Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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Profitability Ratios (Summary)
Advanced Micro Devices Inc., profitability ratios
Based on: 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), 10-K (reporting date: 2020-12-26).
The analysis of the financial ratios over the five-year period reveals several notable trends in the profitability and efficiency metrics.
- Gross Profit Margin
- This ratio exhibited some fluctuation but overall showed an upward trend. It started at 44.53% in 2020, rose to 48.25% in 2021, dipped slightly to 44.93% in 2022, then gradually increased to 49.35% by 2024. This implies an improvement in the company's ability to generate profit from its revenue before operating expenses over the period.
- Operating Profit Margin
- The operating margin showed significant volatility. It increased strongly from 14.02% in 2020 to a peak of 22.2% in 2021. However, it experienced a sharp decline thereafter, dropping to 5.36% in 2022, then further to 1.77% in 2023, followed by a slight recovery to 7.37% in 2024. This reflects challenges faced in operating efficiency or increased operating costs after 2021, although there is some indication of recovery in the most recent year.
- Net Profit Margin
- The net profit margin displayed a downward trajectory. From a high of 25.5% in 2020, it decreased to 19.24% in 2021, and then declined further each subsequent year, reaching 6.36% in 2024. This trend suggests declining overall profitability after accounting for all expenses, taxes, and other costs.
- Return on Equity (ROE)
- ROE demonstrated a dramatic decline over the period. Starting from a high of 42.66% in 2020 and remaining strong at 42.18% in 2021, it dropped precipitously to 2.41% in 2022, further decreasing to 1.53% in 2023, and only modestly improving to 2.85% in 2024. This downward trend indicates diminishing returns generated on shareholders' equity, signaling possible issues in effectively utilizing equity capital.
- Return on Assets (ROA)
- ROA followed a similar pattern to ROE, with very high returns at 27.78% in 2020 and 25.46% in 2021. It then sharply decreased to 1.95% in 2022 and continued declining to 1.26% in 2023 before a slight uptick to 2.37% in 2024. The drop in ROA highlights reduced efficiency in asset utilization to generate profits over the period examined.
Overall, while gross profit margin exhibited resilience and an upward trend, operating and net profitability metrics along with returns on equity and assets experienced significant declines after 2021. The data suggest that despite relatively stable gross profitability, the company faced increased operational challenges and diminishing overall profitability and efficiency in the following years, with only limited signs of recovery by 2024.
Return on Sales
Return on Investment
Gross Profit Margin
Advanced Micro Devices Inc., gross profit margin calculation, comparison to benchmarks
| Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | Dec 26, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Net revenue | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| Monolithic Power Systems Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-26).
1 2024 Calculation
Gross profit margin = 100 × Gross profit ÷ Net revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data over the observed annual periods indicate notable growth and fluctuating profitability metrics. The net revenue shows a consistent upward trajectory, increasing from $9,763 million in 2020 to an estimated $25,785 million in 2024. This growth reflects a significant expansion in the company’s sales or service income over the five-year span.
Gross profit similarly exhibits an overall increasing trend, rising from $4,347 million in 2020 to a projected $12,725 million in 2024. This upward movement parallels the growth in net revenue, suggesting that the company has effectively managed its cost of goods sold relative to sales scale, thereby generating higher absolute profits.
Gross profit margin percentages reveal a varied but generally positive progression. The margin increased from 44.53% in 2020 to a peak of 48.25% in 2021, indicating improved efficiency in turning revenue into gross profit during that period. Although the margin experienced a decline in 2022 to 44.93%, it recovered somewhat afterward, reaching an estimated 49.35% in 2024. This improvement in the later years points toward enhanced cost controls, pricing strategies, or favorable product mix that contributed to better profitability relative to net revenue.
- Revenue Growth
- Steady and significant increase over the five years, more than doubling from 2020 to 2024.
- Gross Profit Trends
- Consistent rise, reflecting successful management of direct costs and effective scaling of operations.
- Profitability (Gross Profit Margin)
- Fluctuated but generally improved, demonstrating better profit retention on sales despite competitive or cost pressures at times.
Overall, the data suggests strong financial performance enhancement marked by expanding revenues, increasing gross profits, and improving profitability margins, especially evident in the last two years of the recorded period.
Operating Profit Margin
Advanced Micro Devices Inc., operating profit margin calculation, comparison to benchmarks
| Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | Dec 26, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | ||||||
| Net revenue | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| Monolithic Power Systems Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
| Operating Profit Margin, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| Operating Profit Margin, Industry | ||||||
| Information Technology | ||||||
Based on: 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), 10-K (reporting date: 2020-12-26).
1 2024 Calculation
Operating profit margin = 100 × Operating income ÷ Net revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data for the periods under review reveals notable fluctuations in key performance indicators including operating income, net revenue, and operating profit margin.
- Net Revenue
- There is a consistent upward trend in net revenue over the years, increasing from $9,763 million in 2020 to $25,785 million in 2024. The most significant rise was observed between 2021 and 2022, with incremental growth continuing, albeit at a slower pace, through to 2024.
- Operating Income
- Operating income experienced substantial volatility. It surged dramatically from $1,369 million in 2020 to $3,648 million in 2021, followed by a sharp decline to $1,264 million in 2022 and further decreases to $401 million in 2023. In 2024, operating income recovered to $1,900 million, although this figure remains significantly lower than the 2021 peak.
- Operating Profit Margin
- The operating profit margin mirrored the trend in operating income, peaking at 22.2% in 2021 before dropping sharply to 5.36% in 2022. It further declined to 1.77% in 2023, suggesting diminished profitability relative to revenue. By 2024, the margin improved to 7.37% but remained below earlier peak levels, indicating a partial recovery in operational efficiency.
Overall, while the company demonstrated strong revenue growth throughout the period, profitability metrics such as operating income and margin showed pronounced instability, particularly after 2021. The data suggests challenges in converting increased revenues into proportional operating profits, with a significant dip in profitability in 2022 and 2023 followed by a moderate rebound in 2024.
Net Profit Margin
Advanced Micro Devices Inc., net profit margin calculation, comparison to benchmarks
| Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | Dec 26, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Net revenue | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| Monolithic Power Systems Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
| Net Profit Margin, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| Net Profit Margin, Industry | ||||||
| Information Technology | ||||||
Based on: 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), 10-K (reporting date: 2020-12-26).
1 2024 Calculation
Net profit margin = 100 × Net income ÷ Net revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- The net income demonstrated significant volatility over the observed five-year period. Initially, it increased from 2,490 million US dollars in 2020 to a peak of 3,162 million US dollars in 2021, indicating strong profitability growth. However, there was a sharp decline in 2022 to 1,320 million US dollars, and this downward trend continued into 2023, reaching a low of 854 million US dollars. In 2024, net income recovered somewhat to 1,641 million US dollars but remained below the levels observed in 2020 and 2021.
- Net Revenue
- Net revenue exhibited a consistent upward trend throughout the analyzed years. Starting at 9,763 million US dollars in 2020, it rose markedly to 16,434 million US dollars in 2021, followed by further increases to 23,601 million in 2022 and 22,680 million in 2023, before reaching the highest reported figure of 25,785 million US dollars in 2024. This growth suggests expanding sales and market penetration despite fluctuations in net income.
- Net Profit Margin
- The net profit margin declined steadily and substantially after 2020. From a high of 25.5% in 2020, it decreased to 19.24% in 2021, then dropped sharply to 5.59% in 2022 and continued falling to 3.77% in 2023. There was a mild recovery to 6.36% in 2024, yet profit margins remain significantly lower than earlier years. This decline indicates pressure on profitability despite the increasing revenue base, potentially due to rising costs or lower pricing power.
- Overall Insights
- While revenue showed robust growth, profitability measured by both net income and net profit margin displayed a weakening trend during most of the period. The sharp reduction in net income alongside a declining profit margin suggests increased operational or financial challenges impacting earnings quality. The partial recovery in 2024 indicates initial signs of profitability stabilization but still reflects a more constrained profit environment compared to the start of the period.
Return on Equity (ROE)
Advanced Micro Devices Inc., ROE calculation, comparison to benchmarks
| Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | Dec 26, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| Monolithic Power Systems Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
| ROE, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| ROE, Industry | ||||||
| Information Technology | ||||||
Based on: 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), 10-K (reporting date: 2020-12-26).
1 2024 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- Net income experienced a peak in 2021 at 3,162 million US dollars, followed by a sharp decline to 1,320 million in 2022. The downward trend continued in 2023, reaching 854 million, then showed partial recovery in 2024 with an increase to 1,641 million. This indicates significant volatility and challenges in profitability after 2021.
- Stockholders’ Equity
- Stockholders’ equity showed a dramatic increase from 7,497 million US dollars in 2021 to 54,750 million in 2022. It continued to rise slightly in the subsequent years, reaching 57,568 million in 2024. This substantial growth in equity suggests large capital inflows or retained earnings despite the decreasing net income.
- Return on Equity (ROE)
- ROE was strong and stable in 2020 and 2021, maintaining above 40%. However, it sharply declined in 2022 to 2.41%, further dropping to 1.53% in 2023, before slightly improving to 2.85% in 2024. This drop signifies that the company generated much less profit from its equity base in the later years despite the large increase in equity, reflecting lower efficiency in equity utilization.
- Summary
- The data reveals contrasting trends: a steep decrease in net income and ROE after 2021, contrasted with a very large increase in stockholders' equity starting in 2022. This combination results in a much lower profitability ratio relative to the equity base. The company appears to have expanded its equity significantly but has faced challenges converting this into proportional profit growth during the analyzed period.
Return on Assets (ROA)
Advanced Micro Devices Inc., ROA calculation, comparison to benchmarks
| Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | Dec 26, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| Monolithic Power Systems Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
| ROA, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| ROA, Industry | ||||||
| Information Technology | ||||||
Based on: 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), 10-K (reporting date: 2020-12-26).
1 2024 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data demonstrates notable variations across the observed periods. Net income first shows a strong increase from 2,490 million US dollars in 2020 to 3,162 million in 2021. Afterwards, it experiences a sharp decline to 1,320 million in 2022 and further decreases to 854 million in 2023 before slightly recovering to 1,641 million in 2024.
Total assets increased significantly from 8,962 million US dollars in 2020 to 12,419 million in 2021. This growth intensified dramatically in 2022, with total assets jumping to 67,580 million, followed by marginal increases to 67,885 million in 2023 and 69,226 million in 2024.
The return on assets (ROA) percentage aligns with the trends seen in net income relative to the asset base. It begins at a high 27.78% in 2020 and slightly declines to 25.46% in 2021. However, given the substantial asset increase and net income reduction in subsequent years, ROA undergoes a steep decrease to 1.95% in 2022, further dropping to 1.26% in 2023, before a modest rebound to 2.37% in 2024.
Overall, the data indicates a period of rapid asset growth beginning in 2022, accompanied by a significant decline in profitability as measured by net income and ROA. Despite a recovery in net income and ROA in 2024, profitability levels remain far below those seen in the earlier years. This pattern suggests challenges in effectively utilizing the substantially larger asset base to generate proportional earnings during the latter periods.