Advanced Micro Devices Inc. (NASDAQ:AMD)

Current Income Tax Expense

Over the observed periods, the current income tax expense exhibits notable fluctuations. Starting at 13 million US dollars in December 2020, there is a significant increase to 205 million in December 2021. This upward trend continues, peaking at 1383 million by the end of December 2022. Subsequently, the expense declines to 673 million in December 2023 before rising again to 1544 million in December 2024. These variations suggest changing taxable income or shifts in tax policy impacting current tax liabilities.

Deferred Income Tax Expense

The deferred income tax expense shows considerable volatility with values alternating between negative and positive figures throughout the periods. Initially, there is a substantial deferred tax benefit of -1223 million in December 2020, which reverses to a 308 million expense in December 2021. The deferred tax expense then swings back to a significant benefit of -1505 million in December 2022, followed by smaller benefits of -1019 million and -1163 million in December 2023 and 2024, respectively. This pattern indicates fluctuations in timing differences related to income recognition and deductions, with credits often exceeding accruals.

Income Tax Provision (Benefit)

The overall income tax provision, combining both current and deferred taxes, exhibits mixed results across the periods. A tax benefit of -1210 million is recorded in December 2020, turning into a provision of 513 million in December 2021. The provision reduces substantially to -122 million in December 2022, indicating a minor tax benefit. However, another benefit is observed in December 2023 at -346 million, before shifting back to a provision of 381 million in December 2024. This alternating pattern reflects the combined effects of the volatile current and deferred tax components and may correspond to variations in taxable income and temporary differences.

The data presents the statutory federal income tax rate alongside the effective income tax rate over a five-year period.

Statutory Federal Income Tax Rate

The statutory tax rate remained constant at 21% throughout the entire period from 2020 to 2024. This consistency indicates no changes in the federal corporate tax legislation affecting the company during these years.

Effective Income Tax Rate

The effective income tax rate exhibits significant volatility across the reviewed periods:

- In 2020, the effective rate was notably negative at -95%, indicating substantial tax benefits or credits that outweighed tax liabilities during that year.

- In 2021, the rate sharply shifted to a positive 14%, suggesting the company began to recognize taxable income more aligned with the statutory rate.

- The rate again turned negative in 2022, at -10%, reflecting some return of tax credits, deductions, or adjustments reducing the overall tax expense below zero.

- An even more pronounced negative rate of -68% was observed in 2023, indicating a considerable tax benefit that significantly reduced the tax burden or possibly reflected one-time tax implications.

- By 2024, the effective tax rate returned closer to positive territory at 18.84%, approaching the statutory rate though still slightly lower, which may suggest a normalization of tax expenses or utilization of tax planning strategies.

Overall, while the statutory tax rate remained stable, the effective tax rate was highly erratic, showing large swings between negative and positive values. This pattern suggests the company experienced variable tax outcomes, potentially influenced by fluctuations in profitability, the application of tax credits, deferred tax assets or liabilities, or other tax-related events affecting the income tax expense recognized in the financial statements.

The financial data reveals several notable trends in the company's deferred tax assets and liabilities, capitalized research and development expenditures, and related items over the five-year period.

Capitalized Research and Development (R&D)

Capitalized R&D has shown a consistent and substantial increase starting from 2022. It rose sharply from $943 million in 2022 to $1,753 million in 2023, and further to $2,892 million in 2024. This indicates an escalating investment in developing intangible assets or innovation activities being capitalized on the balance sheet.

Net Operating Loss Carryovers

These carryovers have fluctuated moderately but generally trended downward from $1,029 million in 2020 to $962 million in 2024, suggesting a slight reduction in accumulated tax losses available to offset future taxable income.

Accruals and Reserves Not Currently Deductible

This category exhibited variability, rising from $514 million in 2020 to a peak of $835 million in 2022, before declining to $574 million in 2023, then increasing again to $829 million in 2024. This volatility reflects changes in timing differences related to tax deductions and financial reporting accruals.

Federal and State Tax Credit Carryovers

Federal and state tax credits decreased notably from $569 million in 2020 to $319 million in 2021 but rebounded to $631 million in 2022 and gradually increased through 2024, reaching $679 million. This pattern suggests utilization and replenishment cycles in tax credit balances.

Foreign R&D and Investment Tax Credits

These credits have shown a generally stable trend with a slight increase from $489 million in 2020 to $597 million in 2023, followed by a marginal decrease to $579 million in 2024, indicating relatively steady foreign tax incentives over the period.

Employee Benefits Not Currently Deductible

This amount has consistently increased from $122 million in 2020 to $334 million in 2024, reflecting growing timing differences or accruals related to employee benefit costs that are non-deductible for tax purposes in the short term.

Lease Liability and Right-of-Use Assets

Lease liabilities increased significantly from $72 million in 2020 to $182 million in 2024, indicating heightened lease commitments. Correspondingly, right-of-use assets, which represent the asset side of lease accounting, became increasingly negative (from -$62 million to -$182 million), consistent with the capitalization of lease obligations under accounting standards.

Deferred Tax Assets

Total deferred tax assets decreased slightly between 2020 and 2021 (from $2,998 million to $2,853 million) but then surged to $6,645 million in 2024. This substantial growth is likely driven by increases in capitalized R&D and other deductible temporary differences.

Valuation Allowance and Net Deferred Tax Assets

The valuation allowance increased in magnitude from -$1,576 million in 2020 to -$2,136 million in 2024, indicating a growing portion of deferred tax assets deemed not realizable. Despite this, deferred tax assets net of valuation allowances increased significantly, from $1,422 million in 2020 to $4,509 million in 2024, reflecting strengthened expectations of future taxable income to realize these assets.

Acquired Intangibles

There was a marked increase in acquired intangible assets on the liability side, from negligible amounts in 2020 and 2021 to large negative values (over -$3 billion) from 2022 onward. This aligns with significant intangible assets acquired and possibly related deferred tax liabilities.

Global Intangible Low-Taxed Income (GILTI)

The GILTI tax amounts, recorded from 2022 onwards, decreased in magnitude from -$633 million in 2022 to -$222 million in 2024, suggesting a reduction in this specific tax liability over the period.

Other Miscellaneous Items

Other deferred tax assets and liabilities exhibited small fluctuations but remained relatively minor in comparison to principal categories.

Deferred Tax Liabilities and Net Position

Deferred tax liabilities expanded dramatically from a modest negative $188 million in 2020 to over -$4 billion in 2024, heavily influenced by acquired intangibles and other significant liabilities. As a result, the net deferred tax assets position shifted from a positive $1,234 million in 2020 to a negative $1,876 million in 2022, before partially recovering to a positive $339 million in 2024. This reflects volatility in tax positions derived from varying temporary differences and valuation allowances.

Overall, the data reflects a company increasing its capitalized R&D investments and acquiring substantial intangible assets, impacting its deferred tax asset and liability balances significantly. The fluctuating valuation allowances suggest cautious assessments of future tax benefit realizability despite growing deferred tax assets. Additionally, lease obligations have increased noticeably, consistent with broader adoption of lease accounting standards. Tax credit balances and loss carryovers demonstrate normal utilization cycles and modest declines. The net deferred tax position shows considerable volatility but improves toward the end of the analyzed period.

Deferred Tax Assets

The value of deferred tax assets exhibited a significant decline from 1,245 million US dollars in 2020 to 931 million in 2021, continuing sharply down to 58 million in 2022. Subsequently, there was a partial recovery, with the assets increasing to 366 million in 2023 and further to 688 million in 2024. This pattern suggests volatility, with an initial major reduction followed by a recovery phase over the last two years.

Deferred Tax Liabilities

Deferred tax liabilities remained relatively stable at a low level between 11 and 12 million US dollars in 2020 and 2021, respectively. However, a dramatic increase occurred in 2022, jumping to 1,934 million. This elevated level then decreased to 1,202 million in 2023 and further to 349 million in 2024. Despite the reduction after 2022, liabilities remain significantly higher than pre-2022 levels, indicating a clear shift in deferred tax obligations.

Overall Trends and Insights

Both deferred tax assets and liabilities demonstrate considerable fluctuation over the five-year period. The drastic changes in 2022 indicate a substantial tax-related event or adjustment impacting the company’s tax positions. The asset base shows recovery in the later years, while liabilities, although decreasing after 2022, remain elevated compared to early period levels. This dynamic suggests ongoing adjustments in tax-related deferred balances that will require ongoing monitoring for financial planning and risk assessment.

Total Assets

Reported total assets displayed a substantial increase from 8,962 million USD in 2020 to 67,580 million USD in 2022, maintaining relatively stable levels around 67,800 million USD through 2023 and 69,200 million USD in 2024. Adjusted total assets followed a similar trend, rising from 7,717 million USD in 2020 to approximately 67,500 million USD in 2022 and remaining stable thereafter with a slight increase to 68,538 million USD by 2024.

Total Liabilities

Both reported and adjusted total liabilities showed increases over the early years, with reported liabilities rising from 3,125 million USD in 2020 to a peak of 12,830 million USD in 2022. A subsequent decline is observable in 2023 to 11,993 million USD, further decreasing to 11,658 million USD in 2024. Adjusted liabilities mirrored this pattern, although the peak was slightly lower at 10,896 million USD in 2022, followed by reductions to 10,791 million USD and a slight rise in 2024 to 11,309 million USD.

Stockholders’ Equity

Reported stockholders’ equity increased significantly from 5,837 million USD in 2020 to 54,750 million USD in 2022 and continued to increase modestly reaching 57,568 million USD by 2024. Adjusted stockholders’ equity showed a less pronounced but consistent upward trend from 4,603 million USD in 2020 to 56,626 million USD in 2022, with marginal increases thereafter, reaching approximately 57,229 million USD by 2024.

Net Income

Reported net income demonstrated growth from 2,490 million USD in 2020, peaking at 3,162 million USD in 2021 before sharply declining to 1,320 million USD in 2022 and further decreasing to 854 million USD in 2023. A recovery is noted in 2024 with net income rising to 1,641 million USD. In contrast, adjusted net income showed an increase from 1,267 million USD in 2020 to 3,470 million USD in 2021, followed by a notable shift to negative territory with losses of 185 million USD in 2022 and 165 million USD in 2023. A partial recovery to a positive 478 million USD was seen in 2024.

Summary Insights

The data reveals a significant expansion in both total assets and stockholders’ equity during 2021 and 2022, stabilizing afterwards which suggests a period of substantial growth followed by consolidation. Total liabilities increased notably up to 2022, then decreased or stabilized, indicating possible deleveraging or restructuring efforts in the most recent years. The divergence between reported and adjusted net income in recent years is conspicuous, with adjusted figures reflecting losses during 2022 and 2023 despite positive reported earnings, highlighting the impact of tax adjustments or other accounting considerations. The partial recovery in adjusted net income in 2024 may suggest improvements in operational performance or tax-related factors.

Reported Net Profit Margin

The reported net profit margin shows a declining trend from 25.5% in 2020 to 3.77% in 2023, followed by a moderate recovery to 6.36% in 2024. This indicates a significant reduction in profitability over the earlier years with slight improvement towards the end of the period.

Adjusted Net Profit Margin

The adjusted net profit margin exhibits fluctuation, starting at 12.98% in 2020, increasing to 21.11% in 2021, and then turning negative in 2022 and 2023 (-0.78% and -0.73% respectively), before slightly recovering to 1.85% in 2024. This pattern suggests underlying operational challenges or extraordinary items affecting net profitability when adjusted for taxes.

Reported Total Asset Turnover

Reported total asset turnover increases from 1.09 in 2020 to 1.32 in 2021, then sharply declines to around 0.33-0.37 in the subsequent years. This reduction implies decreased efficiency in using assets to generate revenue after 2021.

Adjusted Total Asset Turnover

The adjusted total asset turnover follows a similar trend, rising from 1.27 in 2020 to 1.43 in 2021, followed by a steep drop to approximately 0.34-0.38 in later years. The alignment with reported figures confirms a consistent decline in asset utilization efficiency post-2021.

Reported Financial Leverage

Financial leverage reported values increase from 1.54 in 2020 to 1.66 in 2021, then decrease gradually to about 1.2 by 2024. This suggests a reduction in reliance on debt or liabilities relative to equity over time after peaking in 2021.

Adjusted Financial Leverage

The adjusted financial leverage mirrors the reported trend, rising from 1.68 in 2020 to 1.75 in 2021, then declining steadily to approximately 1.2 in 2024. This indicates consistent leverage management regardless of tax adjustments.

Reported Return on Equity (ROE)

Reported ROE remains strong and stable around 42% in 2020 and 2021, but then drastically decreases to 1.53%-2.85% by 2023-2024. This sharp fall reflects weakened profitability relative to shareholders' equity during recent periods.

Adjusted Return on Equity (ROE)

The adjusted ROE is relatively volatile, starting at 27.53% in 2020, peaking at 52.75% in 2021, then turning negative in 2022 and 2023, with slight recovery to 0.84% in 2024. These variations suggest significant impacts from tax adjustments or extraordinary items on shareholders' returns.

Reported Return on Assets (ROA)

Reported ROA trends downward from 27.78% in 2020 to a low of 1.26% in 2023, with a modest increase to 2.37% in 2024. This pattern indicates deterioration in earnings generated from assets.

Adjusted Return on Assets (ROA)

The adjusted ROA similarly declines from 16.42% in 2020 to slight negative values in 2022 and 2023 (-0.27% and -0.24% respectively), followed by a small positive recovery to 0.7% in 2024. This confirms challenges in asset profitability, especially after adjustment for deferred or annual income tax considerations.

The financial performance over the reported periods shows notable fluctuations in both reported and adjusted net income figures. Reported net income increased significantly from 2,490 million US dollars in 2020 to a peak of 3,162 million in 2021, followed by a sharp decline to 1,320 million in 2022 and a further decrease to 854 million in 2023. A recovery trend appears in 2024, with reported net income rising to 1,641 million.

Adjusted net income mirrors a somewhat similar but more volatile pattern. It grew from 1,267 million in 2020 to 3,470 million in 2021, which represents a substantial improvement relative to reported net income. However, a marked negative shift occurs in 2022 and 2023, with adjusted net income turning negative at -185 million and -165 million, respectively. In 2024, adjusted net income returns to a positive value of 478 million, indicating a partial recovery.

When examining profitability through net profit margins, the reported net profit margin declined steadily after 2020, dropping from 25.5% to 19.24% in 2021 and then more sharply to 5.59% in 2022 and 3.77% in 2023, before modestly recovering to 6.36% in 2024. This downward trend highlights decreasing profitability relative to revenues over several years, with a slight improvement observed in the most recent period.

The adjusted net profit margin shows a more pronounced volatility. From 12.98% in 2020, it climbed to 21.11% in 2021, reflecting improved adjusted earnings compared to revenues. Nevertheless, it shifted to negative figures in 2022 and 2023, with margins of -0.78% and -0.73% respectively, indicating adjusted losses relative to revenues during these years. By 2024, the adjusted net profit margin recovered positively to 1.85%, though it remains considerably below earlier peak levels.

Overall, the data reflects a period of strong financial performance peaking in 2021, followed by significant profitability challenges through 2022 and 2023, impacting both reported and adjusted results. The partial recovery seen in 2024, while positive, has not restored profitability metrics to the levels of the earlier years.

The analysis of the financial data reveals significant fluctuations and trends in both reported and adjusted total assets, as well as total asset turnover ratios over the five-year period.

Total Assets

Reported total assets show a strong upward trajectory from 8,962 million US dollars in 2020 to 12,419 million US dollars in 2021, followed by a substantial jump to 67,580 million US dollars in 2022. The asset base then stabilizes with minor increases to 67,885 million US dollars in 2023 and 69,226 million US dollars in 2024.

Similarly, adjusted total assets follow a comparable pattern, increasing from 7,717 million US dollars in 2020 to 11,488 million US dollars in 2021, then spiking to 67,522 million US dollars in 2022. Adjusted assets remain relatively stable thereafter, with slight increments to 67,519 million US dollars in 2023 and 68,538 million US dollars in 2024.

Total Asset Turnover Ratios

Reported total asset turnover exhibits a positive trend during the first two years, increasing from 1.09 in 2020 to 1.32 in 2021, but then sharply declines to 0.35 in 2022. It remains relatively stable at low levels, 0.33 in 2023 and a marginal rise to 0.37 in 2024.

Adjusted total asset turnover shows a similar trend, starting higher than the reported ratio at 1.27 in 2020 and peaking at 1.43 in 2021. It also sharply decreases to 0.35 in 2022, followed by a slight decline to 0.34 in 2023 and a mild increase to 0.38 in 2024.

Overall, the data indicates a significant expansion in the asset base beginning in 2022, which coincides with a marked decline in asset turnover ratios. The initial strong asset turnover efficiency observed in 2020 and 2021 decreases substantially post-2021, suggesting that the company’s ability to generate sales relative to its asset size has diminished following the asset growth. The stability in asset size and modest recovery in turnover ratios in recent years may reflect adjustments in operational efficiency or changes in asset utilization strategies.

Total Assets

Total assets experienced a significant increase from US$ 8,962 million in 2020 to US$ 12,419 million in 2021. A sharp and substantial rise is observed in 2022, with assets reaching US$ 67,580 million, which plateaued slightly in subsequent years around US$ 67,885 million in 2023 and US$ 69,226 million in 2024. The adjusted total assets follow a similar trend but remain slightly lower than the reported figures, indicating the effect of tax adjustments on asset valuation.

Stockholders' Equity

Reported stockholders' equity showed continuous growth from US$ 5,837 million in 2020 to US$ 7,497 million in 2021. However, it dramatically increased in 2022 to US$ 54,750 million and continued to increase moderately through 2023 and 2024, reaching US$ 57,568 million. Adjusted stockholders’ equity, while initially lower than the reported figures, similarly rose sharply in 2022 and exhibited moderate growth afterward, stabilizing near US$ 57,229 million by 2024.

Financial Leverage

Reported financial leverage increased from 1.54 in 2020 to 1.66 in 2021, indicating a greater proportion of total assets financed by debt relative to equity. This ratio then decreased substantially in 2022 to 1.23 and continued to decline slightly through 2023 and 2024, stabilizing around 1.20. Adjusted financial leverage mirrors this pattern, beginning at 1.68 in 2020, peaking at 1.75 in 2021, then declining sharply to 1.19 in 2022 and maintaining a stable level around 1.19 to 1.20 through 2024. This trend suggests a reduction in leverage post-2021, implying a stronger equity position relative to liabilities after adjustment.

Overall Analysis

The data reveal a marked expansion in asset base and equity from 2021 to 2022, possibly reflecting significant business growth, acquisitions, or accounting reclassifications. Financial leverage ratios indicate that despite the asset and equity growth, the company has reduced its relative debt burden over the last three years. Adjustments for reported and deferred taxes moderately affect the equity and asset figures but do not significantly alter the overall trends observed in financial leverage, which remains consistent across reported and adjusted data.

Net Income Trends

The reported net income demonstrates a significant increase from 2020 to 2021, rising from 2,490 million US dollars to 3,162 million US dollars. Following this peak, there is a sharp decline through 2022 and 2023, reaching a low of 854 million US dollars, before showing a modest recovery to 1,641 million US dollars in 2024.

In contrast, the adjusted net income displays greater volatility. It increases from 1,267 million US dollars in 2020 to 3,470 million US dollars in 2021, surpassing the reported figure for that year. However, the following years show negative adjusted net incomes in 2022 and 2023, at -185 million and -165 million US dollars respectively, before returning to positive territory at 478 million US dollars in 2024. This indicates significant adjustments impacting profitability during those years.

Stockholders' Equity Evolution

The reported stockholders’ equity shows an upward trend over the observed period, beginning at 5,837 million US dollars in 2020 and increasing substantially to 74,750 million US dollars in 2022. It then stabilizes with moderate growth to 57,568 million US dollars by 2024. Note that the peak in 2022 represents an exceptional increase compared to earlier periods.

The adjusted stockholders’ equity follows a similar trajectory but with generally lower absolute values. It rises from 4,603 million US dollars in 2020 to 56,626 million US dollars in 2022, and remains relatively stable thereafter through 2024. The gap between reported and adjusted figures indicates notable deferred tax or other adjustments impacting equity valuation.

Return on Equity (ROE) Analysis

Reported ROE starts at a high level of 42.66% in 2020 and remains stable at 42.18% in 2021. It experiences a marked decline in the subsequent years, falling to 2.41% in 2022 and further down to 1.53% in 2023, before a slight improvement to 2.85% in 2024.

The adjusted ROE exhibits even greater fluctuation. It rises significantly to 52.75% in 2021 from 27.53% in 2020, then turns negative in 2022 and 2023 with values of -0.33% and -0.29% respectively. The measure recovers marginally in 2024 to 0.84%. This pattern reinforces the presence of substantial adjustments influencing profitability relative to equity in the mid-term period.

Overall Insights

The data reveals considerable variability in income and profitability metrics once adjustments related to reported and deferred income taxes are taken into account. While reported figures suggest strong financial performance in the early period followed by a slowdown and partial recovery, the adjusted results show substantial periods of negative profitability, highlighting the impact of tax-related and other adjustments on financial outcomes.

The equity base expanded notably, especially as per the reported figures, peaking in 2022 before plateauing, which may reflect capital transactions or revaluations. Despite the growth in equity, returns on equity have diminished sharply from their earlier heights. This suggests that the company’s efficiency in generating profit from shareholders' equity declined significantly during the later years of the period analyzed.

Net Income Trends

The reported net income shows an initial increase from 2,490 million USD in 2020 to a peak of 3,162 million USD in 2021, followed by a significant decrease to 1,320 million USD in 2022 and further declining to 854 million USD in 2023. A rebound occurs in 2024, with net income rising to 1,641 million USD. The adjusted net income exhibits more volatility, increasing sharply from 1,267 million USD in 2020 to 3,470 million USD in 2021, then turning negative in 2022 and 2023 with -185 million USD and -165 million USD respectively, before partially recovering to 478 million USD in 2024.

Asset Base Analysis

Reported total assets demonstrate considerable growth between 2021 and 2022, increasing from 12,419 million USD to 67,580 million USD, and remain relatively stable thereafter, ending at 69,226 million USD in 2024. Adjusted total assets follow a similar pattern, rising from 11,488 million USD in 2021 to 67,522 million USD in 2022 and stabilizing around 68,538 million USD by 2024. This suggests a major asset revaluation or acquisition event around 2022, with the asset base maintaining stability subsequently.

Return on Assets (ROA) Patterns

The reported ROA declines sharply from 27.78% in 2020 to 25.46% in 2021, then plummets to 1.95% in 2022 and continues to decrease to 1.26% in 2023 before modestly recovering to 2.37% in 2024. The adjusted ROA shows a similar trend but with more pronounced volatility: starting at 16.42% in 2020, reaching a high of 30.21% in 2021, then dropping below zero in 2022 and 2023 with -0.27% and -0.24% respectively, and moving back to a positive 0.7% in 2024. This pattern indicates challenges in profitability efficiency relative to the asset base in recent years, especially after 2021.

Overall Insights

The data outlines a period of strong financial performance in 2020 and 2021, followed by a sharp downturn in profitability and adjusted earnings in 2022 and 2023, with some signs of recovery by 2024. The substantial increase in total assets starting in 2022 suggests significant investments or acquisitions that may have impacted profitability metrics adversely during the adjustment phase. Both reported and adjusted figures converge on a narrative of initial growth, followed by operational or market challenges, and a tentative return to improved performance.