leverage. Free cash flow remains positive, enabling strategic growth and shareholder value creation.

Ratios & DuPont Analysis

Key ratios for FY 2024 include:

• Net Profit Margin: 6.4% (Net Income / Revenue)
• Return on Assets (ROA): 2.4% (Net Income / Total Assets)
• Return on Equity (ROE): 2.9% (Net Income / Shareholdersu2019 Equity)
• Asset Turnover: 0.37 (Revenue / Total Assets)
• Equity Multiplier: 1.2 (Total Assets / Shareholdersu2019 Equity)

The DuPont analysis indicates moderate profitability driven by high-margin segments, with room for improvement in asset efficiency and ROE, influenced by strategic investments and share repurchase activities.

Risk Factors

AMD faces several risks, including regulatory challenges in global markets, competitive pressures from Intel and NVIDIA, and market volatility affecting demand cycles. Operational risks include supply chain disruptions and geopolitical tensions impacting component availability. Macro risks such as inflation, currency fluctuations, and economic slowdown could weaken consumer and enterprise spending. Additionally, rapid technological change requires continuous innovation; failure to maintain leadership could erode competitive advantage. Regulatory compliance, patent litigations, and environmental regulations also pose potential operational hurdles.

Notes & Additional Commentary

Unusual items impacting FY 2024 include a $58 million impairment charge on indefinite-lived intangible assets due to market conditions, alongside strategic acquisition costs. The companyu2019s restructuring initiatives aim to optimize workforce and assets, with expected savings materializing in upcoming quarters. Share repurchase activity reflects confidence in AMDu2019s long-term valuation, although valuation volatility remains a concern. The companyu2019s effective tax rate improved to 19%, supported by strategic tax planning and benefits from international incentives.

Investment Implications

Short-term opportunities include leveraging AMDu2019s expanding product portfolio to capture additional market share, especially in data centers and AI markets. The companyu2019s innovation pipeline and recent acquisitions strengthen its competitive position, offering upside potential. Long-term risks include macroeconomic uncertainties and aggressive competition, which could pressure margins. AMDu2019s balanced capital allocation, strong balance sheet, and focus on R&D support a positive outlook. Overall, AMD presents a compelling investment case for growth-oriented investors willing to accept industry cyclicality and technological risks.