DCF Studio

    AMD · NMS · Technology

    Advanced Micro Devices, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 36.77

    Market price

    USD 559.82

    Implied upside

    -93.4%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis model values the shares at 6.6% of the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.

    Current EV/EBITDA of 135.4x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 36.77-93.4%
    Exit multiple
    USD 100.54-82.0%
    Market price
    USD 559.82

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn4bn9bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 39.4bnUSD 44.7bnUSD 50.8bnUSD 57.8bnUSD 65.7bn+13.6%
    EBITUSD 2.5bnUSD 2.9bnUSD 3.3bnUSD 3.7bnUSD 4.2bn+13.6%
    NOPATUSD 2.1bnUSD 2.3bnUSD 2.7bnUSD 3.0bnUSD 3.4bn+13.6%
    Add depreciation & amortisationUSD 5.3bnUSD 6.0bnUSD 6.8bnUSD 7.8bnUSD 8.8bn+13.6%
    Less capital expenditureUSD -944.0mUSD -1.1bnUSD -1.2bnUSD -1.4bnUSD -1.6bn+13.6%
    Less increase in working capitalUSD -1.3bnUSD -1.4bnUSD -1.6bnUSD -1.9bnUSD -2.1bn+13.6%
    Free cashflow to firmUSD 5.1bnUSD 5.8bnUSD 6.6bnUSD 7.5bnUSD 8.6bn+13.6%
    Discount factor0.92890.80160.69170.59690.5150-
    Present valueUSD 4.8bnUSD 4.7bnUSD 4.6bnUSD 4.5bnUSD 4.4bn-1.9%
    Present Value Of The ForecastUSD 23.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.989Reported 2.476, pulled toward 1.0 (Blume)
    Cost of equity15.94%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 913.9bn99.6% of capital
    Total debtUSD 3.8bn0.4% of capital, book value as a proxy
    Tax rate19.2%Effective, capped at statutory
    WACC15.89%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 36.77

    57% of EV

    Forecast FCFF, final year
    USD 8.6bn
    Capex at depreciation, working capital in reinvestment
    USD 9.2bn
    Less reinvestment at g/ROIC (15.7% of NOPAT)
    USD -1.4bn
    Capitalised
    USD 7.7bn
    ROIC (WACC floor)
    15.9%
    Terminal value, undiscounted
    USD 59.2bn
    Terminal value, discounted
    USD 30.5bn
    Enterprise value
    USD 53.5bn
    Less net debt
    USD -6.7bn
    Equity value
    USD 60.2bn

    Exit at 20.0x EBITDA

    Value per shareUSD 100.54

    85% of EV

    Terminal value, undiscounted
    USD 261.7bn
    Terminal value, discounted
    USD 134.8bn
    Enterprise value
    USD 157.8bn
    Less net debt
    USD -6.7bn
    Equity value
    USD 164.5bn

    Spread between methods: 93%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    13.89%41.5841.7041.8141.9242.03
    14.89%38.9139.0239.1239.2239.32
    15.89%36.5936.6836.7736.8636.95
    16.89%34.5534.6334.7134.7934.87
    17.89%32.7432.8132.8932.9633.04

    Outlined: this model. Green text: above today's price of 559.82. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Discount rate15.9%2.6%-13.3pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.