Advanced Micro Devices Inc. (NASDAQ:AMD)

Return on Assets (ROA)

The Return on Assets demonstrates a significant fluctuation over the analyzed periods. Starting from a high point near the end of 2020, with values around 27.78% to 35.59%, there is a notable downward trend into 2022, where ROA declines sharply to as low as 0.58%, and even turns slightly negative by mid-2023. Following this low, a gradual recovery is observed from the third quarter of 2023 through early 2025, where ROA improves steadily to approximately 3.11%. This pattern suggests a period of strong asset profitability initially, followed by a substantial dip, and a slow yet consistent return to more positive performance levels.

Financial Leverage

Financial Leverage ratios exhibit general stability with minor variations throughout the entire timeline. Starting close to 1.93 in early 2020, the ratio decreases to around 1.54 by the end of 2020 and then remains relatively consistent around levels between 1.2 and 1.3 over the subsequent quarters. These slight fluctuations indicate modest changes in the company's use of debt relative to equity, with no significant spikes or drops, reflecting a cautious or steady approach in capital structure management during this period.

Return on Equity (ROE)

Return on Equity displays a trend largely parallel to that of ROA but with amplified values, as expected due to leverage effects. ROE peaks towards the end of 2020, achieving levels from approximately 42.66% up to 55.62%. Thereafter, a pronounced decline occurs through 2021 and into mid-2023, where ROE drops sharply to below zero briefly, and subsequently remains at low single-digit percentages. From late 2023 onward, ROE begins to recover, gradually increasing to near 3.85% by early 2025. The pattern reflects a period of strong equity profitability which is severely impacted before entering a phase of partial recovery.

Overall Observations

The data reveal a strong and robust profitability phase around late 2020, followed by a significant downturn through 2021 into mid-2023 across all profitability metrics. The financial leverage remains relatively stable throughout these fluctuations, implying the company's capital structure was not significantly altered during periods of changing profitability. The gradual recovery in both ROA and ROE from late 2023 suggests improving operational performance or external conditions, though profitability has yet to return to the high levels experienced in 2020.

The analysis of the quarterly financial metrics reveals distinct trends and fluctuations over the observed periods.

Net Profit Margin (%)

The net profit margin was observed to be consistently strong during the periods around 2020 and early 2021, with figures exceeding 25%. However, starting from March 2022, the margin showed a sharp decline, falling progressively to nearly zero and slightly negative by September 2023. After this trough, a recovery trend begins, with margins gradually improving to around 8% by March 2025. This indicates a period of profitability contraction followed by a slow recovery phase towards the end of the observed timeframe.

Asset Turnover (ratio)

The asset turnover ratio experienced a notable increase from early 2020 through the end of 2021, peaking at approximately 1.33. Post-2021, the ratio plunged sharply down to 0.28 in March 2022, signifying a reduction in efficiency regarding asset use to generate sales. From this low point, the ratio demonstrated a slow but steady recovery to around 0.39 by the first quarter of 2025, indicating improving asset utilization over time.

Financial Leverage (ratio)

Financial leverage ratios were moderately stable throughout the period. Initially fluctuating between approximately 1.54 and 1.99 through 2020 and 2021, there was a decline to around 1.2 from early 2022 onward. This steadiness close to the 1.2 mark suggests that the company maintained a relatively conservative leverage position with minimal variation in debt relative to equity in the latter periods.

Return on Equity (ROE) (%)

Return on equity displayed strong performance up till late 2021, reaching values near 56%. Following this peak, ROE declined notably from early 2022 onwards to nearly zero and briefly negative by late 2023, mirroring the downturn in net profit margin and asset efficiency. Subsequently, ROE showed gradual improvement in 2024 and early 2025, climbing back up to approximately 4%, indicative of recovery in overall equity profitability.

Overall, the data suggest that the company experienced robust profitability and efficiency in 2020–2021, followed by a significant downturn through 2022 and 2023. The financial metrics indicate a phase of recovery starting in 2024, with improvement in profitability, asset use efficiency, and returns to equity holders, while maintaining relatively stable financial leverage throughout the period.

The financial data reveals several key trends across the analyzed periods. The tax burden ratio exhibits considerable volatility, with values fluctuating widely between 0.8 and 41.6 at certain points, indicating varying effective tax rates or adjustments impacting profitability. The interest burden ratio remains relatively stable, mostly close to 1, with occasional dips as low as 0.05, suggesting minimal fluctuations in interest expense relative to earnings before interest and taxes (EBIT) over most periods.

The EBIT margin shows a general downward trend after peaking beyond 20% in early 2021. Margins fall sharply after this peak, even dipping into negative territory for a brief period, before gradually recovering towards the end of the timeline, reaching about 10.34%. This pattern suggests periods of operational challenge or increased costs, followed by a slow restoration of profitability at the operational level.

Asset turnover initially remains above 1, reflecting efficient asset utilization in generating revenues, but it plummets in mid-2022 to around 0.28-0.39 in subsequent periods. This marked decline may indicate expanded asset bases not yet fully translating into proportional revenue gains or a shift in business operations.

Financial leverage displays moderate variability, mostly fluctuating between 1.2 and 1.99, showing some changes in the capital structure but maintaining a generally stable leverage position. A higher leverage ratio in initial periods slightly declines and subsequently stabilizes, implying adjustments in debt and equity financing balance.

Return on equity (ROE) increases steadily through early 2021, peaking around 55.62%, but sharply declines afterward, falling to near zero and even negative (-0.05) briefly, before modestly recovering to approximately 3.85% towards the final periods. This trajectory suggests strong profitability initially, followed by significant challenges impacting shareholder returns, with a slow but limited recovery in later periods.

Tax Burden

Highly volatile with spikes and troughs, potentially reflecting fluctuating effective tax rates or extraordinary items.

Interest Burden

Mostly stable around 1, indicating steady interest expense relative to EBIT, except notable low points reflecting reduced interest impact.

EBIT Margin

Peaked strongly near 22-20%, followed by a sharp decline including negative quarters; recovered slowly to mid-teens and single digits towards the end.

Asset Turnover

Started strong above 1, then dropped markedly below 0.4, suggesting less efficient asset use or expansion of asset base outpacing revenue growth.

Financial Leverage

Moderately fluctuating but generally stable near 1.2 to 1.6, indicating consistent capital structure management.

Return on Equity (ROE)

Strong early growth above 40%, then steep decline through the periods including near-zero and negative values, followed by modest recovery to below 5%.

The financial data reflects key performance indicators over several quarters, revealing distinct phases of change and fluctuation.

Net Profit Margin (%)

This metric exhibited strong values around 25% to 27% during the mid-2020 to late 2021 period, representing high profitability. From early 2022 onwards, the margin experienced a significant downward trend, dropping below 10% by the end of 2022 and reaching near zero and slightly negative values in mid to late 2023. However, starting in late 2023 and into 2024, there is a gradual recovery indicated by a steady increase reaching above 8% by the first quarter of 2025. This pattern suggests a period of margin compression followed by a moderate rebound.

Asset Turnover (ratio)

Asset turnover was relatively high and increasing from early measurements, moving from just above 1.0 in mid-2020 up to approximately 1.33 by late 2021. Following this peak, there was a sharp decline to values around 0.28 to 0.35 during 2022 and early 2023, signifying reduced efficiency in asset utilization to generate sales. In the subsequent quarters throughout 2023 and into 2025, asset turnover gradually improved, climbing back toward nearly 0.4 by the first quarter of 2025. This suggests efforts to enhance asset use efficiency over time after a significant dip.

Return on Assets (ROA) (%)

The ROA values closely mirror the net profit margin trends, starting from high levels above 25% during mid-2020 to late 2021, indicating strong overall profitability relative to asset base. Thereafter, a sharp decline is observed, with ROA falling dramatically during 2022 and reaching close to zero or slightly negative in mid-2023. From late 2023 through 2024, ROA shows a steady recovery, achieving approximately 3.11% growth by early 2025. This trajectory points to initial strong asset profitability, followed by challenging periods and gradual recovery.

In summary, the period under review is characterized by initially robust profitability and efficiency metrics, which deteriorate significantly around 2022, possibly reflecting adverse operational or market conditions. The latter part of the data indicates strategic or operational improvements driving gradual recovery in profit margins, asset utilization, and returns. Monitoring progress in the upcoming periods will be crucial to assess the sustainability of this positive trend.

The analysis of the quarterly financial ratios reveals several notable trends across the presented periods.

Tax Burden

The tax burden ratio exhibits considerable volatility, with values fluctuating between a low of approximately 0.8 and a peak exceeding 40 during the observed timeframe. From 2020 through early 2022, it generally decreases from around 1.95 to about 0.86, suggesting a declining tax impact relative to pretax earnings. However, there is a sharp spike noted around mid-2023, reaching an unusually high figure near 41.6, followed by a rapid normalization back to levels close to 1 by early 2024. This irregularity may indicate a one-time tax event or reclassification impacting the ratio during that period.

Interest Burden

The interest burden ratio remains relatively stable and close to 1 for most periods, oscillating between 0.96 and 0.99 through 2020 to early 2022, which signals minimal interest expense relative to operating income. A notable decline occurs around mid-2023 with a sharp drop to around 0.05, followed by a recovery to approximately 0.83 by late 2023 and a gradual upward trend thereafter, reaching near 0.97 by early 2025. This fluctuation suggests significant changes in interest expenses or financing structure within that timeframe.

EBIT Margin

The EBIT margin shows a general upward trend from early 2020, increasing steadily from about 13.6% to a peak of roughly 22.6% by early 2022, reflecting improved operational efficiency or profitability. After this peak, a marked decline occurs throughout 2022 and into early 2023, even entering slightly negative territory during mid-2023. Subsequently, a recovery phase begins in late 2023, with EBIT margin rising incrementally to exceed 10% by early 2025. This pattern highlights a period of operational challenges followed by a gradual restoration of profitability.

Asset Turnover

Asset turnover remains relatively stable with modest variation over the observed quarters. From early 2020 to early 2022, the ratio hovers around 1.09 to 1.33 indicating efficient use of assets to generate revenue. Post early 2022, a notable reduction occurs with the ratio dropping below 0.4 and maintaining a level close to 0.32-0.39 through early 2025. This decline suggests either an increase in asset base or a slowdown in revenue generation relative to assets held.

Return on Assets (ROA)

ROA demonstrates strong performance and growth from early 2020 through 2021, climbing from approximately 27.8% to over 35.5%. This reflects robust profitability relative to asset investments during that period. However, from early 2022 onwards, a significant drop is evident, with ROA falling sharply to below 2% by mid-2023, including a brief negative phase. From late 2023, a slow and steady rebound emerges, bringing ROA back to above 3% by early 2025. This trend aligns with the EBIT margin and asset turnover developments, indicating operational and asset utilization challenges followed by gradual recovery.

The financial ratios presented reveal several notable trends and fluctuations over the examined periods.

Tax Burden

The tax burden ratio starts at elevated levels in early 2021 with values such as 1.95 and gradually decreases to a range between 0.8 and 1.1 by late 2022. However, a significant spike is observed in April 2023 where the ratio sharply rises to 41.6, an outlier compared to the rest of the data. Following this spike, the tax burden returns to ratios close to previous levels, fluctuating between 0.8 and 1.68 through early 2025. This pattern indicates an unusual tax expense or adjustment in Q2 2023, followed by normalization.

Interest Burden

The interest burden remains relatively stable across the periods, mostly hovering near 0.97 to 0.99 from early 2021 through early 2022, indicating steady interest expenses relative to operating income. A marked decline appears in mid-2023, reaching a low point of 0.05, possibly reflecting an extraordinary reduction in interest expenses or income from non-operating sources. After this anomaly, the ratio gradually recovers, increasing to approximately 0.97 by early 2025, suggesting a return to more typical interest burden levels.

EBIT Margin

The EBIT margin shows a positive trend initially, improving from 13.59% in early 2021 to a peak above 22% by early 2022, reflecting enhanced operating profitability. However, this is followed by a significant decline, dipping below zero in mid-2023 (-1.01%), indicative of operational losses during that quarter. Starting late 2023, the EBIT margin recovers steadily, achieving 10.34% by early 2025, highlighting a gradual restoration of operating efficiency and profitability.

Net Profit Margin

Net profit margin follows a somewhat similar trend to EBIT margin, remaining robust near 25% through the first half of 2021, then progressively declining to 1.71% by late 2022. It briefly turns negative in mid-2023 (-0.11%), consistent with the EBIT margin’s operational losses observed during the same timeframe. Subsequently, net margin improves steadily, reaching over 8% by early 2025, indicating recovery in bottom-line profitability.

In summary, the data exhibit a pattern of strong profitability and manageable tax and interest burdens through 2021, followed by notable stress and volatility around mid-2023, marked by an unusual spike in tax burden and significant drops in profitability and interest burden. The latter periods show gradual improvements, suggesting corrective actions or market conditions leading to the return of operational and net profit growth as well as normalization of tax and interest effects.