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 – 28.85% × 61,734 = -13,286
The financial performance from 2021 to 2025 is characterized by a structural shift in the capital base and a subsequent period of significant economic value destruction, followed by a recent trend of operational recovery. A transition from a lean capital structure in 2021 to a heavily capitalized position in 2022 created a substantial hurdle for profitability, as the cost of maintaining the expanded asset base far exceeded the generated operating income for several consecutive years.
- Net Operating Profit After Taxes (NOPAT)
- A period of extreme volatility is observed in NOPAT, which plummeted from 3,517 million US$ in 2021 to negative values in 2022 and 2023. A recovery phase began in 2024, culminating in a sharp increase to 4,525 million US$ by 2025. This indicates a return to strong operational profitability after a multi-year downturn.
- Invested Capital and Cost of Capital
- A massive expansion of invested capital occurred between 2021 and 2022, rising from 6,195 million US$ to 58,525 million US$. This capital base remained relatively stable through 2025, ending at 61,734 million US$. Concurrently, the cost of capital remained consistently high and stable, hovering between 28.59% and 29.03% throughout the entire period.
- Economic Profit Trends
- Economic profit shifted from a positive 1,719 million US$ in 2021 to deep negative territory starting in 2022, reaching a low of -16,911 million US$ in 2023. This decline is directly attributable to the surge in invested capital, which significantly increased the capital charge. While the recovery in NOPAT has led to a gradual improvement in economic profit—reducing the deficit to -13,286 million US$ by 2025—the company continues to fail to generate returns above its cost of capital.
The overarching pattern indicates that while operational efficiency and profitability are trending upward, the scale of the invested capital combined with a high cost of capital continues to result in negative economic value added. The substantial increase in the capital base in 2022 shifted the financial requirement for value creation upward, meaning significantly higher NOPAT levels are now required to achieve a positive economic profit.
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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$62,999 million in 2025. This consistent growth suggests a strengthening of the company’s equity base.
The interplay between debt and equity significantly influences the overall invested capital. The initial surge in invested capital in 2022 was largely attributable to a combination of increased debt and a substantial rise in stockholders’ equity. The subsequent fluctuations in invested capital reflect changes in both debt levels and equity positions. The increase in debt in 2025, coupled with continued equity growth, suggests a strategic approach to capital structure management.
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Cost of Capital
Advanced Micro Devices Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 326,392) | 326,392) | ÷ | 330,301) | = | 0.99 | 0.99 | × | 29.16% | = | 28.81% | ||
| Debt3 | 3,125) | 3,125) | ÷ | 330,301) | = | 0.01 | 0.01 | × | 3.79% × (1 – 21.00%) | = | 0.03% | ||
| Operating lease liability4 | 784) | 784) | ÷ | 330,301) | = | 0.00 | 0.00 | × | 4.74% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 330,301) | 1.00 | 28.85% | ||||||||||
Based on: 10-K (reporting date: 2025-12-27).
1 US$ 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 | × | 29.16% | = | 28.82% | ||
| 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 | 28.85% | ||||||||||
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 | × | 29.16% | = | 28.84% | ||
| 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 | 28.87% | ||||||||||
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 | × | 29.16% | = | 28.54% | ||
| 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 | 28.59% | ||||||||||
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 | × | 29.16% | = | 29.01% | ||
| 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 | 29.03% | ||||||||||
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 | (13,286) | (16,179) | (16,911) | (16,872) | 1,719) | |
| Invested capital2 | 61,734) | 58,227) | 57,883) | 58,525) | 6,195) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -21.52% | -27.79% | -29.22% | -28.83% | 27.74% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Analog Devices Inc. | -12.06% | -14.18% | -10.09% | -11.45% | -14.69% | |
| Applied Materials Inc. | 17.02% | 10.13% | 13.12% | 23.09% | 18.58% | |
| Broadcom Inc. | -3.00% | -10.42% | 4.81% | 3.56% | -5.68% | |
| Intel Corp. | -18.76% | -30.08% | -19.97% | -13.18% | 3.40% | |
| KLA Corp. | 20.42% | 16.08% | 20.01% | 22.42% | 10.88% | |
| Lam Research Corp. | 11.84% | -3.28% | 2.09% | 17.11% | 12.45% | |
| Marvell Technology Inc. | -26.67% | -26.71% | -22.37% | -25.14% | -26.87% | |
| Micron Technology Inc. | -5.88% | -17.78% | -29.73% | -2.10% | -6.71% | |
| NVIDIA Corp. | 117.11% | 61.66% | -16.42% | 25.78% | 6.26% | |
| Qualcomm Inc. | 12.40% | 7.60% | 0.13% | 26.57% | 23.96% | |
| Texas Instruments Inc. | 2.38% | 2.70% | 12.32% | 32.90% | 31.53% | |
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 × -13,286 ÷ 61,734 = -21.52%
4 Click competitor name to see calculations.
A significant shift in the economic value creation profile occurred between 2021 and 2022, characterized by a transition from positive economic profit to substantial economic losses. While the initial period showed value creation, the subsequent years are marked by a failure to generate returns exceeding the cost of capital, although a gradual trend toward recovery is evident in the final years of the period.
- Invested Capital Dynamics
- A sharp increase in invested capital is observed between 2021 and 2022, rising from 6,195 million USD to 58,525 million USD. Following this expansion, the capital base remained relatively stable, fluctuating slightly before reaching 61,734 million USD by December 2025. This suggests a massive structural increase in the asset base employed to generate returns.
- Economic Profit Performance
- Economic profit shifted from a surplus of 1,719 million USD in 2021 to a deficit of 16,872 million USD in 2022. The loss intensified slightly in 2023 to 16,911 million USD before entering a period of steady improvement, narrowing to 16,179 million USD in 2024 and further to 13,286 million USD in 2025. Despite the narrowing deficit, the entity remained unable to achieve positive economic profit throughout the 2022–2025 period.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrored the volatility of economic profit, plummeting from a positive 27.74% in 2021 to -28.83% in 2022. The ratio reached its lowest point of -29.22% in 2023, indicating a significant gap between the return on invested capital and the cost of capital. A gradual upward trajectory is noted from 2024 onward, with the ratio improving to -21.52% by December 2025, reflecting a reduction in the rate of economic value destruction.
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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 | (13,286) | (16,179) | (16,911) | (16,872) | 1,719) | |
| Net revenue | 34,639) | 25,785) | 22,680) | 23,601) | 16,434) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -38.35% | -62.75% | -74.56% | -71.49% | 10.46% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Analog Devices Inc. | -46.03% | -65.46% | -36.23% | -42.92% | -94.41% | |
| Applied Materials Inc. | 12.08% | 7.05% | 8.79% | 13.33% | 11.85% | |
| Broadcom Inc. | -7.05% | -28.49% | 8.42% | 6.66% | -13.37% | |
| Intel Corp. | -41.39% | -52.27% | -33.91% | -18.54% | 3.81% | |
| KLA Corp. | 15.62% | 13.80% | 15.90% | 18.95% | 10.72% | |
| Lam Research Corp. | 9.90% | -3.33% | 1.83% | 12.63% | 10.04% | |
| Marvell Technology Inc. | -82.42% | -92.37% | -75.59% | -112.19% | -82.48% | |
| Micron Technology Inc. | -9.62% | -37.77% | -102.30% | -3.59% | -11.22% | |
| NVIDIA Corp. | 42.41% | 31.13% | -12.99% | 17.28% | 4.89% | |
| Qualcomm Inc. | 8.76% | 6.02% | 0.12% | 17.70% | 14.43% | |
| Texas Instruments Inc. | 3.86% | 4.51% | 15.88% | 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 × -13,286 ÷ 34,639 = -38.35%
3 Click competitor name to see calculations.
The financial performance between 2021 and 2025 is characterized by a sharp transition from positive economic value creation to a period of significant economic loss, occurring despite a general upward trajectory in net revenue. A substantial deterioration in economic profit was recorded starting in 2022, and while the deficit persisted through 2025, the magnitude of these losses began to narrow in the latter part of the period.
- Economic Profit Trajectory
- Economic profit shifted from a positive US$ 1,719 million in 2021 to a significant deficit of US$ 16,872 million in 2022. This downward trend peaked in 2023 with a loss of US$ 16,911 million. A gradual recovery is observed from 2024 through 2025, with the economic loss reducing to US$ 13,286 million by the end of the analyzed period.
- Net Revenue Growth
- Net revenue exhibited consistent growth over the five-year span, rising from US$ 16,434 million in 2021 to US$ 34,639 million in 2025. Despite a slight contraction in 2023 to US$ 22,680 million, the overall trend indicates a strong expansion of the top line, which more than doubled over the timeframe.
- Economic Profit Margin Analysis
- The economic profit margin reflects a severe decline following 2021, moving from a positive 10.46% to -71.49% in 2022 and reaching a nadir of -74.56% in 2023. A trend of marginal improvement is evident in the subsequent years, with the margin recovering to -62.75% in 2024 and further improving to -38.35% in 2025. This indicates that while the company remained unable to generate economic profit, the efficiency of value creation relative to revenue improved in the final two years.
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