Phase Space AI

Financial Model Notes

Advanced Micro Devices [AMD]

Advanced Micro Devices, Inc. [AMD] — Financial Model Notes

Derivations for every figure in AMD_Research.md and AMD_Valuation.md. Computed figures are marked derived with the arithmetic shown.

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1. Quarterly revenue reconstruction

AMD files no Q4 10-Q, so Q4 revenue is derived as the fiscal-year total less the three reported quarters, then cross-checked against the Q4 earnings release.

TTM revenue (Q2 FY25 → Q1 FY26) = 7,685 + 9,246 + 10,270 + 10,253 = $37,454m. Matches scan_v3. Prior-year TTM (Q2 FY24 → Q1 FY25) = 5,835 + 6,819 + 7,658 + 7,438 = $27,750m. TTM YoY growth = 37,454 / 27,750 − 1 = +35.0%. Latest-quarter YoY = 10,253 / 7,438 − 1 = +37.9% (scan_v3 rounds to 37.8%). Q-annualised run-rate = 10,253 × 4 = $41,012m (+9.5% on TTM).

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2. Operating income and gross profit

TTM EBIT = (134) + 1,270 + 1,752 + 1,476 = $4,364m → TTM operating margin 11.7%. TTM gross profit = 3,059 + 4,780 + 5,577 + 5,416 = $18,832m → TTM gross margin 50.3%. Latest quarter: EBIT margin 1,476 / 10,253 = 14.4%; gross margin 5,416 / 10,253 = 52.8%. FY2025: OperatingIncomeLoss 3,694 / 34,639 = 10.7% (the scan_v3 figure — correct for its period).

The Q2 FY2025 operating loss of $(134)m is the ~$800m MI308 export-control charge. FY2025 net charge was ~$440m after a Q4 recovery, so FY2025 operating margin ex-charge is (3,694 + 440) / 34,639 = 11.9%.

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3. Net cash — the double-count

At 2026-03-28, from the Q1 FY2026 10-Q balance sheet:

scan_v3 reported +$7,602m, reproducible as 5,585 + 6,762 − 2,350 − 874 − 874 − 647 = 7,602.

The second $874m is ShortTermBorrowings@2025-12-27, and LongTermDebtCurrent@2026-03-28 is also $874m. These are the same obligation — AMD tagged the current portion of long-term debt under ShortTermBorrowings in the FY2025 10-K and under LongTermDebtCurrent in the Q1 10-Q. The identical value across two different concepts and two different dates is the diagnostic. The scan added both.

scan_v2 reported +$9,997m = 5,585 + 6,762 − 2,350, omitting the current portion entirely.

Both are wrong by the same $874m in opposite directions. Correct figure +$9,123m on a financial-debt basis.

ConvertibleDebtNoncurrent: not present in AMD's XBRL. No convertible overhang.

Not in any net-cash calculation: $4.1bn of maximum gross exposure from guarantees of commercial partners' data-centre lease obligations, term up to 15 years, per Q1 FY26 10-Q.

EV (as reported) = 1,630.6m × $454.54 − $9,123m = $741,173m − $9,123m = $732,050m. EV (fully diluted) = 1,950.6m × $454.54 − $9,123m = $886,634m − $9,123m = $877,511m.

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4. Share count — the 320 million warrant shares

The 20m gap between 1,630m outstanding and 1,650m diluted WA is ordinary RSU/option dilution. No warrant effect is present, because "As of March 28, 2026 … none of the warrant shares had vested or become exercisable." The 10-Q also states the warrants are accounted for "as a liability until certain conditions for equity classification are satisfied."

Vesting conditions, verbatim: "in tranches based on AMD Instinct GPU purchase milestones achieved by OpenAI, Meta, their affiliates, or indirectly through authorized third parties, and achievement of specified Company stock price targets." The OpenAI warrant additionally requires "stock-performance thresholds." Each vested tranche is "further subject to the fulfillment of certain other technical and commercial conditions prior to exercisability."

EPS cross-check

Q1 FY2026 net income $1,383m ÷ 1,650m diluted = $0.8382 against filed diluted EPS $0.84 ✓. Q4 FY2025 from the release: net income $1.5bn, diluted EPS $0.92. FY2025: net income $4,335m, diluted EPS $2.65 → implies ~1,636m diluted WA ✓ consistent.

Not dual-class.

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5. Segment series

Sourced from the Q1 FY26 and Q4 FY25 earnings releases (each states current quarter, prior quarter and year-ago quarter) and the 10-Q segment note.

Annual: FY2024 Data Center 12,579 revenue / 3,482 op income (27.7%); FY2025 16,635 / 3,603 (21.7%). Revenue +32.3%, operating income +3.5% — the margin finding in §4 of the research note.

TTM Data Center (Q2 FY25 → Q1 FY26) = 3,859 + 4,341 + 5,380 + 5,775 = $19,355m = 51.7% of TTM revenue.

Q1 FY26 segment growth attribution: total +$2,815m; Data Center +$2,101m (74.6%); Client and Gaming +$664m (23.6%); Embedded +$50m (1.8%).

Q1 FY26 Client and Gaming detail: Client 2,885 (+25.8%), Gaming 720 (+11.3%). Q1 FY26 unallocated ("All other") $(1,036)m = $551m acquisition-intangible amortisation + $487m SBC.

AI-accelerator revenue is not disclosed. Data Center per AMD's own definition contains AI accelerators, server CPUs, GPUs, APUs, DPUs, AI NICs, FPGAs and adaptive SoCs, with no split given. No split is asserted in this memo.

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6. Corrected trailing CAGR

scan_v3 base: cagr_base_revenue = $23,601m = FY2022 revenue, period ended 2022-12-31. Endpoint: TTM $37,454m at 2026-03-28. Interval 1,183 days = 3.239 years.

(37,454 / 23,601)^(1 / 3.239) − 1 = 15.3%

scan_v3 reports 13.643599% — bit-identical to scan_v2, whose TTM endpoint was $34,622m. Verified: (34,622 / 23,601)^(1/3) − 1 = 13.63%, i.e. the scan's figure reproduces exactly on scan_v2's TTM over a round 3-year window. The CAGR was not recomputed when TTM was corrected. Understated by 1.7pp.

Caveat on the base itself: Xilinx closed February 2022, inside the FY2022 base period, which inflates the base and therefore understates the CAGR further. Directionally conservative, so no adjustment is made.

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7. Own-multiple history

Daily EV/Sales, 2022-02-03 → 2026-07-28, 1,123 trading days. Alpaca split-adjusted daily bars; TTM revenue as known at each date, lagged to filing dates; current shares and net cash held constant.

Momentum: 12-1 = +199.6%; trailing 12-month total return +161.8%.

EV/EBIT history spans 120 trading days only (a continuous four-quarter EBIT series requires the Q2 FY25 loss quarter to be in the window). Declared UNIDENTIFIED as a valuation anchor per valuation.md. For reference only: today's 167.7x as-reported / 201.1x fully diluted, against a 150.7x median of that short window.

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8. Reverse-DCF parameterisation

assets/reverse_dcf.py, EBIT basis. Solved: revenue CAGR. Fixed: EV $877,511m (fully diluted); revenue $37,454m; 5 years; WACC 10.0%; terminal margin 18.0%; exit multiple 21.2x.

Result 58.1%, implying FY2031 revenue of $370,342m. On as-reported shares (EV $732,050m) the required CAGR is ~54.9%.

Terminal margin justification: 18% sits above the 14.4% latest quarter and the 11.7% TTM, below the 22.5% FY2025 non-GAAP. It is a generous input, chosen so the FAIL cannot be attributed to a harsh margin assumption.

Exit multiple note: 21.2x EBIT at an 18% margin equals 3.8x EV/Sales, marginally below AMD's all-time minimum of 3.79x — a stringent exit, which is why the sensitivity table extends to 2.0x the anchor (42.4x EBIT = 7.6x sales, comfortably inside the historical range). It still fails there.

Terminal value is 100% of modelled EV, above the 60% threshold, so the reverse DCF is the primary long-horizon output and sensitivity is run over the exit multiple.

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9. Data-quality flags

1. Net cash double-counted $874m — LongTermDebtCurrent@2026-03-28 and ShortTermBorrowings@2025-12-27 are the same obligation. scan_v2 omitted it; scan_v3 counted it twice.
2. 320m warrant shares absent from the data model entirely. Understates fully diluted equity value by $145bn (19.6%). Larger in absolute terms than any error described in the Tier-2 brief.
3. $4.1bn of off-balance-sheet lease guarantees absent from net cash.
4. revenue_cagr_demonstrated stale, carried from scan_v2; understates by 1.7pp.
5. margin_period = FY2025, so margins are one quarter stale and depressed by the $440m MI308 charge.
6. entity_public_float $232,300m is a stale cover-page dollar amount against a $741bn market cap.
7. Terminal margin left uncapped at AMD's own 10.7% while AVGO (39.9%) and MRVL (16.1%) were both capped at 15.6%. The inconsistency is the defect — AMD's treatment is the correct one.