Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Advanced Micro Devices Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 4,525 – 28.44% × 61,734 = -13,029
The analysis of economic profit reveals a significant transition from value creation to substantial value destruction over the observed five-year period. While the initial year showed positive economic profit, the subsequent years are characterized by deep deficits, despite a recent recovery in operational profitability.
- Net Operating Profit After Taxes (NOPAT)
- A period of high volatility is evident in operational earnings. NOPAT declined from 3,517 million USD in 2021 to negative values in 2022 and 2023, reaching a low of -201 million USD. A recovery phase followed, with profit returning to positive territory in 2024 and expanding significantly to 4,525 million USD by 2025.
- Invested Capital
- A massive expansion in the capital base occurred between 2021 and 2022, increasing from 6,195 million USD to 58,525 million USD. Following this surge, the invested capital remained relatively stable, with a slight upward trend concluding at 61,734 million USD in 2025.
- Cost of Capital
- The cost of capital remained remarkably consistent throughout the period, fluctuating minimally between 28.18% and 28.61%. This stability indicates that changes in economic profit were driven by operational performance and capital deployment rather than shifts in the required rate of return.
- Economic Profit Trends
- Economic profit shifted from a positive 1,744 million USD in 2021 to a deep deficit of 16,631 million USD in 2022. Although losses narrowed gradually in 2024 and 2025, ending at -13,029 million USD, the entity remained unable to generate a positive return above its cost of capital. The primary driver of this trend was the disproportionate increase in invested capital relative to the growth of NOPAT, which created a capital charge that significantly outweighed operating gains.
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Net Operating Profit after Taxes (NOPAT)
Advanced Micro Devices Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in liability for product warranty.
3 Addition of increase (decrease) in liabilities related to the 2024 Restructuring Plan.
4 Addition of increase (decrease) in equity equivalents to net income.
5 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 784 × 4.74% = 37
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 168 × 21.00% = 35
7 Addition of after taxes interest expense to net income.
8 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 215 × 21.00% = 45
9 Elimination of after taxes investment income.
10 Elimination of discontinued operations.
The financial performance, as indicated by Net Income and Net Operating Profit After Taxes (NOPAT), exhibits significant fluctuations over the five-year period. While Net Income demonstrates volatility, NOPAT reveals a more pronounced pattern of instability, including a period of negative profitability.
- Net Income Trend
- Net Income increased from US$3,162 million in 2021 to US$1,320 million in 2022, representing a substantial decrease. It continued to decline to US$854 million in 2023 before recovering to US$1,641 million in 2024. The most recent year, 2025, shows a significant increase to US$4,335 million, exceeding the 2021 level.
- NOPAT Trend
- NOPAT began at US$3,517 million in 2021. A dramatic shift occurred in 2022, with NOPAT falling to a loss of US$138 million. This negative trend continued into 2023, with NOPAT reaching a loss of US$201 million. A recovery began in 2024, with NOPAT returning to positive territory at US$621 million. The most recent year, 2025, shows a substantial increase in NOPAT to US$4,525 million, surpassing the initial value in 2021.
The divergence between Net Income and NOPAT suggests potential differences between accounting profit and true economic profit. The negative NOPAT values in 2022 and 2023 indicate that the company’s operating profits, after accounting for taxes, were insufficient to cover the cost of capital employed during those periods. The substantial increase in both Net Income and NOPAT in 2025 suggests a significant improvement in operational efficiency and/or market conditions. The recovery in NOPAT from negative values to a level exceeding the initial value indicates a strengthening of the company’s ability to generate returns above its cost of capital.
- Relationship between Net Income and NOPAT
- While both metrics generally move in the same direction, the magnitude of change differs. The larger fluctuations observed in NOPAT suggest it is more sensitive to underlying operational performance and capital costs than Net Income. The period of negative NOPAT while Net Income remained positive indicates the presence of significant non-cash expenses or a high cost of capital relative to operating profits.
Further investigation into the factors driving these fluctuations, particularly the causes of the negative NOPAT in 2022 and 2023, would be beneficial for a comprehensive understanding of the company’s financial health.
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Cash Operating Taxes
Advanced Micro Devices Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
The income tax provision and cash operating taxes exhibit considerable fluctuation over the observed five-year period. A notable divergence between the two metrics is apparent, suggesting significant non-cash tax effects are present.
- Income Tax Provision
- The income tax provision initially registers a value of 513 million in 2021. This is followed by a benefit of 122 million in 2022, and a larger benefit of 346 million in 2023. A return to a provision of 381 million is seen in 2024, before reverting to a benefit of 103 million in 2025. This pattern indicates substantial changes in taxable income or the utilization of tax loss carryforwards.
- Cash Operating Taxes
- Cash operating taxes begin at 214 million in 2021, increasing dramatically to 1,392 million in 2022. The value then decreases to 658 million in 2023, and rises again to 1,531 million in 2024. Finally, a significant outflow reversal is observed in 2025, resulting in a negative value of -365 million. This suggests substantial tax refunds or credits were received in 2025.
The substantial difference between the income tax provision and cash operating taxes across the period highlights the impact of items such as deferred taxes, tax credits, and potentially net operating loss carryforwards. The large positive value for cash operating taxes in 2022 and 2024, coupled with the negative value in 2025, warrants further investigation to understand the underlying drivers of these cash flows. The volatility in both metrics suggests a complex tax position and potential sensitivity to changes in tax regulations or business performance.
- Relationship between Metrics
- The considerable discrepancies between the income tax provision and cash operating taxes indicate that reported earnings are not necessarily reflective of actual cash outflows for taxes. This difference is particularly pronounced in 2022, 2023, and 2025, where the divergence is substantial. A detailed analysis of the deferred tax assets and liabilities would be necessary to fully understand these variations.
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Invested Capital
Advanced Micro Devices Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of liability for product warranty.
4 Addition of liabilities related to the 2024 Restructuring Plan.
5 Addition of equity equivalents to stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of short-term investments.
The reported invested capital demonstrates significant fluctuation over the observed period. Initially, a substantial increase is noted, followed by relative stabilization and a subsequent rise towards the end of the period. A detailed examination of the components contributing to invested capital reveals key trends in the company’s financial structure.
- Invested Capital Trend
- Invested capital experienced a dramatic increase from US$6,195 million in 2021 to US$58,525 million in 2022. This represents a nearly tenfold increase, likely driven by significant financing activities. Following this surge, invested capital decreased slightly to US$57,883 million in 2023, indicating a potential stabilization or adjustment in capital allocation. A modest increase to US$58,227 million occurred in 2024, before rising again to US$61,734 million in 2025.
- Debt & Leases
- Total reported debt and leases exhibited a substantial increase from US$732 million in 2021 to US$2,956 million in 2022. This increase aligns with the overall rise in invested capital during the same period, suggesting debt financing played a role. The debt level remained relatively stable in 2023 at US$3,109 million, then decreased to US$2,321 million in 2024. A notable increase to US$4,006 million is observed in 2025, indicating renewed reliance on debt financing.
- Stockholders’ Equity
- Stockholders’ equity demonstrated a significant increase from US$7,497 million in 2021 to US$54,750 million in 2022. This substantial growth likely reflects retained earnings and/or equity issuance. Stockholders’ equity continued to grow, albeit at a slower pace, reaching US$55,892 million in 2023, US$57,568 million in 2024, and US$62,999 million in 2025. This consistent growth suggests a strengthening of the company’s equity base.
The interplay between debt and equity significantly influences the overall invested capital. The initial surge in invested capital in 2022 was largely attributable to a combination of increased debt and a substantial rise in stockholders’ equity. The subsequent fluctuations in invested capital reflect changes in both debt levels and equity positions. The increase in debt in 2025, coupled with continued equity growth, suggests a strategic approach to capital structure management.
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Cost of Capital
Advanced Micro Devices Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 326,392) | 326,392) | ÷ | 330,301) | = | 0.99 | 0.99 | × | 28.74% | = | 28.40% | ||
| Debt3 | 3,125) | 3,125) | ÷ | 330,301) | = | 0.01 | 0.01 | × | 3.79% × (1 – 21.00%) | = | 0.03% | ||
| Operating lease liability4 | 784) | 784) | ÷ | 330,301) | = | 0.00 | 0.00 | × | 4.74% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 330,301) | 1.00 | 28.44% | ||||||||||
Based on: 10-K (reporting date: 2025-12-27).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 181,510) | 181,510) | ÷ | 183,653) | = | 0.99 | 0.99 | × | 28.74% | = | 28.40% | ||
| Debt3 | 1,543) | 1,543) | ÷ | 183,653) | = | 0.01 | 0.01 | × | 3.39% × (1 – 21.00%) | = | 0.02% | ||
| Operating lease liability4 | 600) | 600) | ÷ | 183,653) | = | 0.00 | 0.00 | × | 4.63% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 183,653) | 1.00 | 28.44% | ||||||||||
Based on: 10-K (reporting date: 2024-12-28).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 270,951) | 270,951) | ÷ | 273,963) | = | 0.99 | 0.99 | × | 28.74% | = | 28.42% | ||
| Debt3 | 2,371) | 2,371) | ÷ | 273,963) | = | 0.01 | 0.01 | × | 3.26% × (1 – 21.00%) | = | 0.02% | ||
| Operating lease liability4 | 641) | 641) | ÷ | 273,963) | = | 0.00 | 0.00 | × | 4.57% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 273,963) | 1.00 | 28.45% | ||||||||||
Based on: 10-K (reporting date: 2023-12-30).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 126,929) | 126,929) | ÷ | 129,699) | = | 0.98 | 0.98 | × | 28.74% | = | 28.12% | ||
| Debt3 | 2,281) | 2,281) | ÷ | 129,699) | = | 0.02 | 0.02 | × | 3.26% × (1 – 21.00%) | = | 0.05% | ||
| Operating lease liability4 | 489) | 489) | ÷ | 129,699) | = | 0.00 | 0.00 | × | 3.83% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 129,699) | 1.00 | 28.18% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 144,012) | 144,012) | ÷ | 144,772) | = | 0.99 | 0.99 | × | 28.74% | = | 28.59% | ||
| Debt3 | 341) | 341) | ÷ | 144,772) | = | 0.00 | 0.00 | × | 7.50% × (1 – 21.00%) | = | 0.01% | ||
| Operating lease liability4 | 419) | 419) | ÷ | 144,772) | = | 0.00 | 0.00 | × | 3.70% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 144,772) | 1.00 | 28.61% | ||||||||||
Based on: 10-K (reporting date: 2021-12-25).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Advanced Micro Devices Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 27, 2025 | Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (13,029) | (15,937) | (16,670) | (16,631) | 1,744) | |
| Invested capital2 | 61,734) | 58,227) | 57,883) | 58,525) | 6,195) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -21.11% | -27.37% | -28.80% | -28.42% | 28.16% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Analog Devices Inc. | -12.03% | -14.15% | -10.06% | -11.43% | -14.67% | |
| Applied Materials Inc. | 17.27% | 10.37% | 13.36% | 23.33% | 18.82% | |
| Broadcom Inc. | -2.94% | -10.36% | 4.87% | 3.61% | -5.62% | |
| Intel Corp. | -18.62% | -29.96% | -19.83% | -13.05% | 3.54% | |
| KLA Corp. | 20.58% | 16.23% | 20.17% | 22.57% | 11.03% | |
| Lam Research Corp. | 12.15% | -2.98% | 2.38% | 17.40% | 12.74% | |
| Marvell Technology Inc. | -26.42% | -26.46% | -22.13% | -24.89% | -26.61% | |
| Micron Technology Inc. | -14.47% | -26.19% | -37.98% | -10.44% | -15.17% | |
| NVIDIA Corp. | 117.48% | 62.03% | -16.05% | 26.14% | 6.62% | |
| Qualcomm Inc. | 12.49% | 7.70% | 0.23% | 26.66% | 24.06% | |
| Texas Instruments Inc. | 2.39% | 2.70% | 12.32% | 32.90% | 31.54% | |
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -13,029 ÷ 61,734 = -21.11%
4 Click competitor name to see calculations.
A significant shift in economic performance occurred between 2021 and 2022, transitioning from a state of value creation to substantial economic loss. While the company maintained a positive economic profile in 2021, a sharp decline followed, with economic profit remaining negative through 2025, although a gradual recovery trend emerged in the final two years of the period.
- Economic Profit Trends
- Economic profit plummeted from a surplus of 1,744 million USD in 2021 to a deficit of 16,631 million USD in 2022. The losses peaked in 2023 at 16,670 million USD before beginning a steady contraction. By 2025, the economic loss narrowed to 13,029 million USD, indicating a slow but consistent trajectory toward recovering economic value.
- Invested Capital Expansion
- A massive expansion in invested capital is observed between 2021 and 2022, where the figure surged from 6,195 million USD to 58,525 million USD. Following this spike, invested capital remained relatively stable, fluctuating slightly around the 58 billion USD mark before increasing to 61,734 million USD in 2025. This suggests a major capital deployment or acquisition event in 2022 that fundamentally altered the company's capital structure.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrors the volatility seen in economic profit, dropping from a positive 28.16% in 2021 to -28.42% in 2022. The ratio reached its lowest point in 2023 at -28.80%, signaling that the return on invested capital was significantly below the cost of capital. However, a progressive improvement is evident from 2024 onward, with the ratio climbing to -27.37% and further improving to -21.11% by 2025.
The overall trajectory indicates that while the company has not yet returned to positive economic value added, the narrowing of the economic spread ratio and the reduction in annual economic losses suggest an improving efficiency in utilizing its expanded capital base.
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Economic Profit Margin
Advanced Micro Devices Inc., economic profit margin calculation, comparison to benchmarks
| Dec 27, 2025 | Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (13,029) | (15,937) | (16,670) | (16,631) | 1,744) | |
| Net revenue | 34,639) | 25,785) | 22,680) | 23,601) | 16,434) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -37.61% | -61.81% | -73.50% | -70.47% | 10.61% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Analog Devices Inc. | -45.93% | -65.34% | -36.13% | -42.83% | -94.24% | |
| Applied Materials Inc. | 12.25% | 7.22% | 8.96% | 13.47% | 12.01% | |
| Broadcom Inc. | -6.91% | -28.32% | 8.52% | 6.76% | -13.24% | |
| Intel Corp. | -41.07% | -52.08% | -33.68% | -18.36% | 3.97% | |
| KLA Corp. | 15.74% | 13.93% | 16.02% | 19.08% | 10.87% | |
| Lam Research Corp. | 10.15% | -3.02% | 2.09% | 12.85% | 10.28% | |
| Marvell Technology Inc. | -81.64% | -91.49% | -74.77% | -111.07% | -81.68% | |
| Micron Technology Inc. | -23.39% | -54.91% | -129.04% | -17.68% | -25.06% | |
| NVIDIA Corp. | 42.55% | 31.32% | -12.70% | 17.52% | 5.17% | |
| Qualcomm Inc. | 8.83% | 6.10% | 0.20% | 17.76% | 14.49% | |
| Texas Instruments Inc. | 3.86% | 4.52% | 15.89% | 28.85% | 28.21% | |
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Net revenue
= 100 × -13,029 ÷ 34,639 = -37.61%
3 Click competitor name to see calculations.
The analysis of economic value reveals a significant shift in financial performance starting in 2022, characterized by a transition from positive value creation to substantial value destruction, followed by a period of gradual recovery.
- Economic Profit Trends
- A severe reversal is observed between 2021 and 2022, as economic profit moved from a surplus of 1,744 million US$ to a deficit of 16,631 million US$. This negative trend peaked in 2023 with a loss of 16,670 million US$. Subsequent years show a steady narrowing of this deficit, with losses improving to 15,937 million US$ in 2024 and 13,029 million US$ in 2025.
- Net Revenue Performance
- Net revenue exhibited strong overall growth throughout the period, increasing from 16,434 million US$ in 2021 to 34,639 million US$ in 2025. Despite a minor contraction in 2023, the general trajectory remains positive, with a significant surge in revenue observed in the final year of the analysis.
- Economic Profit Margin Analysis
- The economic profit margin underwent a drastic contraction, falling from a positive 10.61% in 2021 to a trough of -73.50% in 2023. A recovery phase followed, with the margin improving to -61.81% in 2024 and further ascending to -37.61% in 2025. This trend suggests that while the organization has not yet returned to creating economic value above its cost of capital, the efficiency of revenue generation relative to economic loss is improving.
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