AMD
AMD
Hold 2026-05-07
Model
DCF
Price at Report
$421.39
Base IV
$217.04
Bear IV
$92.52
Bull IV
$471.72
Entry Zone: 88-200 · Sell Above: 422
Bore Family Office
Valuation Report — Advanced Micro Devices, Inc. (AMD) • May 7, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 9.50% • Current Price: $421.39
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Advanced Micro Devices (AMD) designs high-performance computing platforms spanning CPUs, GPUs, adaptive SoCs, and data center accelerators. Under CEO Dr. Lisa Su, AMD has transformed from a struggling PC chipmaker into the #2 data center processor vendor, with EPYC server CPUs gaining significant share from Intel and Instinct GPUs emerging as the leading non-NVIDIA alternative for AI training and inference. FY2025 revenue hit a record $34.6B (+34% YoY), driven by Data Center segment revenue of $16.6B (+32% YoY) and Client segment revenue of $10.6B (+51% YoY).
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Data Center | $16,600M | 48% | +32.0% | 50.0% | Crown jewel — EPYC CPUs + Instinct GPUs, AI hyperscaler ramp |
| Client | $10,600M | 31% | +51.0% | 30.0% | Record Ryzen PC CPU sales, share gains vs Intel |
| Gaming | $3,900M | 11% | +51.0% | 15.0% | Semi-custom console SoCs + Radeon GPUs, cyclical |
| Embedded | $3,500M | 10% | -3.0% | 25.0% | Xilinx acquisition — recovery from inventory correction |
| Blended Growth Rate | — | 100% | +36.4% | — | Weighted avg across segments |
📊 Business Lifecycle Stage
Stage 1
Startup
Startup
Stage 2
Hyper Growth
Hyper Growth
Stage 3
Self Funding
Self Funding
Stage 4
Operating Leverage
Operating Leverage
Stage 5
Capital Return
Capital Return
Stage 6
Decline
Decline
Stage 4 — Operating Leverage: Revenue growing modestly with profits inflecting rapidly. The classic DCF sweet spot — FCF is reliable, growing, and well-anchored to analyst estimates.
Why this drives model selection: Classic DCF sweet spot — FCF inflecting and growing rapidly.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 6.5% | <8% weak |
| FCF Margin | 22.9% | ≥10% strong |
| Debt / EBITDA | 0.6x | ≤2x conservative |
| Revenue Trend | Growing 3yr | 3-year directional trend |
| FCF Margin Trend | Expanding | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|
| Revenue ($M) | $9,763 | $16,434 | $23,601 | $22,680 | $25,785 | $34,639 |
| Rev YoY Growth | — | +68.3% | +43.6% | -3.9% | +13.7% | +34.3% |
| Gross Margin | 44.5% | 48.2% | 44.9% | 46.1% | 49.4% | 49.5% |
| EBITDA ($M) | $2,779 | $4,714 | $5,526 | $3,854 | $4,964 | $6,698 |
| EBITDA Margin | 28.5% | 28.7% | 23.4% | 17.0% | 19.3% | 19.3% |
| Operating Income ($M) | $1,369 | $3,648 | $1,264 | $401 | $1,900 | $3,694 |
| Operating Margin | 14.0% | 22.2% | 5.4% | 1.8% | 7.4% | 10.7% |
| Net Income ($M) | $2,490 | $3,162 | $1,320 | $854 | $1,641 | $4,335 |
| Net Margin | 25.5% | 19.2% | 5.6% | 3.8% | 6.4% | 12.5% |
| EPS (diluted) | $2.06 | $2.57 | $0.84 | $0.53 | $1.01 | $2.65 |
| Free Cash Flow ($M) | $777 | $3,220 | $3,115 | $1,121 | $2,405 | $6,735 |
| Annual DPS | $0.000 | $0.000 | $0.000 | $0.000 | $0.000 | $0.000 |
| Total Debt ($M) | $313 | $322 | $2,863 | $3,003 | $2,212 | $3,847 |
💹 Capital Return & Share Count Analysis
Net Share Change
+35.5% (2020→2025)
📈 Net dilution — issuances exceed buybacks
EPS Amplification
EPS grew +28.6% vs net income +74.1% over the period — -45.5pp of EPS growth diluted by share issuance.
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2020 | 1207.0M | — | — | — |
| 2021 | 1229.0M | +1.8% | $1,762 | 0.3% |
| 2022 | 1571.0M | +27.8% | $3,702 | 0.6% |
| 2023 | 1625.0M | +3.4% | $985 | 0.1% |
| 2024 | 1637.0M | +0.7% | $862 | 0.1% |
| 2025 | 1636.0M | -0.1% | $1,316 | 0.2% |
AMD has been a net diluter since the Xilinx acquisition (2022), with shares increasing from ~1,207M (2020) to ~1,636M (2025). However, share count has been relatively stable since 2023 (~1,625–1,637M) as buybacks partially offset SBC dilution. Buyback yield is low (~0.5%) given the high stock price. No dividend is paid.
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.30% | 10-yr US Treasury yield |
| Beta (β) | 2.430 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 17.67% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 3.50% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 2.98% | × (1 − 15%) |
| Weight Equity (We) | 99.4% | Mkt cap $0.0B |
| Weight Debt (Wd) | 0.6% | Gross debt $0.0B |
| WACC | 9.50% | DCF discount rate |
📈 DCF Scenarios
$93
🔴 Bear
$217
📊 Base
$472
🚀 Bull
$421.39
Current Price
$357
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 10.0% | 5.0% | 2.5% | 11.50% | $93 | ▼78.0% |
| 📊 Base | 20.0% | 10.0% | 3.0% | 9.50% | $217 | ▼48.5% |
| 🚀 Bull | 30.0% | 14.0% | 3.5% | 8.50% | $472 | ▲11.9% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 10.0% | Stage 2: 5.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $9.43B | $8.46B | $8.46B |
| Year 2 | Stage 1 | $10.37B | $8.34B | $16.80B |
| Year 3 | Stage 1 | $11.41B | $8.23B | $25.04B |
| Year 4 | Stage 1 | $12.55B | $8.12B | $33.16B |
| Year 5 | Stage 1 | $13.81B | $8.01B | $41.17B |
| Year 6 | Stage 2 | $14.50B | $7.55B | $48.72B |
| Year 7 | Stage 2 | $15.22B | $7.11B | $55.82B |
| Year 8 | Stage 2 | $15.99B | $6.69B | $62.51B |
| Year 9 | Stage 2 | $16.78B | $6.30B | $68.81B |
| Year 10 | Stage 2 | $17.62B | $5.93B | $74.75B |
| Terminal | — | TV=$200.7B | PV(TV)=$67.6B (47% of EV) | EV=$142.3B |
| Intrinsic Value | — | — | EV $142.3B − Net Debt → Equity / Shares | $93 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (11.50%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $200.7B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $67.6B). Enterprise Value = PV of FCFs ($74.7B) + PV of TV ($67.6B) = $142.3B. Subtracting net debt gives equity value of $150.8B, divided by shares outstanding = $93 per share.
Base Scenario
Stage 1: 20.0% | Stage 2: 10.0% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $10.29B | $9.40B | $9.40B |
| Year 2 | Stage 1 | $12.35B | $10.30B | $19.69B |
| Year 3 | Stage 1 | $14.82B | $11.28B | $30.98B |
| Year 4 | Stage 1 | $17.78B | $12.37B | $43.34B |
| Year 5 | Stage 1 | $21.33B | $13.55B | $56.90B |
| Year 6 | Stage 2 | $23.47B | $13.61B | $70.51B |
| Year 7 | Stage 2 | $25.82B | $13.68B | $84.19B |
| Year 8 | Stage 2 | $28.40B | $13.74B | $97.93B |
| Year 9 | Stage 2 | $31.24B | $13.80B | $111.73B |
| Year 10 | Stage 2 | $34.36B | $13.86B | $125.59B |
| Terminal | — | TV=$544.5B | PV(TV)=$219.7B (64% of EV) | EV=$345.3B |
| Intrinsic Value | — | — | EV $345.3B − Net Debt → Equity / Shares | $217 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (9.50%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $544.5B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $219.7B). Enterprise Value = PV of FCFs ($125.6B) + PV of TV ($219.7B) = $345.3B. Subtracting net debt gives equity value of $353.8B, divided by shares outstanding = $217 per share.
Bull Scenario
Stage 1: 30.0% | Stage 2: 14.0% | Terminal: 3.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $11.15B | $10.27B | $10.27B |
| Year 2 | Stage 1 | $14.49B | $12.31B | $22.58B |
| Year 3 | Stage 1 | $18.84B | $14.75B | $37.33B |
| Year 4 | Stage 1 | $24.49B | $17.67B | $55.00B |
| Year 5 | Stage 1 | $31.83B | $21.17B | $76.17B |
| Year 6 | Stage 2 | $36.29B | $22.24B | $98.42B |
| Year 7 | Stage 2 | $41.37B | $23.37B | $121.79B |
| Year 8 | Stage 2 | $47.16B | $24.56B | $146.35B |
| Year 9 | Stage 2 | $53.77B | $25.80B | $172.15B |
| Year 10 | Stage 2 | $61.29B | $27.11B | $199.26B |
| Terminal | — | TV=$1268.8B | PV(TV)=$561.2B (74% of EV) | EV=$760.4B |
| Intrinsic Value | — | — | EV $760.4B − Net Debt → Equity / Shares | $472 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (8.50%) to get its present value. After Year 10, FCF grows at the terminal rate (3.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $1268.8B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $561.2B). Enterprise Value = PV of FCFs ($199.3B) + PV of TV ($561.2B) = $760.4B. Subtracting net debt gives equity value of $768.9B, divided by shares outstanding = $472 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 7.5% | $264 | $281 | $301 | $325 | $356 |
| 8.0% | $241 | $255 | $271 | $290 | $313 |
| 8.5% | $222 | $233 | $246 | $261 | $279 |
| 9.0% | $205 | $214 | $225 | $237 | $252 |
| 9.5% | $190 | $198 | $207 | $217 | $229 |
| 10.0% | $177 | $184 | $191 | $200 | $210 |
| 10.5% | $166 | $172 | $178 | $185 | $193 |
| 11.0% | $156 | $161 | $166 | $172 | $179 |
| 11.5% | $147 | $151 | $155 | $161 | $166 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🌊 Elliott Wave Analysis
Elliott Wave structure analysis based on 500 days of price history. Current position and wave progress help evaluate entry timing.
| Structure | Type | Span | Waves | Score | Rules |
|---|---|---|---|---|---|
| Impulse 1 (partial) | Impulse | $78.21 → $417.48 | 1→2→3 | 9.6 | R1:100 R2:100 R3:100 |
Current position: In Impulse 1, Wave 3 ~75% complete, target ~$493.64
🏦 Comparable Valuation
| Company | Ticker | Market Cap | P/E (TTM) | Fwd P/E | EV/EBITDA | FCF Yield | Rev Growth |
|---|---|---|---|---|---|---|---|
| NVIDIA | NVDA | $2,950B | 52× | 38× | 48× | 2.1% | +78% |
| AMD | AMD | $687B | 137× | 61× | 109× | 1.2% | +35% |
| Intel | INTC | $105B | N/M | 58× | 54× | −3.2% | −7% |
| Broadcom | AVGO | $920B | 63× | 40× | 42× | 4.8% | +25% |
| Qualcomm | QCOM | $185B | 16× | 14× | 15× | 5.6% | +12% |
| Texas Instruments | TXN | $195B | 30× | 28× | 32× | 4.2% | −3% |
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2020 | $2.06 | — | — | — | Actual |
| 2021 | $2.57 | — | — | — | Actual |
| 2022 | $0.84 | — | — | — | Actual |
| 2023 | $0.53 | — | — | — | Actual |
| 2024 | $1.01 | — | — | — | Actual |
| 2025 | $2.65 | — | — | — | Actual |
| 2026 | $5.49 | $6.85 | $10.19 | 5 | Estimate |
| 2027 | $7.25 | $11.41 | $18.41 | 2 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2020 | $9.8B | — | — | — | Actual |
| 2021 | $16.4B | — | — | — | Actual |
| 2022 | $23.6B | — | — | — | Actual |
| 2023 | $22.7B | — | — | — | Actual |
| 2024 | $25.8B | — | — | — | Actual |
| 2025 | $34.6B | — | — | — | Actual |
| 2026 | $43.4B | $47.4B | $54.0B | 5 | Estimate |
| 2027 | $49.0B | $68.8B | $97.7B | 2 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $357.31 | Range $120–$530
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| John Vinh | Keybanc | Buy | $530 | +25.8% |
| Stacy Rasgon | Bernstein | Buy | $525 | +24.6% |
| Aaron Rakers | Wells Fargo | Buy | $505 | +19.8% |
| Joshua Buchalter | TD Cowen | Strong Buy | $500 | +18.7% |
| C.J. Muse | Cantor Fitzgerald | Buy | $500 | +18.7% |
| Tom O'Malley | Barclays | Buy | $500 | +18.7% |
| Kevin Cassidy | Rosenblatt | Strong Buy | $490 | +16.3% |
| Cody Acree | Benchmark | Strong Buy | $485 | +15.1% |
| Christopher Rolland | Susquehanna | Buy | $450 | +6.8% |
| Ruben Roy | Stifel | Strong Buy | $450 | +6.8% |
| Matt Bryson | Wedbush | Buy | $450 | +6.8% |
| Jay Goldberg | Seaport Global | Strong Buy | $430 | +2.0% |
| Gil Luria | DA Davidson | Strong Buy | $425 | +0.9% |
| Vijay Rakesh | Mizuho | Buy | $415 | -1.5% |
| Srini Pajjuri | RBC Capital | Hold | $400 | -5.1% |
| Harlan Sur | JP Morgan | Hold | $385 | -8.6% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|---|---|---|---|---|
| Q1 2026 | $1.37 vs $1.25 | +$0.12 ✅ | $10.3B vs $9.9B | +$0.4B ✅ | Beat — AI data center surge |
| Q4 2025 | $1.53 vs $1.24 | +$0.29 ✅ | $10.3B vs $9.6B | +$0.7B ✅ | Massive beat — record quarter |
| Q3 2025 | $1.20 vs $1.09 | +$0.11 ✅ | $9.2B vs $8.8B | +$0.4B ✅ | Beat — Data Center strength |
| Q2 2025 | $0.48 vs $0.40 | +$0.08 ✅ | $7.7B vs $7.2B | +$0.5B ✅ | Beat — Client segment record |
(e) Confidence Band Commentary
AMD has beaten EPS estimates in all 4 recent quarters, with an average surprise of ~15.8%. The trend is accelerating — Q4 2025's 23% beat and Q1 2026's 9.6% beat demonstrate that management guidance remains consistently conservative. The consensus Strong Buy rating from 36 analysts, with only 7 Holds and no Sells, reflects broad confidence in the AI-driven growth trajectory. However, the wide PT range ($120–$530) signals meaningful disagreement about AMD's long-term TAM and competitive positioning vs. NVIDIA.
💡 Investment Thesis
- AI Data Center Dominance: AMD's Instinct GPU platform is the only meaningful non-NVIDIA alternative for AI workloads at scale. The MI300X/MI440X ramp has driven Data Center revenue from $6B (2023) to $16.6B (2025), and the pipeline through MI450 (Rubin-era) positions AMD for continued hyperscaler share gains.
- Operating Leverage Inflection: Revenue is scaling 35%+ YoY while opex grows at half that rate. The result: operating margin expanded from 1.8% (2022) to 10.7% (2025) and is trending toward 15–20% as the model matures. FCF has inflected from $1.1B (2023) to $8.6B TTM.
- Balance Sheet Fortress: Net cash of $8.5B with negligible leverage (total debt/EBITDA <0.5×) provides optionality for strategic acquisitions, buybacks, or weathering a cyclical downturn without dilution risk.
- Xilinx Integration Gains: The Embedded segment is recovering from the post-merger inventory correction. As AI edge computing and adaptive computing demand grows, the Xilinx portfolio provides a high-margin, defensible moat.
- Valuation Risk: Trading at ~137× trailing EPS and ~61× forward EPS demands flawless execution. Any slowdown in Data Center GPU ramp or loss of hyperscaler momentum could compress multiples aggressively.
👔 Management Quality & Culture
CEO: Not identified · Tenure: Since 2014 (~12 yrs) · ★ Founder
⚠️ Key-Person Risk: HIGH
Founder-led company — strategy and culture deeply tied to a single individual. Succession planning is a material risk.
Net Insider Buys (12m)
-207,837 shares
Incentive Alignment
⚠️ Moderate
Compensation: Equity-based compensation present
CEO Background & Track Record
Board of Directors :: Advanced Micro Devices, Inc. (AMD)
Olson’s qualifications include his more than 30 years of experience in senior roles of financial responsibility in the semiconductor industry, together with his track record of growing profitable businesses and his experien
Olson’s qualifications include his more than 30 years of experience in senior roles of financial responsibility in the semiconductor industry, together with his track record of growing profitable businesses and his experien
Meet the Board of Directors of Advanced Micro Devices
The Board of Directors comprises ten members, including two females and eight males. Each member has unique experiences and accomplishments that have earned them a place on AMD's board. Below are brief profiles of each member: John Cal
The Board of Directors comprises ten members, including two females and eight males. Each member has unique experiences and accomplishments that have earned them a place on AMD's board. Below are brief profiles of each member: John Cal
Advanced Micro Devices, Inc. | American Semiconductor Compan
The success of Athlon marked the peak of Jerry Sanders’s long tenure as chief executive officer; he retired in 2002 and was succeeded by Hector Ruiz, whom he had recruited two years earlier.
The success of Athlon marked the peak of Jerry Sanders’s long tenure as chief executive officer; he retired in 2002 and was succeeded by Hector Ruiz, whom he had recruited two years earlier.
Capital Allocation & Strategy
Advanced Micro Devices 2026 Company Profile: Stock Performan
You’re viewing 5 of 48 investments and acquisitions. Get the full list » ... Peer performance insights compare the company’s ESG performance to the performance of selected peers to help inform future ESG decisions and drive internal perform
You’re viewing 5 of 48 investments and acquisitions. Get the full list » ... Peer performance insights compare the company’s ESG performance to the performance of selected peers to help inform future ESG decisions and drive internal perform
Advanced Micro Devices (AMD) | AMD Stock Price, Company Over
2025 · 2024 · 2023 · 2022 · 2021 · 2020 · 2019 · 2018 · 2017 · Revenue · $25.8B · Assets · $69.2B · Profits · $1.6B · Sources · FactSet, Bloomberg, S&P Cap IQ; Forbes.
2025 · 2024 · 2023 · 2022 · 2021 · 2020 · 2019 · 2018 · 2017 · Revenue · $25.8B · Assets · $69.2B · Profits · $1.6B · Sources · FactSet, Bloomberg, S&P Cap IQ; Forbes.
Employee Ratings
Overall Rating
3.7/5 ★★★★☆
Reviews
396
Culture Signal
Mixed
✅ Strengths
- recommend
⚠️ Concerns
- layoffs
Employee Review Excerpts
AMD Reviews (4,873): Pros & Cons of Working At AMD | Glassdo
How satisfied are employees working at AMD?84% of AMD employees would recommend working there to a friend based on Glassdoor reviews. Employees also rated AMD 3.7 out of 5 for work life balance, 3.9 for culture and values a
How satisfied are employees working at AMD?84% of AMD employees would recommend working there to a friend based on Glassdoor reviews. Employees also rated AMD 3.7 out of 5 for work life balance, 3.9 for culture and values a
AMD "work environment" Reviews | Glassdoor
Employees also rated AMD 3.8 out of 5 for work life balance, 4.0 for culture and values and 4.0 for career opportunities. What are employees saying about AMD layoffs in 2025?Explore Glassdoor's employee reviews to unde
Employees also rated AMD 3.8 out of 5 for work life balance, 4.0 for culture and values and 4.0 for career opportunities. What are employees saying about AMD layoffs in 2025?Explore Glassdoor's employee reviews to unde
Working at AMD: 396 Reviews | Indeed.com
Great CEO ... My experience has been positive at AMD. A good balance of WLB and decent pay. You won't make as much money as FAANG but its not too bad. Work is interesting. Colleagues are smart.
Great CEO ... My experience has been positive at AMD. A good balance of WLB and decent pay. You won't make as much money as FAANG but its not too bad. Work is interesting. Colleagues are smart.
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DCF Verdict: Hold — Advanced Micro Devices, Inc. (AMD)
Current price: $421.39 | Analyst Avg PT: $357.31
$93
🔴 Bear
$217
📊 Base
$472
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$200 | Begin position |
| Tier 2 — Add | ≤$155 | Add on weakness |
| Tier 3 — Full | ≤$88 | Full allocation |
| Sell Alert | ≥$422 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
Verdict: Hold. AMD is executing at the highest level in its history — Data Center revenue surging, operating leverage inflecting, and FCF compounding. However, the stock at $421 already prices in much of the AI upside with a 137× trailing P/E and a market cap implying $680B+ in enterprise value. Our base-case DCF intrinsic value lands meaningfully below the current price, reflecting the gap between even aggressive growth assumptions and today's elevated multiple. The bull case (dominant AI share gains sustaining 25%+ growth for a decade) only reaches ~$370 — still below today's price. We would become enthusiastic buyers on a significant pullback toward the $200–$250 range, where the risk/reward improves materially.
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 224 |
| Average Cost Basis | $179.67 |
| Current Market Value | $94,391 |
| Unrealized P&L | $+54,145 (+134.5%) |
| Annual DPS | — (not provided) |
| Annual Dividend Income | — (DPS missing) |
| Current Yield (at price) | — |
| Yield on Cost | — |
| vs Target (~$200K) | $94,391 / $200,000 (47%) |
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| FCF Base | Using TTM FCF of $8,574M (Q1 2026 TTM) as base year. This captures the full AI data center ramp and is 28% above FY2025 FCF of $6,697M. FY2023 FCF was only $1,121M — the acceleration has been dramatic. Even with this aggressive starting point, the DCF produces a base IV well below the current stock price, confirming that AMD's valuation is driven by expectations of sustained hypergrowth beyond what a 10-year projection window can realistically capture. |
| WACC Calibration (Critical) | Raw WACC build gives 17.7% (Ke = 17.67% with β=2.43). This produces IVs of $15–73 across scenarios — far below even the most bearish analyst target of $120. We use an adjusted WACC of 9.5% (base) for several reasons: (1) AMD's beta of 2.43 reflects historical volatility as a smaller, cyclical chipmaker — the company today is a $687B diversified platform with $8.5B net cash; (2) Industry practice for large-cap semis uses 9–11% WACC; (3) At 9.5%, the base IV of ~$201 is still 44% below analyst consensus PT, suggesting either the market is pricing in even lower discount rates or longer/stronger growth than we model. Bear adds +200bp; bull subtracts 100bp. |
| Growth Assumptions | Stage 1 (Yrs 1-5) base case at 20% FCF growth assumes: (1) Data Center revenue grows 30-40% CAGR driven by Instinct GPU ramp; (2) Client segment grows 15-20% on Ryzen share gains; (3) Operating margins expand from 11% to 17-18% as scale kicks in; (4) Revenue reaches ~$80B by 2030. Bull case at 30% assumes dominant AI market share gains. Bear case at 10% assumes AI growth decelerates and NVIDIA/custom silicon compress margins. |
| Why Base IV << Analyst PT | Our base-case DCF value of ~$201 is 44% below the analyst consensus PT of $357. This gap is the central finding of this report. It reflects the fundamental challenge of valuing a company where 72%+ of intrinsic value comes from the terminal value, and the market is pricing in a longer, stronger growth runway than even aggressive DCF assumptions produce. Analyst PTs are often influenced by relative valuation (P/E, EV/EBITDA multiples) which embed higher growth expectations. Our DCF is the honest fundamental assessment: AMD is a great business trading at a price that assumes perfection. |
| Terminal Value | Terminal growth rate of 3.0% (base) reflects AMD's secular position in AI/data center compute. The company is not a utility — it's a high-growth platform that should grow above GDP indefinitely if it maintains its competitive moat. However, 3% is well below the 4-5% some bulls would argue for, reflecting the inherent cyclicality of semiconductors. Terminal value comprises ~61% of total enterprise value in the base case — a high percentage that underscores the sensitivity of the model to long-term assumptions. |
| Net Cash Benefit | AMD holds $8.5B in net cash (total debt $3.9B vs. $12.3B in cash/ST investments). This is subtracted from EV (i.e., added to equity value) in the DCF. The net cash position provides downside protection and strategic flexibility — AMD could fund significant acquisitions or aggressive buybacks without tapping debt markets. |
| Position Context | Bore Family Office holds 224 shares at $179.67 cost basis (current price $421.39 = +135% gain). The position is deeply profitable. Our Hold verdict means: don't add at current prices (too expensive on fundamentals), but don't sell either (the AI thesis is real and executing). A pullback to the $200-250 range would represent compelling value and warrant adding to the position. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.