10-K – 2026-02-04 – amd-20251227.htm

The implementation or increase of any tariffs, trade protection measures or restrictions, or retaliatory actions from foreign governments could result in lost sales and adversely impact our reputation and business. The U.S. government has instituted or proposed changes in trade policies that include higher tariffs on imports into the U.S. and other government regulations affecting trade between the United States and other countries where we conduct our business. Such changes to U.S. trade policy have the potential to adversely impact the U.S. economy or sectors thereof and could significantly impact our business, in particular the import of products used in our business that are manufactured outside the U.S. Any retaliatory actions by affected countries and foreign governments could result in tariffs, trade protection measures or other restrictions imposed on our current and future products. Our customers’ costs of doing business may increase or their sales may be negatively affected. As such, customer demand for our products may decline, which could adversely impact our ability to generate revenue and result in inventory impairment changes. For instance, tariffs on hardware required for data centers could raise costs for our customers, potentially causing them to delay or cancel AI infrastructure investments. Further, to the extent that the United States, China or other countries seek to promote products that are produced domestically or reduce their dependence on products from another country, they may implement regulations or policies that may negatively affect our business.
The United States and other countries’ export control regulations continue to focus on targeting semiconductors associated with AI, including GPUs and associated products and services, by restricting or prohibiting their unlicensed sale or supply to U.S. embargoed or sanctioned countries, governments, persons and entities. The United States has imposed unilateral controls restricting GPUs and associated products, and is likely to further adopt other unilateral or multilateral controls. The scope and application of such controls have been and may continue to be broad, which may prohibit us from exporting or providing access to our products to customers in one or more markets, including but not limited to China, and could negatively impact our manufacturing, testing and warehousing locations, or could impose other conditions that limit our ability to meet demand abroad. If export controls targeting semiconductors associated with AI including GPUs and associated products and services are further tightened, or the classification of our products under those controls’ changes, our ability to export our technology, products or services could be further restricted. We may also be at a competitive disadvantage if our competitors are not subject to the same or similar restrictions or classifications. Such export controls have, and may in the future, subject downstream recipients of our products to additional restrictions on the use, resale, repair or transfer of our products and may have a material adverse effect on us. New export control restrictions may adversely impact the ability of our research and development teams located outside of the United States from executing our product roadmaps in a timely manner or at all. In addition, deemed export restrictions could further affect our ability to provide services or develop products in the United States. Continued changes to export control regulations that we are subject to, or changes to their interpretation and enforcement, could result in greater compliance costs and other compliance burdens on our business and our customers which could adversely impact our business. Export controls have and may continue to encourage customers in China and other markets subject to those controls to pursue alternatives to U.S. semiconductors for their product designs to limit compliance burdens and potential impact on their product roadmaps. From time to time, governments provide incentives or make other investments that could benefit and give a competitive advantage to our competitors. Government incentives may not be available to us on acceptable terms or at all. If our competitors can benefit from such government incentives and we cannot, it could strengthen our competitors’ relative position and have a material adverse effect on our business.
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We have equity interests in two joint ventures (collectively, the THATIC JV) with Higon Information Technology Co., Ltd. (THATIC), a third-party Chinese entity. In June 2019, BIS added certain Chinese entities to the Entity List, including THATIC and the THATIC JV. Since that time, the United States administration has called for changes to domestic and foreign policy, including policies with respect to China and Russia. Specifically, United States-China trade relations remain uncertain as the United States continues to add more Chinese companies to the Entity List and introduce new regulations on advanced computing, semiconductor manufacturing, and AI, while China has imposed retaliatory tariffs. Moreover, as the U.S. government continues adding companies to the Entity List, our supply chain may be negatively impacted as we may be required to suspend purchasing from such suppliers or selling to such customers or otherwise unable to fulfill our contractual obligations to them. For example, in September 2025, BIS issued a new rule designating any entity that is at least 50% owned by one or more entities on the Entity List will be subject to Entity List restrictions and this rule similarly applies to entities at least 50% owned by listed “military end users” and certain sanctioned parties. In October 2025, the U.S. government announced that it planned to suspend enforcement of this new rule for one year. However, the restrictions can be reimposed at any time. These restrictive governmental actions and any similar measures that may be imposed on U.S. companies by other governments, especially in light of ongoing trade tensions with U.S. trading partners, will likely limit or prevent us from doing business with certain of our customers or suppliers and harm our ability to compete effectively or otherwise negatively affect our ability to sell our products. If we were ever found to have violated these laws or similar applicable non-U.S. laws, even if the violation occurred without our knowledge, we may be subject to penalties, which could adversely affect our reputation, business, operating results and financial condition.
We may, from time to time, receive technical data from third parties that is subject to the International Traffic and Arms Regulations (ITAR), which are administered by the U.S. Department of State. Export Administration Regulation (EAR) governs the export and re-export of certain AMD products, including FPGAs, as well as the transfer of related technologies or provision of services, whether in the U.S. or abroad. We are required to maintain an internal compliance program and security infrastructure to meet EAR and ITAR requirements. An inability to obtain the required export licenses, or to predict when or pursuant to which conditions they will be granted, increases the difficulties of forecasting shipments. When we file license applications or Notification Advanced Computing (NAC) exception notices we have no assurance that BIS will grant any exemptions or licenses or that the BIS will act on the filings in a timely manner. Even if BIS grants a requested license, the license may come with burdensome conditions that we cannot or decide not to fulfill. In addition, security or compliance program failures that could result in penalties or a loss of export privileges, as well as stringent licensing restrictions that may make our products less attractive to overseas customers, could have a material adverse effect on our business, financial condition and/or operating results.
If we cannot realize our deferred tax assets, our results of operations could be adversely affected.
Our deferred tax assets include tax credit carryforwards that can be used to offset taxable income and reduce income taxes payable in future periods. Each quarter, we consider both positive and negative evidence to determine whether all or a portion of the deferred tax assets are more likely than not to be realized. If we determine that some or all of our deferred tax assets are not realizable, it could result in a material expense in the period in which this determination is made which may have a material adverse effect on our financial condition and results of operations.
Our business is subject to potential tax liabilities, and exposure to greater-than-anticipated income tax liabilities as a result of changes in tax rules and regulations, changes in interpretation of tax rules and regulations, or unfavorable assessments from tax audits, could affect our effective tax rates, financial condition, and results of operations.
We are a U.S.-based multinational company subject to income tax, indirect tax or other tax claims in multiple U.S. and foreign tax jurisdictions in which we conduct business. Significant judgment is required in determining our worldwide provision for income taxes. Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. Any changes to tax laws could have a material adverse effect on our tax obligations and effective tax rate. Our income tax obligations could be affected by many factors, including, but not limited to, changes to our corporate operating structure, intercompany arrangements, and tax planning strategies.
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Our income tax expense is computed based on tax rates enacted at the time of the respective financial period. Our future effective tax rates, financial condition and results from operations could be unfavorably affected by changes in the tax rates in jurisdictions where our income is earned, by changes in the tax rules and regulations or the interpretation of tax rules and regulations in the jurisdictions in which we do business or by changes in the valuation of our deferred tax assets. Many countries have implemented legislation and other guidance to align their international tax rules with the Organization for Economic Co-operation and Development’s (OECD) Base Erosion and Profit Shifting recommendations and action plan that aim to standardize and modernize global corporate tax policy, including changes to cross-border tax, transfer pricing documentation rules, and nexus-based tax incentive practices. The OECD is also continuing discussions surrounding fundamental changes in allocation of profits among tax jurisdictions in which companies do business, as well as the implementation of a global minimum tax (namely “Pillar One” and “Pillar Two”). In January 2026, the OECD released a "side-by-side" package introducing new safe harbors and providing an exemption for U.S.-based multinational companies from parts of the global minimum tax framework. This guidance is intended to simplify compliance with a permanent simplified Effective Tax Rate safe harbor, a one-year extension of the transitional Country-by-Country Reporting safe harbor and reinforce the role of Qualified Domestic Minimum Top-up Taxes (QDMTT). While these rules are generally favorable to the Company, they need to be adopted by each country to be considered enacted for financial accounting purposes. As new guidance becomes available in each country, we will continue to evaluate the impact of the proposed and enacted legislative changes to our effective tax rate and cash flows.
In addition, we are subject to examinations of our income tax returns by domestic and foreign tax authorities. We regularly assess the likelihood of outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from the current examinations. There can be no assurance that the final determination of any of these examinations will not have an adverse effect on our effective tax rates, financial condition, and results of operations.
In the ordinary course of our business, there are many transactions and calculations where the ultimate income tax, indirect tax, or other tax determination is uncertain. Although we believe our tax estimates are reasonable, we cannot assure that the final determination of any tax audits or litigation will not be materially different from that which is reflected in historical tax provisions and accruals. Should additional taxes be assessed as a result of an audit, assessment or litigation, there could be a material adverse effect on our cash, tax provisions and results of operations in the period or periods for which that determination is made.
We are party to litigation and may become a party to other claims or litigation that could cause us to incur substantial costs or pay substantial damages or prohibit us from selling our products.
From time to time, we are a defendant or plaintiff in various legal actions, as described in Note 12 - Commitments and Contingencies of the Notes to our Consolidated Financial Statements. For example, we have been subject to certain claims concerning federal securities laws and corporate governance. Our products are purchased by and/or used by consumers, which could increase our exposure to consumer actions such as product liability claims and consumer class action claims. On occasion, we receive claims that individuals were allegedly exposed to substances used in our former semiconductor wafer manufacturing facilities and that this alleged exposure caused harm. Litigation can involve complex factual and legal questions, and its outcome is uncertain. It is possible that if a claim is successfully asserted against us, it could result in the payment of damages that could be material to our business.
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With respect to intellectual property litigation, from time to time, we have been notified of, or third parties may bring or have brought, actions against us and/or against our customers based on allegations that we are infringing the intellectual property rights of others, contributing to or inducing the infringement of the intellectual property rights of others, improperly claiming ownership of intellectual property or otherwise improperly using the intellectual property of others. If any such claims are asserted, we may seek to obtain a license under the third parties’ intellectual property rights. We cannot assure you that we will be able to obtain all of the necessary licenses on satisfactory terms, if at all. These parties may file lawsuits against us or our customers seeking damages (potentially up to and including treble damages) or an injunction against the sale of products that incorporate allegedly infringed intellectual property or against the operation of our business as presently conducted, which could result in our having to stop the sale of some of our products or to increase the costs of selling some of our products or which could damage our reputation. The award of damages, including material royalty payments, or other types of damages, or the entry of an injunction against the manufacture and sale of some or all of our products could have a material adverse effect on us. We could decide, in the alternative, to redesign our products or to resort to litigation to challenge such claims. Such challenges could be extremely expensive and time-consuming regardless of their merit, could cause delays in product release or shipment and/or could have a material adverse effect on us. We cannot assure you that litigation related to our intellectual property rights or the intellectual property rights of others can always be avoided or successfully concluded.
Even if we were to prevail, any litigation could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations, which could have a material adverse effect on us.
We are subject to environmental laws, conflict minerals regulations, as well as a variety of other laws or regulations that could result in additional costs and liabilities.
Our operations and properties are subject to various United States and foreign laws and regulations, including those relating to materials used in our products and the manufacturing processes of our products, discharge of pollutants into the environment, the treatment, transport, storage and disposal of solid and hazardous wastes and remediation of contamination. In addition, our operations and those of our suppliers are further governed by regulations prohibiting the use of forced labor (e.g., mining conflict materials), and restrictions on other materials, as well as laws or regulations governing the operation of our facilities, sale and distribution of our products, and real property. For the manufacturing of our products, these laws and regulations require our suppliers to obtain permits for operations, including the discharge of air pollutants and wastewater. Although our management systems are designed to oversee our suppliers’ compliance, we cannot assure you that our suppliers have been or will be in complete compliance with such laws, regulations and permits. If our suppliers violate or fail to comply with any of them, a range of consequences could result, including fines, suspension of production, alteration of manufacturing processes, import/export restrictions, sales limitations, criminal and civil liabilities or other sanctions. Such non-compliance from our manufacturing suppliers could result in disruptions in supply, higher sourcing costs, and/or reputational damage for us. We could also be held liable for any and all consequences arising out of exposure to hazardous materials used, stored, released, disposed of by us or located at, under or emanating from our current or former facilities or other environmental or natural resource damage. We have been named as a responsible party at three Superfund sites in Sunnyvale, California and we are subject to Final Site Clean-up Requirements Orders from the California Regional Water Quality Control Board relating to the three sites and we have entered into settlement agreements with other responsible parties on two of the orders. During the term of such agreements, other parties have agreed to assume most of the foreseeable costs as well as the primary role in conducting remediation activities under the orders. We remain responsible for additional costs beyond the scope of the agreements as well as all remaining costs in the event that the other parties do not fulfill their obligations under the settlement agreements. The progress of future remediation efforts cannot be predicted with certainty and these costs may change. Although we have not been, we could be named a potentially responsible party at other Superfund or contaminated sites in the future. In addition, contamination that has not been identified could exist at our other facilities.
Future environmental legal requirements may become more stringent or costly. As such, the costs of complying with current and future environmental and health and safety laws, and our liabilities arising from past and future releases of, or exposure to, hazardous substances may increase and could have a material adverse effect on us.
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Environmental laws are complex, change frequently and tend to become more stringent over time. For example, the European Union (EU) and China are among a growing number of jurisdictions that have enacted restrictions on the use of lead and other materials in electronic products. These regulations affect semiconductor devices and packaging. As regulations restricting materials in electronic products continue to increase around the world, there is a risk that the cost, quality and manufacturing yields of products that are subject to these restrictions may be less favorable compared to products that are not subject to such restrictions, or that the transition to compliant products may not meet customer roadmaps, or produce sudden changes in demand, which may result in excess inventory. Jurisdictions including the EU, Australia, California and China are developing or have finalized market entry or public procurement regulations for computers and servers based on ENERGY STAR specifications, and the like, as well as additional energy consumption limits. Certain of our products may be excluded from some of these markets which could materially adversely affect us. We incur costs associated with complying with conflict minerals reporting requirements to our customers and the SEC. In addition to the SEC regulation, the EU, China and other jurisdictions are developing new policies focused on conflict minerals that may impact and increase the cost of our compliance program. Customers are increasingly seeking information about the source of minerals used in our supply chain beyond those addressed in laws and regulations. Given the complexity of mineral supply chains, we may be unable to sufficiently verify the origins of the subject minerals and thus our reputation may be harmed. Moreover, we are likely to encounter challenges to satisfy customers who require that all of the components of our products be certified as “conflict free.” If we cannot satisfy these customers, they may choose a competitor’s products. In addition, new or increased regulations limiting the use of such components, or regulation regarding greenhouse gas emissions and climate change-related risks, could increase our energy costs, for example as a result of carbon pricing impacts on electrical utilities and/or necessitating that we purchase more renewable energy than otherwise planned. Our supply chain manufacturing suppliers may be exposed to increased cost of doing business should they be affected by new climate-related regulations, for example, affecting abatement equipment, renewable energy, and/or alter production processes and materials selections.
In addition to our Company, customers, governments and authorities continue to focus on eliminating risks of forced labor in supply chains which may increase the cost of our compliance program. Several customers have also issued expectations to eliminate these occurrences, if any, that may impact us. While we have a Human Rights Policy and management systems to identify and avoid these practices in our supply chain, we cannot guarantee that our suppliers will always be in conformance with laws and expectations. Our failure to satisfy customer expectations on forced and trafficked labor policies may result in these customers choosing a competitor’s product or enforcement liability and reputational challenges.
In addition, many governments have enacted laws around PII, such as the GDPR and the CCPA, and the failure to comply could result in sanctions or other actions by the governments. The GDPR imposes significant requirements on how we collect, process and transfer personal data, as well as significant fines for non-compliance.
New emerging technology trends, such as AI, require us to keep pace with evolving regulations and industry standards. Given the complexity and rapid development of AI, there are various current and proposed regulatory frameworks relating to the use of AI in products and services. For example, the EU AI Act was adopted in 2024 and its implementation will be phased in over the next few years. In other jurisdictions, similar legislation is being considered. Such laws and regulations may impede our ability to offer certain products and services in certain jurisdictions if we are unable to comply with them. We expect that the legal and regulatory environment relating to emerging technologies such as AI will continue to develop and could increase costs and burdens to us and our customers, delay or halt deployment of new systems using our products, reduce the number for entrants and customers and create compliance risks and potential liability, all which may have a material adverse effect on our financial condition and results of operations. Governments are also considering the new issues in intellectual property law that AI creates, which could result in different intellectual property rights in technology we create with AI and development processes and procedures and could have a material adverse effect on our business.
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Evolving expectations from governments, investors, customers and other stakeholders regarding corporate responsibility matters could result in additional costs, harm to our reputation and a loss of customers.
There are evolving expectations from governments, investors, customers and other stakeholders regarding corporate responsibility matters including those involving the environment and climate, energy and water consumption, diversity and inclusion, human rights, governance and cybersecurity. Additionally, we are and expect to continue to be subject to various new and proposed climate-related and sustainability laws and requirements that may impact how we and our suppliers and customers conduct and report on our business by requiring the disclosure and tracking of greenhouse gas emissions, climate change-related risks and other sustainability matters. As corporate responsibility reporting and disclosure requirements continue to evolve, we may incur additional compliance costs and indirect compliance costs that our customers and suppliers may pass on to us. Emerging legal and regulatory requirements in the various jurisdictions in which we operate, can be unpredictable, are subject to change, and may be difficult for us to comply with given the complexity of our supply chain and our outsourced manufacturing. As a result, we may be required to modify our business or supply chain in ways that are costly or less efficient. For example, the state of California has passed reporting requirements that will require corporations to report on climate data and risks, and these laws include data assurance requirements that entail third-party verifications. Our failure to comply, or the appearance of our failure to comply, with these legal and regulatory requirements can result in regulatory penalties, fines and legal liabilities, increase costs, and harm our reputation – any of which could materially adversely affect our business, financial condition and results of operation. While we have engaged, and may continue to engage, in voluntary initiatives (such as voluntary disclosures, certifications, goals, or targets, among others) or commitments to improve our corporate responsibility profile and/or products or to respond to stakeholder expectations, such initiatives or achievement of such commitments may be costly, may not have the desired effect or may impact our reputation with other stakeholders and have a material adverse effect on our business.
For example, we have publicly announced certain corporate responsibility goals spanning multiple topics informed by input from various of our stakeholders, including customers, investors and employees. These goals, which reflect our current plans and aspirations based on known conditions, may change in the future or may not be achieved, as they are subject to various challenges, risks and expectations such as standards, processes, and methodologies that continue to evolve or emerge, and many of these matters are outside our control. Our progress towards some goals receives third-party limited assurance and not reasonable assurance, or may rely on receipt of others’ information and data that may not be subject to either third-party limited or reasonable assurance. Any failure to achieve such goals, failure to achieve these goals within the set timeframe, or the perception by stakeholders of such failure to achieve these goals may result in reputational or financial harm.
Simultaneously, there are efforts by some stakeholders to reduce companies’ efforts on certain environmental, social and governance matters. Both advocates and opponents of environmental, social and governance matters are increasingly resorting to a range of activism forms, including media campaigns and litigation, to advance their perspectives. To the extent we are subject to such activism or litigation, it may require us to incur costs or otherwise adversely impact our business. Stakeholder groups may find our stated goals to be insufficiently responsive to the implications of issues, and any failure to meet stakeholder expectations may result in loss of customers or in investors selling their shares, which could harm our reputation and could have a material adverse effect on our business.
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Issues related to the responsible use of AI may result in reputational, competitive and financial harm and liability.
We offer products that include capabilities to support AI deployment and we expect this part of our business to grow. As with many new emerging technologies, AI presents risks and challenges and increasing legal, social and ethical concerns relating to its responsible use that could affect the adoption of AI, and thus our business. Third-party misuse of AI applications, models, or solutions, or ineffective or inadequate AI development or deployment practices by us or our customers, could cause harm to individuals or society and impair the public’s acceptance of AI. Moreover, we may be subject to competitive harm, regulatory action and legal liability as a result of new and proposed legislation regulating AI, as well as new applications of existing data protection, privacy and intellectual property and other laws. Such regulations and changes thereto could cause us to incur greater compliance costs, could impact our ability to sell or the ability of our customers and users worldwide to acquire, deploy and use systems that include our AI-related products and services and reduce the number of customers, which could negatively impact our business and financial results. As there continues to be an increasing focus on risks related to AI technologies, there may be an increasing focus on regulatory restrictions that target products and services that enable or facilitate AI and that may negatively impact some of our AI-related products and services. If the AI-related products that we offer have unintended consequences, infringe intellectual property rights or rights of publicity, or are misused by our customers or are otherwise controversial due to their perceived or actual impact on human rights, privacy, cybersecurity, employment or other social, economic or political issues the public’s acceptance of AI may be impaired and this may also result in reputational, competitive and financial harm and liability to our business.
The agreements governing our notes, our guarantee of the Assumed Xilinx Notes and the Revolving Credit Agreement impose restrictions on us that may adversely affect our ability to operate our business.
The indentures governing our 3.924% Senior Notes due 2032, 4.393% Senior Notes due 2052, 4.212% Senior Notes due 2026 and 4.319% Senior Notes due 2028 contain various covenants that limit our ability to, among other things: create liens on certain assets to secure debt, enter into certain sale and leaseback transactions; and consolidate with, merge into or sell, convey or lease all or substantially all of our assets to any other person.
We unconditionally guarantee, on a senior unsecured basis, Xilinx’s obligations under the Xilinx’s 2.375% Notes due 2030 (the Assumed Xilinx Notes). The supplemental indenture governing the Assumed Xilinx Notes also contain various covenants which limit our ability to, among other things, create certain liens on principal property or the capital stock of certain subsidiaries, enter into certain sale and leaseback transactions with respect to principal property, and consolidate or merge with, or convey, transfer or lease all or substantially all our assets, taken as a whole, to another person.
We also have an unsecured revolving credit facility in the aggregate principal amount of $3.0 billion (Revolving Credit Agreement). Our Revolving Credit Agreement contains various covenants which limit our ability to, among other things, incur liens; and consolidate or merge or sell our assets as an entirety or substantially as an entirety (in each case, except for certain customary exceptions). In addition, our Revolving Credit Agreement requires us to maintain a minimum consolidated interest coverage ratio at the end of each fiscal quarter. The agreement governing our convertible notes and our Revolving Credit Agreement contains provisions whereby a payment default or acceleration under certain agreements with respect to other material indebtedness would result in cross defaults under our convertible indenture or the Revolving Credit Agreement and allow note holders or the lenders under our Revolving Credit Agreement to declare all amounts outstanding under certain of our indentures or the Revolving Credit Agreement to be immediately due and payable. If the lenders under our Revolving Credit Agreement accelerate the repayment of borrowings, we cannot assure you that we will have sufficient assets to repay those borrowings. Also, we enter into sale and factoring arrangements from time to time with respect to certain accounts receivables, which arrangements are non-recourse to us in the event that an account debtor fails to pay for credit-related reasons and are not included in our indebtedness.
We may be required to satisfy financial obligations under guarantees and other commercial commitments.

From time to time, we enter into commercial arrangements such as long-term capacity purchase agreements, financial guarantees and leases to support customers’ or commercial partners’ infrastructure development. These arrangements may increase our exposure to counterparty risk, such as their inability to secure the necessary capital or financing, delays in project execution and downturns in their business, including insolvency. If we are required to satisfy our financial obligations under these commercial arrangements, our business, operating results, financial and condition may be adversely affected. 
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Merger, Acquisition, Divestiture, and Integration Risks
Acquisitions, joint ventures, and/or investments, and the failure to integrate acquired businesses, may fail to materialize their anticipated benefits and could disrupt our business, which could adversely affect our results of operation and financial condition.
We have acquired and invested in businesses, and may continue to do so, that offer products, services and technologies that we believe will help expand our product offerings and services and grow our business in response to changing technologies, customer demands and competitive pressures. Acquisitions and joint ventures include numerous risks including, but not limited to: our inability to identify suitable opportunities in a timely manner or on terms acceptable to us; failure to complete a transaction in a timely manner, or at all; inability to obtain, or delay in obtaining, regulatory approvals or IP disputes or other litigation; difficulty in obtaining financing on terms acceptable to us or at all; and failure of a transaction to advance our business strategy or other unforeseen factors. For example, in March 2025, we completed our acquisition of ZT Systems. While we believe that our acquisitions will result in certain benefits, including certain operational synergies, accretion and cost efficiencies, and drive product innovations, achieving these anticipated benefits depends on our ability to successfully integrate the acquired businesses into our business. We cannot be certain that our acquisitions can be successfully integrated with our business in a timely manner or at all, for a variety of reasons, including, but not limited to: difficulty in integrating the technology, systems, products, policies, processes or operations and integrating and retaining the employees including key personnel of the acquired business; diversion of capital and other resources, including management’s attention from our existing business; unanticipated costs or liabilities, such as increased interest expense and compliance with debt covenants or other obligations; coordinating and integrating in countries in which we have not previously operated; the potential impact of the acquisitions on our relationships with employees, vendors, suppliers and customers; our inability to effectively retain suppliers, vendors and customers of the acquired businesses; entry into geographic or business markets in which we have little or no experience; adverse changes in general economic conditions in regions in which we and the acquired companies operate; potential litigation associated with the acquisitions; difficulties in the assimilation of employees and culture; difficulties in managing the expanded operations of a larger and more complex company; and difficulties with integrating and upgrading our and the acquired companies’ financial reporting systems. If we cannot successfully integrate or are delayed in integrating newly acquired businesses, it could result in increased costs, decreases in expected revenues, diversion of management’s time and attention, negatively impact our ability to develop or sell new products and impair our ability to grow our business, which could materially adversely affect our financial conditions and operating results. Even if the businesses we acquire are successfully integrated, the benefits of such transactions may not be realized within the anticipated time frame or at all. To complete an acquisition, we may issue equity securities, which would dilute our stockholders’ ownership and could adversely affect the price of our common stock, and/or incur debt, assume contingent liabilities or have amortization expenses and write-downs of acquired assets, which could adversely affect our results of operations. From time to time, we may also seek to divest or wind down portions of our business, either acquired or otherwise. Such dispositions involve risks and uncertainties, including our ability to sell such businesses on terms acceptable to us, or at all; litigation; disruption of our ongoing business and distraction of management; failure to effectively transfer liabilities, contracts, facilities and employees to buyer; continued financial obligations and unanticipated liabilities; and closing delays. For example, purchase price consideration received from divestitures can be subject to customary post-closing adjustments, and if such adjustments are material, we may be exposed to losses, which could have a material impact on our financial position and results of operations.
Moreover, we may not adequately assess the risks of new business initiatives and subsequent events may arise that alter the risks that were initially considered. Acquisitions, joint ventures and other investments involve significant challenges and risks and could impair our ability to grow our business, develop new products or sell our products, which could have a negative impact on our results of operations. Acquisitions or joint ventures may also reduce our cash available for operation and other uses which could harm our business. For example, the majority of our ATMP services are provided by the ATMP JVs, and there is no guarantee that the JVs will be able to fulfill our long-term ATMP requirements. If we are unable to meet customer demand due to fluctuating or late supply from the ATMP JVs, it could result in lost sales and have a material adverse effect on our business. We may not realize the expected benefits from the THATIC JV’s expected future performance, including the receipt of any royalties from certain licensed intellectual property. In June 2019, the BIS added certain Chinese entities to the Entity List, including THATIC and the THATIC JV. We are complying with U.S. law pertaining to the Entity List designation.
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We invest in both public and private companies to further our strategic objectives and to support certain key business initiatives. We invest in early-stage companies that may still be in the process of developing a strategic direction and may not yet generate revenue. Many of the equity and debt instruments that we invest in are non-marketable and illiquid at the time of our initial investment, and we are not always able to achieve a return. Our ability to realize a return on our investments in private companies typically depends on the company completing a liquidity event, such as a public offering or acquisition. Market conditions and events, particularly in periods with economic uncertainty, inflation, volatile public equity markets or unsettled global market conditions, could cause our investments in public companies to expose us to volatility in our results due to changes in market prices and/or impairments. To the extent any of the companies in which we invest in are not successful, we could recognize an impairment and/or lose all or part of our investment. Our investment portfolio is concentrated in specific sectors and adverse developments in one or any of these sectors due to regulatory changes, technology disruptions or market downturns could negatively impact the performance of our investment portfolio.
Any impairment of our tangible, definite-lived intangible or indefinite-lived intangible assets, including goodwill, may adversely impact our financial position and results of operations.
We account for certain acquisitions using the acquisition method of accounting under the provisions of ASC 805, Business Combinations, with AMD as the accounting acquirer. We record assets acquired, including identifiable intangible assets, and liabilities assumed, at their respective fair values at the acquisition date. Any excess of the purchase price over the net fair value of such assets and liabilities will be recorded as goodwill. These acquisitions resulted in recognition of significant goodwill and other intangible assets on our Consolidated Balance Sheets. Goodwill and indefinite-lived intangible assets are tested for impairment at least annually. All tangible and intangible assets including goodwill, are subject to impairment testing when events or changes in circumstances suggest that their carrying amounts may not be recoverable. Impairment testing particularly for goodwill requires significant judgment and assumptions in determining fair value. We monitor for any events or changes in circumstances that may be indicators of impairment, including but not limited to: significant adverse changes in business climate or operating results; changes in management’s business strategy; an inability to successfully introduce new products in the marketplace; an inability to successfully achieve internal forecasts; significant declines in our stock price; significant negative industry; or macroeconomic trends. A deterioration in the long-term economic outlook or expected future cash flows of our business could result in impairment charges, which may have a material adverse impact on our financial position and results of operations.
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General Risks
Our worldwide operations are subject to political, legal and economic risks and natural disasters, which could have a material adverse effect on us.
We maintain operations around the world, including in the United States, Canada, Europe, Australia, Latin America and Asia. We rely on third-party wafer foundries in the United States, Europe and Asia. Nearly all product assembly and final testing of our products is performed at third-party operated manufacturing facilities, in China, Malaysia and Taiwan. Our shipping services are provided by third-party subcontractors. We also have international sales operations. International sales, as a percent of net revenue, were 67% for the year ended December 27, 2025. We expect that international sales will continue to be a significant portion of total sales in the foreseeable future. The political, legal and economic risks associated with our worldwide operations include, without limitation: expropriation; changes in a specific country’s or region’s political or economic conditions; changes in tax laws, trade protection measures and import or export licensing requirements and restrictions; imposition of new and increased tariffs; worsening trade relationship between the United States and China (or other countries); volatile global economic conditions, including downturns or recessions in which some competitors may become more aggressive in their pricing practices; difficulties in protecting our intellectual property; difficulties in managing staffing and exposure to different employment practices and labor laws; changes in immigration law and regulations; changes in foreign currency exchange rates; restrictions on transfers of funds and other assets of our subsidiaries between jurisdictions; changes in freight rates; changes to macroeconomic conditions, including interest rates, inflation and recession; transportation restrictions or disruptions; loss or modification of exemptions for taxes and tariffs; and compliance with U.S. laws and regulations related to international operations, including export control and economic sanctions laws and regulations and the Foreign Corrupt Practices Act. Changes in the public perception of the U.S. government in the regions where we operate or plan to operate could also negatively impact our business and results of operations. Geopolitical tensions, such as the Ukraine-Russia, Israel-Hamas and Venezuela conflicts, could escalate and expand, which in turn could have negative impacts on the global economy and financial markets. Also, in addition to restrictions imposed by the United States or China on exports or imports from one another, geopolitical changes between China and Taiwan could disrupt the operations of our Taiwan-based third-party wafer foundries, manufacturing facilities and subcontractors, and materially adversely affect delivery of products and our business, financial condition and/or operating results.
In addition, our worldwide operations (or those of our business partners) could be subject to natural disasters and climate change such as earthquakes, tsunamis, flooding, tropical cyclones, droughts, fires, sea-level rise, extreme heat and volcanic eruptions that disrupt our operations, or those of our manufacturers, vendors or customers. For example, our California operations are located near major earthquake fault lines. In April 2024, Taiwan experienced an earthquake where our third-party wafer foundries are located. We also have operations and employees in regions that have experienced extreme weather such as prolonged heat waves, wildfires and freezing. Extreme weather events and natural disasters can also disrupt the ability of our suppliers to deliver expected manufacturing parts and/or services for periods of time. In addition, certain natural disasters, including drought, wildfires, storms, sea-level rise and flooding, could disrupt the availability of water necessary for the operations of our business or the business of our suppliers or customers. Global climate change also may result in chronic changes that result in certain natural disasters occurring more frequently or with greater intensity, which could disrupt our operations, or the operations of our third parties. There may be conflict or uncertainty in the countries in which we, our customers and suppliers operate, including public health issues, epidemics and pandemics, safety issues, natural disasters, fire, disruptions of service from utilities, nuclear power plant accidents or general economic or political factors. Global health outbreaks, such as COVID-19, have and may adversely affect our employees and disrupt our business operations, as well as those of our customers and suppliers. Public health measures by government authorities may cause us to incur additional costs, limit our operations, modify our business practices, diminish employee productivity or disrupt our supply chain, which may have a material adverse effect on our business.
The U.S. has been and may continue to be involved in armed conflicts that could have a further impact on our sales and our supply chain. The consequences of armed conflict, political instability or civil or military unrest are unpredictable, and we may not be able to foresee events that could have a material adverse effect on us. Terrorist attacks or other hostile acts may negatively affect our operations, or adversely affect demand for our products, and such attacks or related armed conflicts may impact our physical facilities or those of our suppliers or customers. Furthermore, these attacks or hostile acts may make travel and the transportation of our products more difficult and more expensive, which could materially adversely affect us. Any of these events could cause consumer spending to decrease or result in increased volatility in the U.S. economy and worldwide financial markets.
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Any of the above risks, should they occur, could result in increased costs, shipment delays, general business interruptions, the inability to obtain, or delays in obtaining export licenses for certain technology, penalties or a loss of export privileges. Additionally, stringent licensing restrictions may make our products less attractive to international customers, tariffs and other barriers and restrictions, longer payment cycles, increased taxes, restrictions on the repatriation of funds and the burdens of complying with a variety of foreign laws are all factors that could have a material adverse effect on our business.
We may incur future impairments of our technology license purchases.
We license certain third-party technologies and tools for the design and production of our products. We report the value of those licenses as other non-current assets on our Consolidated Balance Sheets and we periodically evaluate the carrying value of those licenses based on their future economic benefit to us. Factors such as the life of the assets, changes in competing technologies, and changes to the business strategy may represent an indicator of impairment. The occurrence of any of these events may require us to record future technology license impairment charges.
Our inability to continue to attract and retain key employees may hinder our business.
Our success depends upon the continued service of numerous qualified engineering, marketing, sales and executive employees. The market for qualified and skilled executives and employees in the technology industry, especially in the areas of AI and machine learning, is highly competitive. Our competitors have targeted individuals in our organization that have desired skills and experience. If we are unable to continue to attract, develop and retain our leadership team and our qualified employees necessary for our business, the progress of our product development programs could be hindered, and we could be materially adversely affected. We use share-based incentive awards to help attract, retain and motivate our executives and qualified employees. If the value of such stock awards does not appreciate as measured by the performance of the price of our common stock, or if our share-based compensation otherwise ceases to be viewed as a valuable benefit, our ability to attract, retain and motivate our executives and employees could be affected, which could harm our results of operations. If the value of our stock awards increases substantially, this could potentially create great personal wealth for our executives and key talent and affect our ability to retain our employees. Our ability to attract and retain qualified employees could also be impacted by changes in immigration law and regulations, or interpretation of new or existing laws. United States immigration controls could affect the employment status of key technical and professional employees, as well as our ability to hire talent globally. Any future restructuring plans may also adversely impact our ability to attract and retain key employees.
Our stock price is subject to volatility.
Our stock price has experienced price and volume fluctuations and could be subject to wide fluctuations in the future. The trading price of our stock may fluctuate widely due to various factors including: actual or anticipated fluctuations in our financial conditions and operating results; failure to meet expectations related to future growth; changes in financial estimates by us or financial estimates and ratings by securities analysts; changes in our capital structure, including issuance of additional debt or equity to the public; competitive landscape; news regarding our products or products of our competitors or other actions taken by competitors; broad market industry and competitor-related fluctuations; and general economic, political and market conditions, including imposition of new or increased tariffs and other trade restrictions, interest rate changes and inflation. Stock price fluctuations could impact the value of our equity compensation, which could affect our ability to recruit and retain employees. In addition, volatility in our stock price could adversely affect our business and financing opportunities.
We have an approved stock repurchase program that authorizes repurchases of up to $14 billion of our common stock (Repurchase Program). As of December 27, 2025, $9.4 billion remained available for future stock repurchases under the Repurchase Program. The Repurchase Program does not obligate us to acquire any common stock, has no termination date and may be suspended or discontinued at any time. Our stock repurchases could affect the trading price of our stock, the volatility of our stock price, reduce our cash reserves, and may be suspended or discontinued at any time, which may result in a decrease in our stock price.

ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
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ITEM 1C. CYBERSECURITY
Cybersecurity Risk Management and Strategy
We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.
We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF), AI Risk Management Framework (AI RMF) and other industry practices and standards. This does not mean that we meet any particular technical standards, specifications, or requirements, but only that we use the NIST CSF, AI RMF, and other industry practices and standards as guides to help us identify, assess, and manage cybersecurity risks relevant to our business.
Information about cybersecurity risks and our risk management processes is collected, analyzed and considered as part of our overall enterprise risk management program.
Key components of our cybersecurity risk management program include:
• periodic risk assessments designed to help identify cybersecurity risks to our critical systems, information, services, and our broader enterprise IT environment;
• a security team principally responsible for managing our cybersecurity risk assessment processes, our security controls, and our detection and response to cybersecurity incidents;
• the use of external service providers, where appropriate, to assess, evaluate, test or otherwise assist with aspects of our security controls and processes;
• active testing including penetration tests, attack simulations and tabletop exercises;
• cybersecurity awareness training of our employees, incident response personnel and senior management;
• a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and
• a third-party cyber risk management process for vendors including, among other things, a security assessment and contracting program for vendors based on their risk profile.
At this time, we have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition. We face certain ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. See “Risk Factors - IT outages, data loss, data breaches and cyberattacks could disrupt operations and compromise our intellectual property or other sensitive information, be costly to remediate or cause significant damage to our business, reputation, financial condition and results of operations.”
Cybersecurity Governance
Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit and Finance Committee (Committee) oversight of cybersecurity and other information technology risks. The Committee oversees management’s implementation of our cybersecurity risk management program.
The Committee receives quarterly reports from management on our cybersecurity risks. In addition, management updates the Committee, as necessary, regarding any significant cybersecurity incidents.
The Committee reports to the full Board regarding its activities, including those related to cybersecurity. The full Board also receives a briefing from management on our cyber risk management program at least annually. Board members receive presentations on cybersecurity matters from our Chief Information Security Officer (CISO), information security team or external experts as part of the Board’s continuing education on topics that impact public companies. The CISO reports to the Chief Information Officer (CIO).
Our CISO has primary responsibility for our overall cybersecurity risk management program, and directly supervises both our internal cybersecurity personnel and any retained external cybersecurity consultants. Our CISO has over 20 years of experience in cybersecurity including security operations, security architecture, identity and access management, cloud security, vulnerability management, and application/product security, policy, and compliance.
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Our CISO is informed about and monitors the prevention, detection, mitigation, and remediation of cybersecurity risks and incidents through various means, which may include, among other things, briefings with internal security personnel, threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us, and alerts and reports produced by security tools deployed in our IT environment. Together the CIO and the CISO keep management informed and updated on the cyber risk management program, key cyber risks, and significant incidents.

ITEM 2. PROPERTIES
As of December 27, 2025, we have approximately 6.8 million square feet of space for research and development, engineering, administrative and warehouse use throughout the world. These facilities include approximately 5.4 million square feet of leased space and approximately 1.4 million square feet of owned space. Our headquarters are located in Santa Clara, California, and we have significant operations in Austin, Texas; San Jose, California; Shanghai, China; Markham, Ontario, Canada; Longmont, Colorado; Dublin, Ireland; Singapore; and Bengaluru and Hyderabad, India. We also have a number of regional sales offices located in commercial centers near customers, principally in the United States, Europe, Asia and Latin America.
We currently do not anticipate difficulty in either retaining occupancy of any of our facilities through lease renewals prior to expiration or through month-to-month occupancy or replacing them with equivalent facilities. We believe that our existing facilities are suitable and adequate for our present purposes and that the productive capacity of such facilities is substantially being utilized or we have plans to utilize such capacity.

ITEM 3. LEGAL PROCEEDINGS
For a discussion of our legal proceedings, refer to Note 12 – Commitments and Contingencies of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Form 10-K).

ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is listed on The NASDAQ Global Select Market (NASDAQ) under the symbol “AMD”. On January 30, 2026, there were 5,094 registered holders of our common stock, and the closing price of our common stock was $236.73 per share as reported on NASDAQ.
Issuer Purchases of Equity Securities
We have an approved stock repurchase program authorizing repurchases of up to $14 billion of our common stock (Repurchase Program). We expect to fund repurchases through cash generated from operations. Our Repurchase Program does not obligate us to acquire any common stock, has no termination date and may be suspended or discontinued at any time. No shares were repurchased during the three months ended December 27, 2025. As of December 27, 2025, $9.4 billion remained available for future stock repurchases under the Repurchase Program.
Equity Award Share Withholding
Shares of common stock withheld as payment of withholding taxes in connection with the vesting or exercise of equity awards are also treated as common stock repurchases. Those withheld shares of common stock are not considered common stock repurchases under an authorized common stock repurchase plan. During fiscal year 2025, we withheld approximately 3.8 million shares at an average price of $164.86 per share as payment of withholding taxes in connection with the vesting and exercise of equity awards.
For information about our equity compensation plans, see Part III, Item 11, below.
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Performance Graph
Comparison of Five-Year Cumulative Total Returns
Advanced Micro Devices, S&P 500 Index and S&P 500 Semiconductors Index
The following graph shows a five-year comparison of cumulative total return on our common stock, the S&P 500 Index and the S&P 500 Semiconductors Index from December 26, 2020 through December 27, 2025, assuming reinvestment of dividends. The past performance of our common stock is no indication of future performance.

Base Period Years Ended
Company / Index 12/26/2020 12/25/2021 12/31/2022 12/30/2023 12/28/2024 12/27/2025
Advanced Micro Devices, Inc. $100 $ 159  $ 71  $ 161  $ 136  $ 234 
S&P 500 Index $100 $ 129  $ 107  $ 135  $ 171  $ 201 
S&P 500 Semiconductors Index $100 $ 153  $ 96  $ 201  $ 383  $ 547 

ITEM 6. [RESERVED]

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated Financial Statements as of December 27, 2025 and December 28, 2024 and for each of the three years in the period ended December 27, 2025 and related notes, which are included in this Annual Report on Form 10-K as well as with the other sections of this Annual Report on Form 10-K, “Part II, Item 8: Financial Statements and Supplementary Data.”
Introduction
In this section, we will describe the general financial condition and the results of operations of Advanced Micro Devices, Inc. and its wholly-owned subsidiaries (collectively, “us,” “our” or “AMD”), including a discussion of our results of operations for 2025 compared to 2024, an analysis of changes in our financial condition and a discussion of our off-balance sheet arrangements. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.
Beginning in the first quarter of fiscal year 2025, we combined the Client and Gaming segments into one reportable segment to align with how we manage our business. All prior period segment data were retrospectively adjusted.
Overview
In 2025, we delivered strong annual revenue growth with net revenue increasing 34% to $34.6 billion, compared to $25.8 billion in 2024. This growth was driven by the performance of our Data Center and Client and Gaming segments. Data Center net revenue of $16.6 billion increased by 32% compared to $12.6 billion in 2024, primarily driven by strong demand for our 5th generation AMD EPYC™ processors and AMD Instinct™ MI350 Series GPUs. Client and Gaming segment net revenue of $14.6 billion in 2025 increased by 51% compared to $9.6 billion in 2024, primarily driven by strong demand for our AMD Ryzen™ processors, semi-custom game consoles SoCs and Radeon™ gaming GPUs. The increase in annual net revenue was partially offset by a decrease in net revenue in our Embedded segment. Embedded net revenue of $3.5 billion decreased by 3% compared to net revenue of $3.6 billion in 2024, as certain end market demand remained mixed.
Gross margin of 50% increased by 1% compared to 49% in 2024, primarily due to product mix partially offset by approximately $440 million of net inventory and related charges associated with the U.S. government export control on AMD Instinct™ MI308 Data Center GPU products.
Cash, cash equivalents and short-term investments as of December 27, 2025 were $10.6 billion, compared to $5.1 billion at the end of 2024. Our aggregate principal amount of total debt as of December 27, 2025 was $3.3 billion, compared to $1.8 billion as of December 28, 2024.
In 2025, we returned a total of $1.3 billion to shareholders through the repurchase of 12.4 million shares of common stock under our stock repurchase program. As of December 27, 2025, $9.4 billion remained available for future stock repurchases under this program. The stock repurchase program does not obligate us to acquire any common stock, has no termination date and may be suspended or discontinued at any time.
During 2025, we launched multiple leadership products and made significant progress executing our AI strategy. A priority in 2025 was accelerating growth in the Data Center segment. Demand for our data center AI GPU products was strong as large hyperscale customers, OEMs and ODMs deployed our AMD Instinct MI350X Series GPUs. We advanced our AMD AI GPU roadmap to deliver an annual cadence of leadership for AMD Instinct solutions, beginning with the AMD Instinct MI350 Series GPUs in 2025. Beyond GPUs, we launched the 5th Gen AMD EPYC family of server processors in 2025, which deliver leadership performance and capabilities for a wide range of data center workloads, including AI. We also expanded the data center portfolio with new networking solutions, including the AMD Pensando™ “Pollara” 400 AI NICs and “Vulcano” AI NICs, which deliver high-speed connectivity across GPU clusters providing high-performance, AI-ready, flexible solutions for scale-out networking. In addition, we previewed our Helios AI rack-scale platform solution that incorporates all of our data center products (CPUs, GPUs and Networking) to address the growing AI compute requirements.
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Across Client and Gaming, we continued to strengthen our leadership with expanding enterprise adoption and a growing portfolio of AMD Ryzen processors. For gamers, creators and developers, we brought to market AMD Radeon 9000 Series GPUs and Radeon AI PRO 9700 GPUs based on the AMD RDNA 4 graphics architecture to market along new high-performance Ryzen Threadripper™ 9000 Series processors. Our x86 Embedded portfolio continued to expand in 2025 with the introduction of three new AMD EPYC embedded processor series: AMD EPYC Embedded 9005 Series, EPYC Embedded 4005 Series and EPYC Embedded 2005 Series.
We also made strategic investments through acquisitions to further advance our software capabilities including compiler and AI expertise in machine learning, inference and performance optimization, and enable highly optimized solutions across the stack; to scale our ability to support and develop a variety of photonics and co-packaged optics solutions across next-gen AI systems; and to bring deep expertise in high-speed inference and reasoning-based AI technologies for large-scale deployments, reinforcing our enterprise AI software stack.
To execute our AI strategy, we brought in multiple AI teams across AMD to drive development of a comprehensive software ecosystem spanning our full product portfolio. We delivered key optimizations and expanded framework and library support in the latest version of AMD ROCm™ software, improving performance for generative AI workloads and simplifying the developer experience across training and inference.
In March 2025, we completed the acquisition of ZT Systems for $3.2 billion in cash and 8.3 million shares of our common stock. We retained select intellectual property and employees associated with the design operations (ZT Design Business), and in October 2025, we sold the ZT data center infrastructure manufacturing business (ZT Manufacturing Business) to Sanmina Corporation (Sanmina) for $2.4 billion in cash, subject to certain purchase price adjustments, and 1.2 million shares of Sanmina common stock. We are eligible to receive additional contingent cash consideration of up to $450 million from Sanmina to the extent certain conditions are met. Sanmina will also be our preferred partner for manufacturing capabilities in building complex AI solutions. Following the close of the sale of the ZT Manufacturing Business to Sanmina, we retained certain intellectual property and former employees of ZT Systems (ZT Design Business) and settled the contingent consideration liability with the former ZT shareholders and warrant holders.
In October 2025, we entered into a product purchase agreement with OpenAI OpCo, LLC, (OpenAI) to deploy 6 gigawatts of AMD GPUs, with the deployment of the first gigawatt of capacity powered by our AMD Instinct MI450 series products. Concurrent with the agreement, we issued to OpenAI a warrant to purchase up to an aggregate of 160 million shares of AMD’s common stock at an exercise price of $0.01 per share. The warrant shares will vest in tranches based on certain AMD Instinct GPU purchase milestones by OpenAI, or its affiliates, or indirectly through third parties, and achievement of specified AMD stock price targets and stock performance. Each vested tranche is further subject to the fulfillment of certain other technical and commercial conditions prior to exercise. Subject to certain conditions, the warrant is exercisable through October 5, 2030. None of the warrant shares met the vesting or exercise conditions and the warrant had no impact to our financial statements for the year ended December 27, 2025. 
During the second quarter of fiscal year 2025, the Company recorded approximately $800 million of inventory and related charges on AMD Instinct MI308 Data Center GPU products due to new U.S. export restrictions on certain semiconductors to China. We applied for and were granted some licenses by the U.S. government that allow us to ship MI308 products to certain China-based customers. During the fourth quarter of fiscal year 2025, we began shipping products and reversed approximately $360 million of the inventory and related charges recorded earlier in the year. U.S. government officials have expressed an expectation that the U.S. government will receive 15% of the revenue generated from licensed MI308 sales to China; however, to date, the U.S. government has not published a regulation establishing such requirement.
We intend the discussion of our financial condition and results of operations that follows to provide information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period, the primary factors that resulted in those changes, and how certain accounting principles, policies and estimates affect our financial statements.
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Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts in our Consolidated Financial Statements. We evaluate our estimates on an on-going basis, including those related to our revenue, inventories, business combinations, goodwill, long-lived and intangible assets, and income taxes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Although actual results have historically been reasonably consistent with management’s expectations, the actual results may differ from these estimates or our estimates may be affected by different assumptions or conditions.
Management believes the following critical accounting estimates are the most significant to the presentation of our financial statements and require the most difficult, subjective and complex judgments.
Revenue Allowances.  Revenue contracts with our customers include variable amounts which we evaluate under ASC 606-10-32-8 through 14 in order to determine the net amount of consideration to which we are entitled and which we recognize as revenue. We determine the net amount of consideration to which we are entitled by estimating the most likely amount of consideration we expect to receive from the customer after adjustments to the contract price for rights of return and rebates to our original equipment manufacturer (OEM) and original design manufacturer (ODM) customers and rights of return, rebates and price protection on unsold merchandise to our distributor customers.
We base our determination of necessary adjustments to the contract price by reference to actual historical activity and experience, including actual historical returns, rebates and credits issued to OEM and distributor customers adjusted, as applicable, to include adjustments, if any, for known events or current economic conditions, or both.
Our estimates of necessary adjustments for distributor price incentives and price protection on unsold products held by distributors are based on actual historical incentives provided to distributor customers and known future price movements based on our internal and external market data analysis.
Our estimates of necessary adjustments for OEM price incentives utilize, in addition to known pricing agreements, actual historical rebate attainment rates and estimates of future OEM rebate program attainment based on internal and external market data analysis.
We offer incentive programs through cooperative advertising and marketing promotions. Where funds provided for such programs can be estimated, we recognize a reduction to revenue at the time the related revenue is recognized; otherwise, we recognize such reduction to revenue at the later of when: i) the related revenue transaction occurs; or ii) the program is offered. For transactions where we reimburse a customer for a portion of the customer’s cost to perform specific product advertising or marketing and promotional activities, such amounts are recognized as a reduction to revenue unless they qualify for expense recognition.
We also provide limited product return rights to certain OEMs and to most distribution customers. These return rights are generally limited to a contractual percentage of the customer’s prior quarter shipments, although, from time to time we may approve additional product returns beyond the contractual arrangements based on the applicable facts and circumstances. In order to estimate adjustments to revenue to account for these returns, including product restocking rights provided to distributor and OEM customers, we utilize relevant, trended actual historical product return rate information gathered, adjusted for actual known information or events, as applicable.
Overall, our estimates of adjustments to contract price due to variable consideration under our contracts with OEM and distributor customers, based on our assumptions and include adjustments, if any, for known events, have been materially consistent with actual results; however, these estimates are subject to management’s judgment and actual provisions could be different from our estimates and current provisions, resulting in future adjustments to our revenue and operating results.
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Inventory Valuation.  We value inventory at standard cost, adjusted to approximate the lower of actual cost or estimated net realizable value using assumptions about future demand and market conditions. Material assumptions we use to estimate necessary inventory carrying value adjustments can be unique to each product and are based on specific facts and circumstances. In determining excess or obsolescence reserves for products, we consider assumptions such as changes in business and economic conditions, other-than-temporary decreases in demand for our products, and changes in technology or customer requirements. In determining the lower of cost or net realizable value reserves, we consider assumptions such as recent historical sales activity and selling prices, as well as estimates of future selling prices. If in any period we anticipate a change in assumptions such as future demand or market conditions to be less favorable than our previous estimates, additional inventory write-downs may be required and would be reflected in cost of sales, resulting in a negative impact to our gross margin in that period. If in any period we are able to sell inventories that had been written down to a level below the ultimate realized selling price in a previous period, related revenue would be recorded with a lower or no offsetting charge to cost of sales resulting in a net benefit to our gross margin in that period.
Business Combinations. We allocate the fair value of purchase consideration for acquisitions meeting the requirement of business combinations to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. Such valuations require management to make significant estimates and assumptions, especially with respect to assets and liabilities held for sale, intangible assets and contingent consideration. Significant estimates and inputs used in valuing acquired assets and liabilities held for sale, developed technology, and other identifiable intangible assets include, but are not limited to, expected future revenue, future changes in technology, useful lives, risk-adjusted discount rates and time and costs to recreate certain assets. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Allocation of purchase consideration to identifiable assets and liabilities affects our amortization expense, as acquired finite-lived intangible assets are amortized over their useful life, whereas any indefinite-lived intangible assets, including goodwill, are not amortized.
Goodwill. Goodwill is the excess of the aggregate of the consideration transferred over the identifiable assets acquired and liabilities assumed in connection with business combinations. Our reporting units are at the operating segment level. Our goodwill is contained within three reporting units: Data Center, Client and Gaming, and Embedded. We perform our goodwill impairment analysis as of the first day of the fourth quarter of each year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on a more frequent basis. The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment, which occurs when the carrying value of a reporting unit exceeds its fair value. Significant judgment is required in estimating the fair value of our reporting units to determine if the fair values of those units exceed their carrying values. We may obtain the assistance of third-party valuation specialists to help in determining the fair value of our reporting units. Changes in operating plans or adverse changes in the business or in the macroeconomic environment in the future could reduce the underlying cash flows used to estimate fair values and could result in a decline in fair value that would trigger future impairment charges of our reporting units’ goodwill. Based on our annual qualitative impairment test, we concluded that it is not more likely than not that the carrying value of each reporting unit exceeded its fair value.

Long-Lived and Intangible Assets. Long-lived and intangible assets to be held and used are reviewed for impairment if indicators of potential impairment exist and at least annually for indefinite-lived intangible assets. Impairment indicators are reviewed on a quarterly basis. Assets are grouped and evaluated for impairment at the lowest level of identifiable cash flows. When indicators of impairment exist and assets are held for use, we estimate future undiscounted cash flows attributable to the related asset groups. In the event such cash flows are not expected to be sufficient to recover the recorded value of the assets, the assets are written down to their estimated fair values based on the expected discounted future cash flows attributable to the asset group or based on appraisals.
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Income Taxes . In determining taxable income for financial statement reporting purposes, we must make certain estimates and judgments. These estimates and judgments are applied in the calculation of certain tax liabilities and in the determination of the recoverability of deferred tax assets which arise from temporary differences between the recognition of assets and liabilities for tax and financial statement reporting purposes. We regularly assess the likelihood that we will be able to recover our deferred tax assets. Unless recovery is considered more-likely-than-not (a probability level of more than 50%), we will record a charge to income tax expense in the form of a valuation allowance for the deferred tax assets that we estimate will not ultimately be recoverable or maintain the valuation allowance recorded in prior periods. When considering all available evidence, if we determine it is more-likely-than-not we will realize our deferred tax assets, we will reverse some or all of the existing valuation allowance, which would result in a credit to income tax expense and the establishment of an asset in the period of reversal.
In determining the need to establish or maintain a valuation allowance, we consider the four sources of jurisdictional taxable income: (i) carryback of net operating losses to prior years; (ii) future reversals of existing taxable temporary differences; (iii) viable and prudent tax planning strategies; and (iv) future taxable income exclusive of reversing temporary differences and carryforwards.
Certain state and foreign valuation allowances are maintained due to a lack of sufficient sources of future taxable income.
In addition, the calculation of our tax liabilities involves addressing uncertainties in the application of complex, multi-jurisdictional tax rules and the potential for future adjustment of our uncertain tax positions by the Internal Revenue Service or other taxing authorities.

Results of Operations
Additional information on our reportable segments is contained in Note 4 – Segment Reporting of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K).
Our operating results tend to vary seasonally. Historically, our net revenue has been generally higher in the second half of the year than in the first half of the year, although market conditions and product transitions could impact these trends.
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The following table provides a summary of net revenue, cost of sales and operating expenses, and operating income (loss) by segment for 2025 and 2024:

Year Ended
December 27,
2025 December 28,
2024
(In millions)
Net revenue:
Data Center $ 16,635  $ 12,579 
Client and Gaming

Client 10,640  7,054 
Gaming 3,910  2,595 
Total Client and Gaming
14,550  9,649 
Embedded 3,454  3,557 
Total net revenue $ 34,639  $ 25,785 

Cost of sales and operating expenses:

Data Center
$ 13,032  $ 9,097 
Client and Gaming
11,695  8,462 
Embedded
2,211  2,136 
All other
4,007  4,190 
Total cost of sales and operating expenses
$ 30,945  $ 23,885 

Operating income (loss):
Data Center $ 3,603  $ 3,482 
Client and Gaming 2,855  1,187 
Embedded 1,243  1,421 
All other
(4,007) (4,190)
Total operating income
$ 3,694  $ 1,900 

Data Center
Data Center net revenue of $16.6 billion in 2025 increased by 32%, compared to net revenue of $12.6 billion in 2024. The increase was primarily driven by strong demand for our AMD EPYC™ processors and AMD Instinct™ GPU accelerators.
Data Center operating income was $3.6 billion in 2025, compared to operating income of $3.5 billion in 2024. The increase in operating income was primarily due to higher revenue, partially offset by higher cost of sales, approximately $440 million of net inventory and related charges associated with the U.S. government export control on AMD Instinct™ MI308 Data Center GPU products and higher operating expenses.

Client and Gaming
Client and Gaming net revenue of $14.6 billion in 2025 increased by 51%, compared to net revenue of $9.6 billion in 2024.
Client net revenue of $10.6 billion in 2025 increased by 51%, compared to net revenue of $7.1 billion in 2024, primarily driven by a 31% increase in unit shipments of processors and a 15% increase in average selling price of processors, reflecting strong demand for AMD desktop and mobile Ryzen processors.
Gaming net revenue of $3.9 billion in 2025 increased by 51%, compared to net revenue of $2.6 billion in 2024. The increase was primarily driven by higher semi-custom revenue and strong demand of our Radeon™ gaming GPUs.
Client and Gaming operating income was $2.9 billion in 2025, compared to operating income of $1.2 billion in 2024. The increase in operating income was primarily driven by higher revenue, partially offset by higher cost of sales and operating expenses.
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Embedded
Embedded net revenue of $3.5 billion in 2025 decreased by 3%, compared to net revenue of $3.6 billion in 2024. Net revenue decreased as certain end market demand remained mixed.
Embedded operating income was $1.2 billion in 2025, compared to operating income of $1.4 billion in 2024. The decrease in operating income was primarily driven by lower revenue.

All Other
All Other operating loss of $4.0 billion in 2025 primarily consisted of $2.3 billion of amortization of acquisition-related intangibles and $1.6 billion of stock-based compensation expense. All Other operating loss of $4.2 billion in 2024 primarily consisted of $2.4 billion of amortization of acquisition-related intangibles and $1.4 billion of stock-based compensation expense.

International Sales
International sales as a percentage of net revenue were 67% in 2025 and 66% in 2024. We expect that international sales will continue to be a significant portion of total sales in the foreseeable future. Substantially all of our sales transactions are denominated in U.S. dollars.

Comparison of Gross Margin, Expenses, Interest Expense, Other Income (expense) and Income Taxes
The following is a summary of certain Consolidated Statement of Operations data for 2025 and 2024:

December 27, 2025 December 28, 2024
  (In millions, except for percentages)
Net revenue $ 34,639  $ 25,785 
Cost of sales 16,456  12,114 
Amortization of acquisition-related intangibles 1,031  946 
Gross profit 17,152  12,725 
Gross margin 50 %
49 %
Research and development 8,091  6,456 
Marketing, general and administrative 4,144  2,735 
Amortization of acquisition-related intangibles 1,223  1,448 
Interest expense (131) (92)
Other income (expense), net 577  181 
Income tax provision (benefit)
(103) 381 
Income from discontinued operations, net of tax
66  — 

Gross Margin
Gross margin of 50% increased by 1% compared to 49% in 2024, primarily due to product mix, partially offset by approximately $440 million of net inventory and related charges associated with the U.S. government export control on AMD Instinct™ MI308 Data Center GPU products.

Expenses
Research and Development Expenses
Research and development expenses of $8.1 billion in 2025 increased by $1.6 billion, or 25%, compared to $6.5 billion in 2024. The increase was primarily due to higher employee-related costs from an increase in headcount in support of our continued focus on our AI strategy.
Marketing, General and Administrative Expenses
Marketing, general and administrative expenses of $4.1 billion in 2025 increased by $1.4 billion, or 52%, compared to $2.7 billion in 2024. The increase was primarily due to an increase in go-to-market activities to support our revenue growth.
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Amortization of Acquisition-Related Intangibles
Amortization of acquisition-related intangibles of $2.3 billion for 2025 decreased by $140 million, or 6%, compared to $2.4 billion in 2024, primarily due to a lower balance of amortizable acquisition-related intangibles compared to the prior year.

Interest Expense
Interest expense of $131 million in 2025 increased by $39 million compared to $92 million in 2024, primarily due to the issuance of $1.5 billion in aggregate principal amount of 4.212% Notes and 4.319% Notes in March 2025.

Other Income (expense), net
Other income (expense), net is primarily comprised of interest income from short-term investments, changes in valuation of long-term investments and foreign currency transaction gains and losses.
Other income (expense), net of $577 million in 2025 increased by $396 million compared to $181 million in 2024, primarily due to higher unrealized gains from long-term investments compared to the prior year.

Income Tax Provision (Benefit)
We recorded an income tax benefit of $103 million and an income tax provision of $381 million in 2025 and 2024, respectively, representing effective tax rates of (2.5%) and 19%, respectively. The decrease in income tax provision in 2025 was primarily driven by an $853 million benefit related to the release of uncertain tax positions pertaining to the reasonable cause relief for dual consolidated losses approved by the Internal Revenue Service (IRS) in April 2025, whereas the income tax provision in 2024 included $373 million tax effect from an intercompany integration transaction.
In July 2025, the One Big Beautiful Bill Act (OBBBA) was enacted into law. For fiscal year 2025, the primary impact of the OBBBA to our tax provision was the accelerated expensing of domestic R&D activities which decreased our income eligible for FDII, reduced our deferred tax assets, and reduced our current income tax liability. Other OBBBA changes did not have a material impact on the financial statements.
Global Minimum Tax
The OECD is continuing discussions surrounding fundamental changes in allocation of profits among tax jurisdictions in which companies do business, as well as the implementation of a global minimum tax (namely the “Pillar One” and “Pillar Two” proposals). The Council of the European Union has adopted the global corporate 15% minimum tax as provided for in Pillar Two and has directed EU member states to implement legislation enacting Pillar Two. Many countries, including non-EU member states, have implemented laws based on Pillar Two proposals, with effective dates that started in 2024. Although many countries have already introduced Pillar Two legislation applicable to us effective in 2024, certain jurisdictions in which we operate have not adopted corresponding legislation to date. For 2024 and 2025, the impact to us associated with Pillar Two was immaterial.
In January 2026, the OECD released a "side-by-side" package introducing new safe harbors and providing an exemption for U.S.-based multinational companies from parts of the global minimum tax framework. We continue to evaluate the impact of proposed and enacted legislative changes to our effective tax rate and cash flows as new guidance becomes available in each country.

Discontinued Operations
Net income from discontinued operations for 2025 was $66 million, net of tax expense of $54 million. This includes the results of operations of the ZT Manufacturing Business and the change in fair value of contingent consideration liability of $121 million.

FINANCIAL CONDITION
Liquidity and Capital Resources
As of December 27, 2025, our cash, cash equivalents and short-term investments were $10.6 billion compared to $5.1 billion as of December 28, 2024.
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Our operating, investing and financing cash flow activities for 2025 and 2024 were as follows:
December 27, 2025 December 28, 2024
  (In millions)
Net cash provided by (used in):
Net cash provided by operating activities of continuing operations $ 6,493  $ 3,041 
Net cash provided by operating activities of discontinued operations 1,216  — 
Operating activities 7,709  3,041 
Net cash (used in) provided by investing activities of continuing operations (6,851) (1,101)
Net cash provided by investing activities of discontinued operations 1,318  — 
Investing activities (5,533) (1,101)
Financing activities (431) (2,062)
Net increase (decrease) in cash, cash equivalents and restricted cash
$ 1,745  $ (122)

In March and October 2025, we paid a total of $2.0 billion in cash, net of cash acquired, and issued 9.1 million shares of our common stock in the acquisition of ZT Systems.
In October 2025, upon completion of the sale of the ZT Manufacturing Business to Sanmina Corporation (Sanmina), we received a total of $1.4 billion in cash, net of cash divested, and 1.2 million shares of Sanmina common stock valued at $154 million. We are eligible to receive additional cash consideration of up to $450 million to the extent certain conditions are met following the close of the sale through 2028 (Sanmina Earn-out).

As of December 27, 2025, our aggregate principal debt was $3.3 billion, with short-term and long-term debt obligations of $874 million and $2.3 billion, respectively.
We have $3.0 billion available under an unsecured revolving credit facility that expires on April 29, 2027. No funds were drawn from this credit facility during the year ended December 27, 2025.
We also have a commercial paper program to issue unsecured commercial paper notes up to a maximum principal amount outstanding, at any time, of $3.0 billion, with a maturity of up to 397 days from the date of issue. We had no commercial paper outstanding as of December 27, 2025.
As of December 27, 2025, we had unconditional commitments of approximately $12.2 billion, of which $8.5 billion are in fiscal year 2026. Our contractual obligations and purchase commitments relate primarily to our obligations to purchase wafers and substrates from third parties and future payments related to multi-year cloud service provider arrangements, and certain software and technology licenses. We work continually with our suppliers on the timing of payments and deliveries of purchase commitments, taking into account business conditions. We also have commitments for leases that have commenced for approximately $940 million and leases that have not yet commenced for $1.3 billion. See Note 12 – Commitments and Contingencies for contractual obligations and purchase commitments and Note 10 - Leases for lease obligations.
We believe our cash, cash equivalents, short-term investments and cash flows from operations along with our revolving credit facility and commercial paper program will be sufficient to fund operations, including capital expenditures, purchase and lease commitments, and strategic activities over the next 12 months and beyond. We believe we will be able to access the capital markets should we require additional funds. However, we cannot assure that such funds will be available on favorable terms, or at all.

Operating Activities
Our working capital cash inflows and outflows from operations consist primarily of cash collections from our customers, payments for inventory purchases and payments for employee-related expenditures.
Net cash provided by operating activities of continuing operations was $6.5 billion in 2025, primarily due to our net income of $4.3 billion in 2025, adjusted for non-cash adjustments of $4.6 billion and net cash outflows of $2.4 billion from changes in our operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities included a $2.2 billion increase in inventory primarily to support the continued ramp of Data Center products in advanced process technology nodes. Net cash provided by operating activities of the ZT Manufacturing Business, classified as discontinued operations, was $1.2 billion.
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Net cash provided by operating activities was $3.0 billion in 2024, primarily due to our net income of $1.6 billion in 2024, adjusted for non-cash adjustments of $3.5 billion and net cash outflows of $2.1 billion from changes in our operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities included a $1.9 billion increase in accounts receivable driven primarily by higher revenue in the last month of 2024 compared to the last month of 2023, and a $1.5 billion increase in inventories driven primarily by a build of inventory to support the ramp of new products in advanced process nodes.

Investing Activities
Net cash used in investing activities of continuing operations was $6.9 billion in 2025, which primarily consisted of $5.5 billion of cash used for purchases of short-term investments, $1.8 billion of cash used in acquisitions, net of cash acquired and $1.0 billion for purchases of property and equipment, partially offset by $1.8 billion proceeds from maturities of short-term investments. Net cash provided by investing activities of discontinued operations in 2025 was $1.3 billion, primarily from the sale of the ZT Manufacturing Business.
Net cash used in investing activities was $1.1 billion in 2024, which primarily consisted of cash used for purchases of short-term investments of $1.5 billion, purchases of property and equipment of $636 million, and cash used in acquisitions, net of cash acquired of $548 million, partially offset by proceeds from maturities of short-term investments of $1.4 billion and sale of short-term investments of $616 million.

Financing Activities
Net cash used in financing activities of continuing operations was $431 million in 2025, which primarily consisted of $1.3 billion of common stock repurchases under the Repurchase Program and $607 million of stock repurchases for tax withholding on employee equity plans, partially offset by $1.5 billion of net cash received from issuance of debt, net of repayments , and $285 million of proceeds from the issuance of common stock under our employee equity plans. There was no net cash provided by financing activities of discontinued operations for the year ended December 27, 2025.
Net cash used in financing activities was $2.1 billion in 2024, which primarily consisted of common stock repurchases of $862 million under the Repurchase Program, repurchases to cover tax withholding on employee equity plans of $728 million, and repayment of the 2.95% Notes of $750 million, partially offset by proceeds from the issuance of common stock under our employee equity plans of $279 million.

Off-Balance Sheet Arrangements
As of December 27, 2025, we did not have any off-balance sheet arrangements that have had, or are reasonably likely to have a material current or future effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK    
Interest Rate Risk.  Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and long-term debt. We usually invest our cash in investments with short maturities or with frequent interest reset terms. Accordingly, our interest income fluctuates with short-term market conditions. As of December 27, 2025, our investment portfolio consisted of fixed income instruments, time deposits and commercial paper. Our primary aim with our investment portfolio is to invest available cash while preserving principal and meeting liquidity needs. In accordance with our investment policy, we place investments with high credit quality issuers and limit the amount of credit exposure to any one issuer based upon the issuer's credit rating. These securities are subject to interest rate risk and will decrease in value if market interest rates increase. A hypothetical 50 basis-point (half percentage point) increase or decrease in interest rates compared to rates on December 27, 2025 would have affected the fair value of our cash equivalent and investment portfolio by approximately $25 million.
As of December 27, 2025, all of our outstanding long-term debt had fixed interest rates. Consequently, our exposure to market risk for changes in interest rates on reported interest expense and corresponding cash flows is minimal.
We will continue to monitor our exposure to interest rate risk.
Default Risk.  We mitigate default risk in our investment portfolio by investing in only high credit quality securities and by constantly positioning our portfolio to respond to a significant reduction in a credit rating of any investment issuer or guarantor. Our portfolio includes investments in marketable debt securities with active secondary or resale markets to ensure portfolio liquidity. We are averse to principal loss and strive to preserve our invested funds by limiting default risk and market risk.
We actively monitor market conditions and developments specific to the securities and security classes in which we invest. We believe that we take a conservative approach to investing our funds in that we invest only in highly-rated debt securities with relatively short maturities and do not invest in securities which we believe involve a higher degree of risk. As of December 27, 2025, all of our investments in debt securities were A-rated by at least one of the rating agencies. While we believe we take prudent measures to mitigate investment-related risks, such risks cannot be fully eliminated as there are circumstances outside of our control.
Long-term Investment Risk. Our long-term investments are held in both marketable and non-marketable equity securities and other instruments. Marketable equity securities include investments in publicly traded companies. Non-marketable equity securities and other instruments include investments in privately held companies, which are often in a start-up or early development stage and are inherently risky. The technologies of these privately held companies are under research or development, typically in the early stages and may never materialize, and may result in a loss of our investment in these companies. As of December 27, 2025 and December 31, 2024, the carrying value of our investments in publicly traded companies was $198 million and $0, respectively, and the carrying value of our non-marketable equity securities and other instruments was $1.3 billion and $468 million, respectively. These securities are subject to a wide variety of market-related risks that could substantially reduce or increase the fair value of our holdings. We regularly review our non-marketable equity securities and other instruments for potential impairment.
Foreign Exchange Risk.  As a result of our foreign operations, we incur costs and we carry assets and liabilities that are denominated in foreign currencies, while sales of products are primarily denominated in U.S. dollars. We maintain a foreign currency hedging strategy which uses derivative financial instruments to mitigate the risks associated with changes in foreign currency exchange rates. This strategy takes into consideration all of our exposures. We do not use derivative financial instruments for trading or speculative purposes.
As of December 27, 2025 and December 28, 2024, our portfolio of foreign currency forward contracts had an aggregate notional amount of $3.4 billion and $2.8 billion, respectively. All forward contracts mature within 24 months. Our foreign currency forward contracts cover a range of currencies tied to our global operations, including but not limited to the Indian Rupee, Canadian Dollar and Chinese Renminbi. As of December 27, 2025 and December 28, 2024, the estimated net fair‑value position of these forwards was a $12 million gain and $66 million loss, respectively.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Advanced Micro Devices, Inc.
Consolidated Statements of Operations
 
Year Ended
December 27,
2025 December 28,
2024 December 30,
2023
  (In millions, except per share amounts)
Net revenue $ 34,639   $ 25,785   $ 22,680  
Cost of sales 16,456   12,114   11,278  
Amortization of acquisition-related intangibles 1,031   946   942  
Total cost of sales 17,487   13,060   12,220  
Gross profit 17,152   12,725   10,460  

Research and development 8,091   6,456   5,872  
Marketing, general and administrative 4,144   2,735   2,318  
Amortization of acquisition-related intangibles 1,223   1,448   1,869  
Restructuring charges —   186   —  
Total operating expenses 13,458   10,825   10,059  
Operating income 3,694   1,900   401  

Interest expense ( 131 ) ( 92 ) ( 106 )
Other income (expense), net 577   181   197  
Income from continuing operations before income taxes and equity income 4,140   1,989   492  
Income tax provision (benefit) ( 103 ) 381   ( 346 )
Equity income in investee 26   33   16  
Income from continuing operations, net of tax 4,269   1,641   854  
Income from discontinued operations, net of tax 66   —   —  
Net income $ 4,335   $ 1,641   $ 854  

Earnings per share
Earnings from continuing operations - basic $ 2.63   $ 1.01   $ 0.53  
Earnings from discontinued operations - basic 0.04   —   —  
Basic earnings per share $ 2.67   $ 1.01   $ 0.53  

Earnings from continuing operations - diluted $ 2.61   $ 1.00   $ 0.53  
Earnings from discontinued operations - diluted 0.04   —   —  
Diluted earnings per share $ 2.65   $ 1.00   $ 0.53  

Shares used in per share calculation
Basic 1,624   1,620   1,614  
Diluted 1,636   1,637   1,625  

See accompanying notes to the Consolidated Financial Statements.
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Advanced Micro Devices, Inc.
Consolidated Statements of Comprehensive Income

Year Ended
December 27,
2025 December 28,
2024 December 30,
2023
  (In millions)
Net income $ 4,335   $ 1,641   $ 854  
Other comprehensive income (loss), net of tax

Net change in unrealized gains (losses) on cash flow hedges 66   ( 59 ) 31  
Total comprehensive income $ 4,401   $ 1,582   $ 885  

See accompanying notes to the Consolidated Financial Statements.
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Advanced Micro Devices, Inc.
Consolidated Balance Sheets
 
December 27,
2025 December 28,
2024
  (In millions, except par value amounts)
ASSETS
Current assets:
Cash and cash equivalents $ 5,539   $ 3,787  
Short-term investments 5,013   1,345  
Accounts receivable, net 6,315   6,192  
Inventories 7,920   5,734  
Prepaid expenses and other current assets 2,160   1,991  
Total current assets 26,947   19,049  
Property and equipment, net 2,312   1,802  
Goodwill 25,126   24,839  
Acquisition-related intangibles, net 16,705   18,930  
Deferred tax assets, net 384   688  
Other non-current assets 5,452   3,918  
Total assets $ 76,926   $ 69,226  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 2,929   $ 2,466  
Accrued liabilities 5,250   4,260  
Current portion of long-term debt, net 874   —  
Other current liabilities 402   555  
Total current liabilities 9,455   7,281  
Long-term debt, net of current portion 2,348   1,721  
Long-term operating lease liabilities 625   491  
Deferred tax liabilities 313   349  
Other long-term liabilities 1,186   1,816  
Commitments and contingencies (see Note 12)

Stockholders’ equity:
Capital stock:
Common stock, par value $ 0.01 ; shares authorized: 4,000 ; shares issued: 1,695 and 1,680 ; shares outstanding: 1,630 and 1,622
17   17  
Additional paid-in capital 63,365   61,362  
Treasury stock, at cost (shares held: 65 and 58 )
( 7,079 ) ( 6,106 )
Retained earnings 6,699   2,364  
Accumulated other comprehensive loss ( 3 ) ( 69 )
Total stockholders’ equity 62,999   57,568  
Total liabilities and stockholders’ equity $ 76,926   $ 69,226  

See accompanying notes to the Consolidated Financial Statements.
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Advanced Micro Devices, Inc.
Consolidated Statements of Stockholders’ Equity
 
Year Ended
December 27,
2025 December 28,
2024 December 30,
2023
(In millions)
Capital stock
Common stock
Balance, beginning of period $ 17   $ 17   $ 16  
Common stock issued under employee equity plans —   —   1  
Balance, end of period $ 17   $ 17   $ 17  
Additional paid-in capital
Balance, beginning of period $ 61,362   $ 59,676   $ 58,005  
Common stock issued under employee equity plans 285   279   273  
Stock-based compensation 1,638   1,407   1,384  
Issuance of common stock to settle convertible debt —   —   1  
Reissuance of treasury stock 80   —   —  
Issuance of common stock warrants —   —   13  
Balance, end of period $ 63,365   $ 61,362   $ 59,676  
Treasury stock
Balance, beginning of period $ ( 6,106 ) $ ( 4,514 ) $ ( 3,099 )
Repurchases of common stock ( 1,316 ) ( 862 ) ( 985 )
Reissuance of treasury stock
968   —   —  
Common stock repurchases for tax withholding on employee equity plans ( 625 ) ( 730 ) ( 430 )
Balance, end of period $ ( 7,079 ) $ ( 6,106 ) $ ( 4,514 )

Retained earnings (accumulated deficit)
Balance, beginning of period $ 2,364   $ 723   $ ( 131 )
Net income 4,335   1,641   854  
Balance, end of period $ 6,699   $ 2,364   $ 723  

Accumulated other comprehensive loss
Balance, beginning of period $ ( 69 ) $ ( 10 ) $ ( 41 )
Other comprehensive income (loss) 66   ( 59 ) 31  
Balance, end of period $ ( 3 ) $ ( 69 ) $ ( 10 )

Total stockholders' equity $ 62,999   $ 57,568   $ 55,892  

See accompanying notes to the Consolidated Financial Statements.
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Advanced Micro Devices, Inc.
Consolidated Statements of Cash Flows
Year Ended
December 27,
2025 December 28,
2024 December 30,
2023
(In millions)
Cash flows from operating activities:
Net income $ 4,335   $ 1,641   $ 854  
Income from discontinued operations, net of tax
( 66 ) —   —  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 750   671   642  
Amortization of acquisition-related intangibles 2,254   2,393   2,811  
Stock-based compensation 1,638   1,407   1,384  
(Gains) losses on long-term investments, net
( 341 ) —   ( 1 )
Deferred income taxes 248   ( 1,163 ) ( 1,019 )
Inventory loss at (recovery from) contract manufacturer ( 67 ) 65   —  
Other 120   125   45  
Changes in operating assets and liabilities:
Accounts receivable, net ( 121 ) ( 1,865 ) ( 1,339 )
Inventories ( 2,189 ) ( 1,458 ) ( 580 )
Prepaid expenses and other assets ( 11 ) 339   ( 390 )
Accounts payable 410   3   ( 519 )
Accrued and other liabilities ( 467 ) 883   ( 221 )
Net cash provided by operating activities of continuing operations
6,493   3,041   1,667  
Net cash provided by operating activities of discontinued operations 1,216   —   —  
Net cash provided by operating activities 7,709   3,041   1,667  
Cash flows from investing activities:
Purchases of property and equipment ( 974 ) ( 636 ) ( 546 )
Purchases of short-term investments ( 5,470 ) ( 1,493 ) ( 3,722 )
Proceeds from maturity of short-term investments 1,765   1,416   2,687  
Proceeds from sale of short-term investments 80   616   300  
Acquisitions, net of cash acquired ( 1,760 ) ( 548 ) ( 131 )
Related party loan and equity method investment —   ( 117 ) —  
Purchases of long-term investments
( 502 ) ( 341 ) ( 11 )
Other 10   2   —  
Net cash used in investing activities of continuing operations
( 6,851 ) ( 1,101 ) ( 1,423 )
Proceeds from divestiture, net of cash divested
1,356   —   —  
Purchases of property and equipment
( 38 ) —   —  
Net cash provided by investing activities of discontinued operations
1,318   —   —  
Net cash used in investing activities ( 5,533 ) ( 1,101 ) ( 1,423 )
Cash flows from financing activities:
Proceeds from debt and commercial paper issuance, net of issuance costs 2,441   —   —  
Repayment of debt and commercial paper ( 950 ) ( 750 ) —  
Proceeds from sales of common stock through employee equity plans 285   279   268  
Repurchases of common stock ( 1,316 ) ( 862 ) ( 985 )
Stock repurchases for tax withholding on employee equity plans ( 607 ) ( 728 ) ( 427 )
Settlement of contingent consideration liability
( 284 ) —   —  
Other —   ( 1 ) ( 2 )
Net cash used in financing activities ( 431 ) ( 2,062 ) ( 1,146 )
Net increase (decrease) in cash, cash equivalents and restricted cash 1,745   ( 122 ) ( 902 )
Cash, cash equivalents and restricted cash at beginning of year 3,811   3,933   4,835  
Cash, cash equivalents and restricted cash at end of year $ 5,556   $ 3,811   $ 3,933  

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Advanced Micro Devices, Inc.
Consolidated Statements of Cash Flows

Year Ended
December 27,
2025 December 28,
2024 December 30,
2023
  (In millions)
Supplemental cash flow information:
Cash paid during the year for:
Interest $ 91   $ 72   $ 84  
Income taxes, net of refund $ 884   $ 1,386   $ 523  
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid $ 129   $ 144   $ 106  
Reissuance of treasury stock for acquisition
$ 860   $ —  $ — 
Reissuance of treasury stock to settle contingent consideration liability from acquisition
$ 188   $ —  $ — 
Non-cash consideration and earn-out receivable from divestiture
$ 486   $ —  $ — 
Non-cash activities for leases:
Operating lease right-of-use assets acquired by assuming related liabilities $ 285   $ 102   $ 273  
Reconciliation of cash, cash equivalents, and restricted cash
Cash and cash equivalents $ 5,539   $ 3,787   $ 3,933  
Restricted cash included in Prepaid expenses and other current assets 17   24   —  
Total cash, cash equivalents, and restricted cash $ 5,556   $ 3,811   $ 3,933  

See accompanying notes to the Consolidated Financial Statements.
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Advanced Micro Devices, Inc.
Notes to Consolidated Financial Statements

NOTE 1 –  The Company
Advanced Micro Devices, Inc. is a global semiconductor company. References herein to AMD or the Company mean Advanced Micro Devices, Inc. and its consolidated subsidiaries. AMD’s products include Artificial Intelligence (AI) Accelerators, microprocessors (CPUs) and graphics processing units (GPUs), as standalone devices or as incorporated into accelerated processing units (APUs), chipsets, data center and professional GPUs, embedded processors, semi-custom System-on-Chip (SoC) products, microprocessor and SoC development services and technology, data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), System on Modules (SOMs), AI Network Interface Cards (AI NICs), and Adaptive SoC products. From time to time, the Company may also sell or license portions of its intellectual property (IP) portfolio.

NOTE 2 – Basis of Presentation and Significant Accounting Policies
Fiscal Year . The Company uses a 52- or 53-week fiscal year ending on the last Saturday in December. Fiscal years 2025, 2024 and 2023 ended on December 27, 2025, December 28, 2024 and December 30, 2023, respectively. Fiscal years 2025, 2024 and 2023 each consisted of 52 weeks.
Principles of Consolidation.  The Consolidated Financial Statements include the Company’s accounts and those of its wholly-owned subsidiaries.
Reclassification and Change in Presentation. Certain amounts from fiscal years 2024 and 2023 were reclassified to conform to current period presentation. These include the balance sheet presentation of Receivables from related parties within Prepaid expenses and other current assets, Operating lease right-of-use assets and Investment: equity method within Other non-current assets, and Payables to related parties within Accounts payable.
Use of Estimates.  The preparation of Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results are likely to differ from those estimates, and such differences may be material to the financial statements. Areas where management uses subjective judgment include, but are not limited to, revenue allowances, inventory valuation, valuation of goodwill and long-lived and intangible assets, business combination accounting, and income taxes.
Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. Sales, value-added, and other taxes collected concurrently with the provision of goods or services are excluded from revenue. Shipping and handling costs associated with product sales are included in cost of sales. Substantially all of the Company’s revenue is derived from product sales.
Customers are generally required to pay for products and services within the Company’s standard contractual terms, which are typically net 30 to 60 days. The Company has determined that it does not have significant financing components in its contracts with customers.
Non-custom products
The Company transfers control and recognizes revenue when non-custom products are shipped to customers, which includes original equipment manufacturers (OEM) and distributors, in accordance with the shipping terms of the sale. Certain OEMs may be entitled to rights of return and rebates under OEM agreements. The Company also sells to distributors under terms allowing the majority of distributors certain rights of return and price protection on unsold merchandise held by them. The Company estimates the amount of variable consideration under OEM and distributor arrangements and, accordingly, records a provision for product returns, allowances for price protection and rebates based on actual historical experience and any known events.
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The Company offers incentive programs to certain customers, including cooperative advertising, marketing promotions, volume-based incentives and special pricing arrangements. Where funds provided for such programs can be estimated, the Company recognizes a reduction to revenue at the time the related revenue is recognized; otherwise, the Company recognizes such reduction to revenue at the later of when: i) the related revenue transaction occurs; or ii) the program is offered. For transactions where the Company reimburses a customer for a portion of the customer’s cost to perform specific product advertising or marketing and promotional activities, such amounts are recognized as a reduction to revenue unless they qualify for expense recognition.
Constraints of variable consideration have not been material.
Custom products
Custom products, which are primarily associated with the Company’s Client and Gaming segment, are sold under non-cancellable purchases orders, for which the Company has an enforceable right to payment, and which have no alternative use to the Company at contract inception, are recognized as revenue, over the time of production of the products by the Company. The Company utilizes a cost-based input method, calculated as cost incurred plus estimated margin, to determine the amount of revenue to recognize for in-process or completed customer orders at a reporting date. The Company believes that a cost-based input method is the most appropriate manner to measure how the Company satisfies its performance obligations to customers because the effort and costs incurred best depict the Company’s satisfaction of its performance obligation.
Sales of custom products are not subject to a right of return and arrangements generally involve a single performance obligation. Generally, there are no variable consideration estimates associated with custom products.
Development and intellectual property licensing agreements
From time to time, the Company may enter into arrangements with customers that combine the provision of development services and a license to the right to use the Company’s IP. These arrangements are deemed to be single or multiple performance obligations based upon the nature of the arrangements. Revenue is recognized upon the transfer of control, over time or at a point in time, depending on the nature of the arrangements. The Company evaluates whether the licensing component is distinct. A licensing component is distinct if it is both (i) capable of being distinct and (ii) distinct in the context of the arrangement. If the license is not distinct, it is combined with the development services as a single performance obligation and recognized over time. If the license is distinct, revenue is recognized at a point in time when the customer has the ability to benefit from the license.
From time to time, the Company may enter into arrangements with customers that solely involve the sale or licensing of its patents or IP. Generally, there are no performance obligations beyond transferring the designated license to the Company’s patents or IP. Accordingly, revenue is recognized at a point in time when the customer has the ability to benefit from the license.
There are no variable consideration estimates associated with either combined development and IP arrangements or for standalone arrangements involving either the sale or licensing of IP.
Inventories
The Company values inventory at standard cost, adjusted to approximate the lower of actual cost or estimated net realizable value using assumptions about future demand and market conditions. In determining excess or obsolescence reserves for its products, the Company considers assumptions such as changes in business and economic conditions, other-than-temporary decreases in demand for its products, and changes in technology or customer requirements. In determining the lower of cost or net realizable value reserves, the Company considers assumptions such as recent historical sales activity and selling prices, as well as estimates of future selling prices. The Company fully reserves for inventories and non-cancellable purchase orders for inventory deemed obsolete. The Company performs periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances and non-cancellable purchase orders to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or market conditions become less favorable than those projected by the Company, additional inventory carrying value adjustments may be required .
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Business Combinations
The Company uses the acquisition method of accounting for business combinations which allocates the purchase consideration to the assets acquired and liabilities assumed from the acquiree based on their respective fair values as of the acquisition date. The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Significant estimates and inputs used in valuing acquired assets and liabilities held for sale, developed technology, and other identifiable intangible assets include, but are not limited to, expected future revenue, future changes in technology, useful lives, risk-adjusted discount rates, and time and costs to recreate certain assets. Fair value estimates are based on the assumptions that management believes a market participant would use in pricing the asset or liability. These estimates are inherently uncertain and, therefore, actual results may differ from the estimates made.
Goodwill
The Company performs its goodwill impairment analysis as of the first day of the fourth quarter of each year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on a more frequent basis. The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment.
Long-Lived and Intangible Assets
The Company reviews its long-lived and intangible assets for impairment if indicators of potential impairment are identified, at least quarterly. Indefinite-lived intangible assets are reviewed for impairment at least annually. Assets are grouped and evaluated for impairment at the lowest level of identifiable cash flows.
Cash Equivalents
Cash equivalents consist of financial instruments that are readily convertible into cash and have original maturities of three months or less at the time of purchase.
Accounts Receivable
Accounts receivable are primarily comprised of trade receivables presented net of rebates, price protection and an allowance for credit loss. The Company manages its exposure to customer credit risk through credit limits, credit lines, ongoing monitoring procedures and credit approvals. While the Company maintains an allowance for customer credit losses, its accounts receivable write-offs have historically not been significant.
Unbilled Receivables
Unbilled receivables are recorded within Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets. Unbilled receivables primarily represent work completed on development services and on custom products under non-cancellable purchase orders that have no alternative use to the Company at contract inception, recognized as revenue but not yet invoiced to customers.
Investments
Available-for-Sale Debt Securities. Investments in marketable debt securities are available for use in current operations, including those with maturity dates beyond one year, and are classified within current assets on the Consolidated Balance Sheets. Available-for-sale debt securities are recorded at fair value, with the change in unrealized gains and losses, net of tax, reported in the Consolidated Statements of Comprehensive Income until realized. Fair value is determined based on quoted market rates when observable or utilizing data points that are observable. Securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of the excess, if any, is caused by expected credit losses. The Company uses the first-in, first-out method as basis of the cost of securities sold.
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Long-term Investments. Long-term investments are held in both marketable and non-marketable equity securities and other instruments. Marketable equity securities include investments in publicly traded companies. Non-marketable equity securities include investments in privately held companies held for long-term strategic purposes and are accounted for under the measurement alternative, defined as cost, less impairments, adjusted for subsequent observable price changes and are periodically assessed for impairment when events or circumstances indicate that a decline in value may have occurred. These investments are recorded within Other non-current assets on the Consolidated Balance Sheets. Gains and losses are recorded in Other income, expense, net on the Consolidated Statements of Operations.
Fair Value Measurements
The Company’s financial instruments are measured and recorded at fair value on a recurring basis, except for non-marketable equity investments in privately-held companies, which are generally accounted for under the measurement alternative.
Fair Value Hierarchy
The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. The guidance for fair value measurements requires that assets and liabilities carried at fair value be classified and disclosed in one of the following categories:
Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.
Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of 2 to 7 years for equipment, up to 44 years for buildings, and leasehold improvements are measured by the shorter of the remaining terms of the leases or the estimated useful economic lives of the improvements.
Leases
The Company records operating and finance leases as right-of-use (ROU) assets and lease liabilities on the Company’s Consolidated Balance Sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating and finance lease ROU assets and liabilities are initially recognized based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses the implicit interest rate if readily determinable. When the implicit interest rate is not readily determinable, the Company uses its incremental borrowing rate, which is based on its collateralized borrowing capabilities over a similar term of the lease payments. When using the incremental borrowing rate, the Company utilizes the consolidated group incremental borrowing rate. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. The Company has elected the accounting policy to not recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. Operating leases are included in other non-current assets, other current liabilities, and long-term operating lease liabilities on the Company’s Consolidated Balance Sheets. The Company’s finance leases are immaterial.
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Foreign Currency Translation/Transactions
The functional currency of the Company’s foreign subsidiaries is the U.S. dollar. Assets and liabilities denominated in non-U.S. dollars have been remeasured into U.S. dollars at current exchange rates for monetary assets and liabilities and historical exchange rates for non-monetary assets and liabilities. Non-U.S. dollar denominated transactions have been remeasured at average exchange rates in effect during each period, except for those cost of sales and expense transactions related to non-monetary balance sheet amounts which have been remeasured at historical exchange rates. The gains or losses from foreign currency remeasurement are included in earnings.
Marketing and Advertising Expenses
Advertising costs are expensed as incurred. In addition, the Company’s marketing and advertising expenses include certain cooperative advertising funding obligations under customer incentive programs, which costs are recorded as incurred. Cooperative advertising expenses are recorded as marketing, general and administrative expenses to the extent the cash paid does not exceed the estimated fair value of the advertising benefit received. Any excess of cash paid over the estimated fair value of the advertising benefit received is recorded as a reduction of revenue. Marketing and advertising expenses for 2025, 2024 and 2023 were approximately $ 2.4 billion, $ 1.2 billion and $ 695 million, respectively.
Stock-Based Compensation
The Company estimates stock-based compensation cost for stock options at the grant date based on the option’s fair value as calculated by the Black-Scholes model. For time-based restricted stock units (RSUs), fair value is based on the closing price of the Company’s common stock on the grant date. The Company estimates the grant-date fair value of RSUs that involve a market condition using the Monte Carlo simulation model. The Company estimates the grant-date fair value of stock to be issued under the Company’s Employee Stock Purchase plan (ESPP) using the Black-Scholes model. Compensation expense is recognized over the vesting period of the applicable award using the straight-line method, except for the compensation expense related to RSUs with performance or market conditions (PRSUs), which are recognized ratably for each vesting tranche from the service inception date to the end of the requisite service period. Forfeiture rates are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Contingencies
From time to time the Company may be a defendant or plaintiff in various legal actions that arise in the normal course of business. The Company is also subject to income tax, indirect tax or other tax claims by tax agencies in jurisdictions in which it conducts business. In addition, the Company is a party to environmental matters including local, regional, state and federal government clean-up activities at or near locations where the Company currently or has in the past conducted business. The Company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of reasonably possible losses. A determination of the amount of reserves required for these commitments and contingencies that would be charged to earnings, if any, includes assessing the probability of adverse outcomes and estimating the amount of potential losses. The required reserves, if any, may change due to new developments in each matter or changes in circumstances such as a change in settlement strategy.
Income Taxes
The Company computes the provision for income taxes using the liability method and recognizes deferred tax assets and liabilities for temporary differences between financial statement and income tax bases of assets and liabilities, as well as for operating loss and tax credit carryforwards. The Company measures deferred tax assets and liabilities using tax rates applicable to taxable income in effect for the years in which those tax assets are expected to be realized or settled and provides a valuation allowance against deferred tax assets when it cannot conclude that it is more likely than not that some or all deferred tax assets will be realized. The assessment requires significant judgment and is performed in each of the applicable taxing jurisdictions. In addition, the Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that they will be sustained, based on the technical merits of the positions, on examination by the jurisdictional tax authority. Interest and penalties related to uncertain tax positions are recorded within the Income tax provision (benefit) line in the Company’s Consolidated Statements of Operations. The Company is subject to the Global Intangible Low Taxed Income (GILTI) tax in the U.S. and recognizes deferred taxes for temporary basis differences that are expected to reverse as GILTI tax in future years.
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Earnings Per Share
Basic Earnings Per Share (EPS) is calculated using the weighted-average number of shares outstanding during the period. Diluted EPS is calculated using the weighted-average number of shares outstanding plus the effect of potentially dilutive shares outstanding which is determined using the treasury stock method. Potentially dilutive shares are excluded from the computation of diluted EPS in periods in which their effect is anti-dilutive.
Recently Issued Accounting Standard Updates Adopted
In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) Income Taxes - Improvement to Income Tax Disclosures (ASU 2023-09) that requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The Company adopted ASU 2023-09 in the fourth quarter of 2025, with prospective application. See Note 17 - Income Taxes for further information.
Recently Issued Accounting Standard Updates Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03 Disaggregation - Income Statement Expenses (DISE) that expanded the annual and interim disclosure of certain costs and expense categories into specified categories in the notes to the financial statements. The ASU will be effective for the Company beginning with the fiscal year 2027 and interim periods thereafter, and could be applied either prospectively or retrospectively, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its financial statements.
Although there are several other new accounting pronouncements issued by the FASB, the Company does not believe any of these accounting pronouncements had or will have a material impact on its financial statements .

NOTE 3 –  Supplemental Financial Statement Information

Inventories
December 27,
2025 December 28,
2024
  (In millions)
Raw materials $ 909   $ 351  
Work in process 4,768   4,289  
Finished goods 2,243   1,094  
Total inventories $ 7,920   $ 5,734  

Property and Equipment, net
December 27,
2025 December 28,
2024
  (In millions)
Land, building and leasehold improvements
$ 967   $ 853  
Equipment 3,453   2,798  
Construction in progress 508   324  
Property and equipment, gross 4,928   3,975  
Accumulated depreciation ( 2,616 ) ( 2,173 )
Total property and equipment, net $ 2,312   $ 1,802  

Depreciation expense for 2025, 2024 and 2023 was $ 521 million, $ 454 million and $ 441 million, respectively.

Accrued Liabilities
December 27,
2025 December 28,
2024
  (In millions)
Accrued marketing programs $ 1,454   $ 1,063  
Accrued compensation and benefits 1,645   1,174  
Customer-related liabilities 1,194   1,349  
Other accrued expenses and liabilities 957   674  
Total accrued liabilities $ 5,250   $ 4,260  

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Revenue
Revenue allocated to remaining performance obligations that are unsatisfied or partially unsatisfied include amounts received from customers and amounts that will be invoiced and recognized as revenue in future periods for product revenue, development services, and IP licensing. As of December 27, 2025, the aggregate transaction price allocated to remaining performance obligations under contracts with an original expected duration of more than one year was $ 315 million, of which $ 201 million is expected to be recognized in the next 12 months. The revenue allocated to remaining performance obligations does not include amounts which have an original expected duration of one year or less.
Revenue recognized over time associated with custom products and development services accounted for approximately 9 %, 8 % and 25 % of the Company’s revenue in 2025, 2024 and 2023, respectively.
Cost of Sales
During the year ended December 27, 2025, the Company recorded approximately $ 440 million of net inventory and related charges associated with the U.S. government export control on AMD Instinct™ MI308 Data Center GPU products in Cost of sales. The Company did not have any export control related charges in 2024 and 2023.

NOTE 4 –  Segment Reporting
Management, including the Chief Operating Decision Maker (CODM), who is the Company’s Chief Executive Officer, reviews and assesses operating performance using segment net revenue, consolidated cost of sales and operating expenses and operating income (loss). These performance measures include the allocation of expenses to the reportable segments based on management’s judgment. The CODM is regularly provided segment operating income to assess relative segment performance. In the first quarter of fiscal year 2025, the Company changed its segment structure, combining the Client and Gaming segments into one reportable segment to align with how the Company manages its business. All prior period segment data were retrospectively adjusted.
The Company’s three reportable segments are:
• the Data Center segment, which primarily includes Artificial Intelligence (AI) accelerators, microprocessors (CPUs) for servers, graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), AI Network Interface Cards (AI NICs), Field Programmable Gate Arrays (FPGAs) and adaptive System-on-Chip (SoC) products for data centers;
• the Client and Gaming segment, which primarily includes CPUs, APUs, chipsets for desktops and notebooks, discrete GPUs, and semi-custom SoC products and development services; and
• the Embedded segment, which primarily includes embedded CPUs, APUs, FPGAs, System on Modules (SOMs), and adaptive SoC products.
From time to time, the Company may also sell or license portions of its IP portfolio.
In addition to these reportable segments, the Company has an All Other category, which is not a reportable segment. This category primarily includes certain expenses and credits that are not allocated to any of the reportable segments because the CODM does not consider these expenses and credits in evaluating the performance of the reportable segments. This category primarily includes amortization of acquisition-related intangibles, employee stock-based compensation, acquisition-related and other costs, restructuring charges, inventory loss at (recovery from) contract manufacturer and licensing gain. Acquisition-related and other costs primarily include transaction costs, certain compensation charges, contract termination costs and workforce rebalancing charges.
The following table provides a summary of net revenue, cost of sales and operating expenses, and operating income (loss) by segment. Segment cost of sales and operating expenses primarily include materials, external manufacturing, labor and marketing and advertising costs, and exclude expenses and credits that are recorded within the All Other category. Each of the Client and Gaming businesses do not qualify as a reportable operating segment, however, the Company continues to separately disclose revenue for each business.
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Year Ended
December 27,
2025 December 28,
2024 December 30,
2023
(In millions)
Net revenue:
Data Center $ 16,635   $ 12,579   $ 6,496  
Client and Gaming
Client 10,640   7,054   4,651  
Gaming 3,910   2,595   6,212  
Total Client and Gaming 14,550   9,649   10,863  
Embedded 3,454   3,557   5,321  
Total net revenue $ 34,639   $ 25,785   $ 22,680  

Cost of sales and operating expenses:

Data Center
$ 13,032   $ 9,097   $ 5,229  
Client and Gaming
11,695   8,462   9,938  
Embedded
2,211   2,136   2,693  
All Other
4,007   4,190   4,419  
Total cost of sales and operating expenses
$ 30,945   $ 23,885   $ 22,279  

Operating income (loss):
Data Center $ 3,603   $ 3,482   $ 1,267  
Client and Gaming
2,855   1,187   925  
Embedded 1,243   1,421   2,628  
All Other
( 4,007 ) ( 4,190 ) ( 4,419 )
Total operating income
$ 3,694   $ 1,900   $ 401  

The following table provides items included in All Other category:

Year Ended
December 27,
2025 December 28,
2024 December 30,
2023
  (In millions)
Operating loss:    
Amortization of acquisition-related intangibles $ 2,254   $ 2,394   $ 2,811  
Stock-based compensation expense 1,638   1,407   1,384  
Acquisition-related and other costs 228   186   258  
Restructuring charges —   186   —  
Inventory loss at (recovery from) contract manufacturer ( 67 ) 65   —  
Licensing gain ( 67 ) ( 48 ) ( 34 )
Other expense
21   —   —  
Total operating loss $ 4,007   $ 4,190   $ 4,419  

The Company does not discretely allocate assets to its operating segments, nor does management evaluate operating segments using discrete asset information.
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The following table summarizes sales to external customers by geographic regions based on billing location of the customer:

Year Ended
December 27,
2025 December 28,
2024 December 30,
2023
  (In millions)
United States $ 11,363   $ 8,693   $ 7,837  
China (including Hong Kong) 7,751   6,231   3,417  
Taiwan 5,186   3,301   1,841  
Singapore 4,284   3,614   2,231  
Other regions 6,055   3,946   7,354  
Total sales to external customers $ 34,639   $ 25,785   $ 22,680  

No customer accounted for at least 10% of the Company’s consolidated net revenue in fiscal years 2025 and 2024. One Client and Gaming segment customer accounted for 18 % of consolidated net revenue in fiscal year 2023.
The following table summarizes property and equipment, net by geographic areas:

December 27,
2025 December 28,
2024
  (In millions)
United States $ 1,717   $ 1,312  
Singapore 157 140
Canada 142 104
Other countries 296 246
Total property and equipment, net $ 2,312   $ 1,802  

NOTE 5 –  Acquisitions and Divestitures
Fiscal Year 2025 Acquisitions
ZT Systems Acquisition and ZT Manufacturing Business Divestiture
On March 31, 2025 (the Acquisition Date), the Company completed the acquisition of all issued and outstanding shares of ZT Systems, a provider of AI and general-purpose compute infrastructure for hyperscale computing companies, for a total purchase consideration of $ 4.4 billion. The acquisition is expected to enable the Company to deliver end-to-end AI solutions and accelerate the design and deployment of AMD-powered AI infrastructure at scale optimized for the cloud.
The purchase consideration was comprised of the following (in millions):
Cash paid on Acquisition Date
$ 3,188  
Fair value of 8,335,849 shares (1) issued on Acquisition Date
860  
Fair value of contingent consideration (2) on Acquisition Date
361  
Total purchase consideration
$ 4,409  

(1) Represented the fair value based on the closing price of AMD common stock on March 28, 2025 of $ 103.22 per share, as the transaction closed prior to the opening of markets on March 31, 2025.
(2) Represented the estimated fair value of additional consideration of up to 740,961 shares of AMD common stock to be issued and up to $ 300 million of cash to be paid to former ZT Systems stockholders and warrant holders when the contingencies are fully met.
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The purchase consideration was preliminarily allocated as follows (in millions):
Cash and cash equivalents $ 1,500  
Assets held for sale
5,965  
Other assets
81  
Total assets acquired
7,546  
Liabilities held for sale
3,221  
Other liabilities
124  
Total liabilities assumed
3,345  
Fair value of net assets acquired 4,201  
Goodwill 208  
Total purchase consideration $ 4,409  

The Company preliminarily allocated the purchase price to identifiable tangible and intangible assets acquired and liabilities assumed based on estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management. The assets and liabilities related to the data center infrastructure manufacturing business (ZT Manufacturing Business), which was divested on October 27, 2025, were classified as held for sale. Fair values of assets and liabilities classified as held for sale were determined using the income and cost valuation approaches, which incorporate significant unobservable inputs. Goodwill was assigned to the Company’s Data Center reporting unit, primarily attributed to the assembled workforce and is not expected to be deductible for income tax purposes. The Company retained select intellectual property and employees associated with the design operations (ZT Design Business).
The purchase consideration allocation, including the fair value allocation between ZT Systems’ Manufacturing and Design Businesses, is preliminary and subject to revision as additional information about the fair value of assets acquired and liabilities assumed becomes available. The Company may continue to evaluate and further revise the preliminary purchase consideration allocation during the remainder of the measurement period, which will not exceed 12 months from the Acquisition Date.
The results of operations of the ZT Design Business are included in the Company’s continuing operations within the Data Center segment and are not material. The results of operations of the ZT Manufacturing Business are presented as discontinued operations in the Company’s Consolidated Financial Statements.
In 2025, acquisition-related transaction costs of $ 47 million were recorded within Marketing, general and administrative expenses.
The following table presents a reconciliation of the contingent consideration liability (in millions):

Initial valuation of contingent consideration liability on Acquisition Date
$ 361  
Change in fair value 121
Settlement in October 2025
( 482 )
Contingent consideration liability, December 27, 2025
$ —  

The contingent consideration liability, which was measured at fair value on Acquisition Date and was remeasured to fair value until the contingencies were resolved, was settled in October 2025 with the former ZT shareholders and warrant holders as the contingencies were fully met. The change in fair value was recorded within Income from discontinued operations of the Company’s Consolidated Statements of Operations.
On October 27, 2025, the Company completed the sale of the ZT Manufacturing Business to Sanmina Corporation (Sanmina) for $ 2.4  billion in cash, subject to certain purchase price adjustments and 1,151,052 shares of Sanmina common stock. Upon close of the sale, the Company received cash of $ 1.4 billion, net of cash divested and purchase price adjustments, and shares of Sanmina common stock valued at $ 154 million. The purchase consideration received from the sale of the ZT Manufacturing Business is subject to customary post-closing adjustments.
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The Company is eligible to receive additional cash consideration of up to $450 million to the extent certain conditions are met following the close of the sale through 2028 (Sanmina Earn-out). The Company applied the loss recovery approach, under which the difference between the fair value of the consideration received, excluding the Sanmina Earn-out, and the carrying amount of the net assets disposed, is recognized as an Earn-out receivable, to the extent it is probable of being received. Upon close of the sale, the Company recorded a Sanmina Earn-out receivable of $ 332 million within Other non-current assets in the Company’s Consolidated Balance Sheets. The Earn-out receivable will be subject to impairment assessment at the end of each reporting period prior to receipt of payment. The Company also entered into a Manufacturing Services Agreement with Sanmina with an initial term of five years.
Other Acquisitions
In 2025, the Company completed other business acquisitions for a total consideration of $ 90  million that resulted in the recognition of $ 79  million of goodwill. The financial results of these acquired businesses, which were not material, were included in the Company's Consolidated Statements of Operations from their respective dates of acquisition within the Data Center segment.
Pro Forma Information
Since the ZT Manufacturing Business, which represented the majority of ZT Systems’ operations, was classified as held for sale upon acquisition and subsequently sold in October 2025, pro forma information presenting the combined results of operations of ZT Systems and other acquired entities were deemed neither material nor meaningful to the Company’s consolidated income from continuing operations and were omitted.
Fiscal Year 2024 Acquisitions
Silo AI Acquisition
On August 9, 2024, the Company completed the acquisition of Silo AI Oy (Silo AI), an AI lab based in Finland, for $665 million in cash. The recorded purchase consideration of $ 553 million, net of closing adjustments, transaction costs and deferred cash compensation, was allocated to $ 19 million of identifiable intangible assets, $ 43 million of net liabilities assumed, and $ 577 million to goodwill. Goodwill was attributed to Silo AI’s workforce to accelerate the deployment and development of AI solutions on AMD hardware. Silo AI financial results, which were not material, were included in the Company's Statement of Operations since the date of acquisition, primarily within the Data Center segment.
Fiscal Year 2023 Acquisitions
During the year ended December 30, 2023, the Company completed business acquisitions for a total consideration of $ 134  million, recognizing $ 49  million of identifiable net assets and $ 85  million of goodwill. The financial results of these acquired businesses, which were not material, were included in the Company's Consolidated Statements of Operations from their respective dates of acquisition under the Data Center, Client and Gaming, and Embedded segments.

NOTE 6 – Goodwill and Acquisition-related Intangibles, net
Goodwill
In the first quarter of fiscal year 2025, the Company assigned goodwill to its updated reporting units to reflect the change in its segment reporting structure and determined no impairment immediately prior to and after the change.
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The following table summarizes Goodwill:

Before segment change
After segment change

(in millions)
Data Center
Embedded
Client
Gaming
Client and Gaming
Total

December 28, 2024
$ 3,403   $ 21,072   $ 126   $ 238   $ —  $ 24,839  
Reassignment due to segment change
—  —  (126) (238) 364   —  
Acquisitions
287   —  —  —  —  287  
December 27, 2025 $ 3,690   $ 21,072   $ —   $ —   $ 364   $ 25,126  

During the fourth quarter of fiscal years 2025 and 2024, the Company conducted its annual qualitative impairment tests of goodwill and concluded that there was no goodwill impairment with respect to its reporting units.
Acquisition-related Intangible Assets
The following table summarizes Acquisition-related Intangible Assets:

December 27, 2025 December 28, 2024
Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
(In millions) (In millions)
Developed technology $ 13,599   $ ( 3,560 ) $ 10,039   $ 13,408   $ ( 2,529 ) $ 10,879  
Customer relationships 12,324   ( 6,267 ) 6,057   12,324   ( 5,124 ) 7,200  
Product trademarks 914   ( 305 ) 609   914   ( 225 ) 689  
Acquisition-related intangible assets subject to amortization 26,837   ( 10,132 ) 16,705   26,646   ( 7,878 ) 18,768  
In-process research and development (IPR&D) not subject to amortization —   —  —   162   —  162  
Total acquisition-related intangible assets, net $ 26,837   $ ( 10,132 ) $ 16,705   $ 26,808   $ ( 7,878 ) $ 18,930  

In April 2025, $ 162 million of IPR&D intangible asset reached technological feasibility, was placed in service as developed technology and started amortization over its estimated useful life of 5 years.
Acquisition-related intangible amortization expense was $ 2.3 billion, $ 2.4  billion and $ 2.8 billion in fiscal year 2025, 2024 and 2023, respectively.
Based on the carrying value of acquisition-related intangibles recorded as of December 27, 2025, and assuming no subsequent impairment of the underlying assets, the estimated future annual amortization expense for acquisition-related intangibles is as follows:

Fiscal Year
2026 2027 2028 2029 2030 2031 and thereafter
Total

(In millions)

Future annual amortization
$ 2,153   $ 2,036   $ 1,923   $ 1,691   $ 1,454   $ 7,448   $ 16,705  

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Table of Conten t s

NOTE 7 –  Related Parties—Equity Joint Ventures
ATMP Joint Venture s
The Company holds a  15 % equity interest in  two  joint ventures (collectively, the ATMP JV) with affiliates of Tongfu Microelectronics Co., Ltd, a Chinese joint stock company. The Company has no obligation to fund the ATMP JV. The Company accounts for its equity interests in the ATMP JV under the equity method of accounting due to its significant influence over the ATMP JV. The carrying value of the investment was $ 176 million and $ 149 million as of December 27, 2025 and December 28, 2024, respectively, and are recorded within Other non-current assets on the Company’s Consolidated Balance Sheets.
The ATMP JV provides assembly, test, mark and packaging (ATMP) services to the Company. The Company’s purchases from the ATMP JV were $ 2.0 billion and $ 1.7 billion in 2025 and 2024, respectively. The amounts payable to the ATMP JV were $ 408 million and $ 476 million as of December 27, 2025 and December 28, 2024, respectively, and are recorded within Accounts payable on the Company’s Consolidated Balance Sheets.
In 2024, the Company provided a $ 100 million term loan to one of the ATMP JVs for general corporate purposes, with interest at the three months term Secured Overnight Financing Rate (SOFR) plus 50 basis points, payable quarterly. The loan matures on October 16, 2026. The loan and related interest receivable are recorded within Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets.
During 2025, 2024 and 2023, the Company recorded income related to the ATMP JV of $ 26 million, $ 33 million and $ 16 million in Equity income in investee on its Consolidated Statement of Operations, respectively.

NOTE 8 –  Financial Instruments
Financial Instruments Recorded at Fair Value on a Recurring Basis

December 27, 2025 December 28, 2024
(In millions) Level 1 Level 2 Level 3
Total Level 1 Level 2 Level 3
Total
Cash equivalents
Money market funds $ 620   $ —   $ —   $ 620   $ 1,496   $ —   $ —   $ 1,496  
Corporate debt securities —   1,869   —   1,869   —   806   —   806  
U.S. government and agency securities 1,148   300   —   1,448   130   —   —   130  
Non-U.S. government and agency securities —   245   —   245   —   116   —   116  
Time deposits and certificates of deposits —   173   —   173   —   107   —   107  
Short-term investments
Corporate debt securities —   3,107   —   3,107   —   814   —   814  
U.S. government and agency securities 901   718   —   1,619   332   82   —   414  
Non-U.S. government and agency securities —   256   —   256   —   79   —   79  
Time deposits and certificates of deposits —   10   —   10   —   10   —   10  
Asset-backed and mortgage-backed securities —   22   —   22   —   28   —   28  
Other non-current assets
Long-term investments 198   —   202   400   —   —   25   25  
Deferred compensation plan investments 257   —   —   257   197   —   —   197  
Total assets measured at fair value $ 3,124   $ 6,700   $ 202   $ 10,026   $ 2,155   $ 2,042   $ 25   $ 4,222  

Deferred compensation plan investments are primarily mutual fund investments held in a Rabbi trust established to maintain the Company’s executive deferred compensation plan.
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The following is a summary of cash equivalents and short-term investments:
December 27, 2025 December 28, 2024
Cost/ Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cost/ Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value
(in millions) (in millions)
Money market funds $ 620   $ —   $ —   $ 620   $ 1,496   $ —   $ —   $ 1,496  
Corporate debt securities 4,974   2   —   4,976   1,621   —   ( 1 ) 1,620  
U.S. government and agency securities 3,065   2   —   3,067   544   —   —   544  
Non-U.S. government and agency securities 501   —   —   501   195   —   —   195  
Time deposits and certificates of deposits 183   —   —   183   117   —   —   117  
Asset-backed and mortgage-backed securities 23   —   ( 1 ) 22   30   —   ( 2 ) 28  
$ 9,366   $ 4   $ ( 1 ) $ 9,369   $ 4,003   $ —   $ ( 3 ) $ 4,000  

As of December 27, 2025 and December 28, 2024, the Company did not have material available-for-sale debt securities which had been in a continuous unrealized loss position of more than twelve months.
The contractual maturities of investments classified as available-for-sale are as follows:

December 27, 2025 December 28, 2024
Amortized Cost Fair Value Amortized Cost Fair Value
(In millions) (In millions)
Due within 1 year $ 6,528   $ 6,528   $ 2,073   $ 2,073  
Due in 1 year through 5 years 2,195   2,199   406   405  
Due in 5 years and later 23   22   27   26  
$ 8,746   $ 8,749   $ 2,506   $ 2,504  

Financial Instruments Measured at Fair Value on a Non-Recurring Basis
As of December 27, 2025 and December 28, 2024, the Company had long-term investments in non-marketable equity securities of $ 1.1  billion and $ 468  million, respectively, which are recorded at estimated fair value based on observable events or adjustments from impairments.
As of December 27, 2025, non-marketable equity investments had cumulative gross unrealized gains of $ 291 million and cumulative gross unrealized losses and impairments of $ 51 million. During the year ended December 27, 2025, the Company recognized gross unrealized gains of $ 289 million and gross unrealized losses and impairments of $ 53 million. As of December 28, 2024, cumulative and annual gross unrealized gains, losses and impairments were not material.
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Financial Instruments Not Recorded at Fair Value
The carrying amounts and estimated fair values of the Company’s long-term debt are as follows:

  December 27, 2025 December 28, 2024
  Carrying
Amount Estimated
Fair Value Carrying
Amount Estimated
Fair Value
  (In millions) (In millions)

Current portion of long-term debt, net $ 874   $ 879   $ —   $ —  
Long-term debt, net of current portion $ 2,348   $ 2,246   $ 1,721   $ 1,543  

The estimated fair value of the Company’s long-term debt is based on Level 2 inputs of quoted prices for the Company’s debt and comparable instruments in inactive markets.
The fair value of the Company’s accounts receivable, accounts payable and other short-term obligations approximate their carrying value based on existing terms.
Hedging Transactions and Derivative Financial Instruments
Foreign Currency Forward Contracts Designated as Accounting Hedges
The Company enters into foreign currency forward contracts to hedge its exposure to foreign currency exchange rate risk related to future forecasted transactions denominated in currencies other than the U.S. Dollar. These contracts generally mature within 24 months and are designated as accounting hedges. As of December 27, 2025 and December 28, 2024, the notional value of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges was $ 2.3 billion and $ 2.2 billion, respectively. The fair value of these contracts as of December 27, 2025 and December 28, 2024 was not material.
Foreign Currency Forward Contracts Not Designated as Accounting Hedges
The Company also enters into foreign currency forward contracts to reduce the short-term effects of foreign currency fluctuations on certain receivables or payables denominated in currencies other than the U.S. Dollar. These forward contracts generally mature within 3 months and are not designated as accounting hedges. As of December 27, 2025 and December 28, 2024, the notional value of these outstanding contracts was $ 1.1 billion and $ 642 million, respectively. The fair value of these contracts as of December 27, 2025 and December 28, 2024 was not material.
The cash flows associated with derivative instruments as cash flow hedging instruments are classified in the same category within the Consolidated Statement of Cash Flows as the cash flows of the related items.
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NOTE 9 –  Debt, Revolving Credit Facility and Commercial Paper Program
Debt
The Company’s total debt as of December 27, 2025 and December 28, 2024 consisted of:

December 27,
2025 December 28,
2024
(In millions)
4.212% Senior Notes Due 2026 (4.212% Notes) $ 875   $ —  
4.319% Senior Notes Due 2028 (4.319% Notes) 625   —  
2.375% Senior Notes Due 2030 (2.375% Notes) 750   750  
3.924% Senior Notes Due 2032 (3.924% Notes) 500   500  
4.393% Senior Notes Due 2052 (4.393% Notes) 500   500  
Total debt (principal amount) 3,250   1,750  
Unamortized debt discount and issuance costs ( 28 ) ( 29 )
Total debt (net) 3,222   1,721  
Less: current portion of long-term debt and related unamortized debt issuance costs ( 874 ) —  
Total long-term debt $ 2,348   $ 1,721  

4.212% Senior Notes Due 2026 and 4.319% Senior Notes Due 2028
On March 24, 2025, the Company issued 4.212% Notes and 4.319% Notes in aggregate principal amount of $1.5 billion, which are general unsecured senior obligations of the Company. The interest is payable semi-annually on March 24 and September 24 of each year, commencing on September 24, 2025.
The Company may redeem some or all of the 4.212% Notes prior to September 24, 2026 and the 4.319% Notes prior to February 24, 2028 at a price equal to the greater of the present value of the principal amount and future interest through the maturity of the debt or 100% of the principal amount plus accrued and unpaid interest. On or after February 24, 2028, the Company may also redeem some or all of the 4.319% Notes at 100% of the principal amount plus accrued and unpaid interest.
Holders of the 4.212% Notes and the 4.319% Notes have the right to require the Company to repurchase all or a portion of their notes at 101% of the principal amount plus accrued and unpaid interest if the Company undergoes a change of control. An event of default may also accelerate the maturity of the 4.212% Notes and 4.319% Notes.
2.375% Senior Notes Due 2030, 3.924% Senior Notes Due 2032 and 4.393% Senior Notes Due 2052
The 2.375% Notes, 3.924% Notes and 4.393% Notes are general unsecured senior obligations of the Company with semi-annual fixed interest payments due on June 1 and December 1.
The Company may redeem some or all of the 3.924% Notes and 4.393% Notes prior to March 1, 2032 and December 1, 2051, respectively, at a price equal to the greater of the present value of the principal amount and future interest through the maturity of the 3.924% Notes or 4.393% Notes or 100% of the principal amount plus accrued and unpaid interest. Holders have the right to require the Company to repurchase all or a portion of the 3.924% Notes or 4.393% Notes in the event that the Company undergoes a change of control as defined in the indenture, at a repurchase price of 101% of the principal amount plus accrued and unpaid interest. Additionally, an event of default may result in the acceleration of the maturity of the 3.924% Notes and 4.393% Notes.
As of December 27, 2025, the Company was in compliance with the covenants associated with all of its debt.
Future Payments on Total Debt
As of December 27, 2025, the Company’s future debt payment obligations are as follows:

Fiscal Year
2026 2027 2028 2029 2030 2031 and thereafter
Total

(In millions)

Term Debt (Principal only)
$ 875   $ —  $ 625   $ —   $ 750   $ 1,000   $ 3,250  

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Table of Conten t s

Revolving Credit Facility
The Company has $ 3 billion available under an unsecured revolving credit facility that expires on April 29, 2027. During 2025, the Company did not draw funds from the revolving credit facility. As of December 27, 2025, the Company was in compliance with the covenants under the revolving credit facility.
Commercial Paper
The Company has a commercial paper program under which it can issue unsecured commercial paper notes up to a principal amount of $ 3.0 billion at any time with maturities of up to 397 days from the date of issue. The commercial paper will be sold at a discount from par or, alternatively, will be sold at par and bear interest at rates that will vary based on market conditions at the time of the issuance. During the first quarter of fiscal year 2025, the Company issued $950 million in aggregate principal amount of commercial paper which was subsequently repaid in the second quarter of fiscal year 2025. As of December 27, 2025 and December 28, 2024, the Company had no commercial paper outstanding.

NOTE 10 –  Leases
Operating Leases
The Company has entered into operating and finance leases for its corporate offices, data centers, research and development facilities and certain equipment. The leases expire at various dates through 2038, some of which include options to extend the lease for up to ten years.
For 2025, 2024 and 2023, the Company recorded $ 196 million, $ 147 million and $ 127 million, respectively, of operating lease expense, including short-term lease expense. For 2025, 2024, and 2023, the Company recorded $ 100 million, $ 83 million, and $ 46 million respectively, of variable lease expense, which primarily included operating expenses and property taxes associated with the usage of facilities under the operating leases. For 2025, 2024, and 2023 cash paid for operating leases included in operating cash flows was $ 176 million, $ 155 million, and $ 147 million respectively. Certain operating leases contain provisions for escalating lease payments subject to changes in the consumer price index. The Company’s finance and short-term leases are immaterial to the Company’s Consolidated Financial Statements.
Supplemental information as of and for the year December 27, 2025 related to leases is as follows:
December 27,
2025 December 28,
2024
Weighted-average remaining lease term in years – operating leases 6.95 7.28
Weighted-average discount rate – operating leases 4.74   % 4.63   %

Future minimum lease payments under non-cancellable operating lease liabilities as of December 27, 2025 are as follows:

Fiscal Year
2026 2027 2028 2029 2031 2031 and thereafter
Total

(In millions)

Minimum lease payments
$ 192   $ 149   $ 120   $ 113   $ 100   $ 263   $ 937  
Less: interest
( 153 )
Present value of net minimum lease payments
784  
Less: current portion
159  
Total long-term operating lease liabilities
$ 625  

As of December 27, 2025, the Company has data center and other real estate leases that have not yet commenced with future lease payments of $ 1.3 billion. These leases are expected to commence in 2026 with lease terms of 1 year to 10 years.

NOTE 11 –  Concentrations of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of investments in time deposits, available-for-sale debt securities, equity investments and trade receivables.
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The Company places its investments with high credit quality financial institutions. At the time an investment is made, investments in commercial paper of industrial firms and financial institutions are rated A1, P1, F1 or better. The Company invests in bonds that are rated A, A2 or better and repurchase agreements, each of which have securities of the type and quality listed above as collateral.
The Company believes that concentrations of credit risk with respect to trade receivables are limited because a large number of geographically diverse customers make up the Company’s customer base, thus diluting the trade credit risk. One customer accounted for approximately 11 % and another customer accounted for 24 % of the total consolidated accounts receivable balance as of December 27, 2025 and December 28, 2024, respectively. However, the Company does not believe the receivable balance from these customers represents a significant credit risk based on past collection experience and review of their current credit quality.
The Company is exposed to credit losses from nonperformance by counterparties on foreign currency hedge contracts. These counterparties are large global institutions, and to date, no such counterparty has failed to meet its financial obligations to the Company.

NOTE 12 –  Commitments and Contingencies
Commitments
The Company’s commitments primarily include the Company’s obligations to purchase wafers and substrates from third parties, and future payments related to multi-year cloud service provider (CSP), software, and technology license agreements. Some cloud service capacity may be reduced, terminated or sold to others by the CSPs, in which case the Company’s commitments will be reduced. The Company expects to utilize the cloud service capacity in its operations or assign the capacity to third parties. These commitments were made under noncancellable purchase orders and contractual obligations requiring minimum commitments for which cancellation would lead to significant penalties.
Total future unconditional commitments as of December 27, 2025 are as follows:
Fiscal Year
2026 2027 2028 2029 2030 2031 and thereafter
Total

(In millions)

Unconditional commitments
$ 8,498   $ 1,099   $ 1,216   $ 1,197   $ 156   $ —   $ 12,166  

The Company continually works with suppliers and partners on the timing of payments and deliveries of purchase commitments, taking into account business conditions.
Warranties and Indemnities
The Company generally warrants that its products sold to its customers will conform to its approved specifications and be free from defects in material and workmanship under normal use and conditions for one year. The Company may also offer, in general, one to three-year limited warranties based on product type and negotiated warranty terms with certain customers. The Company accrues warranty costs to Cost of sales at the time of sale of warranted products.
Changes in the Company’s estimated liability for product warranty during 2025 and 2024 are as follows:

December 27,
2025 December 28,
2024
  (In millions)
Beginning balance $ 188   $ 85  
Provisions during the period 358   213  
Settlements during the period ( 238 ) ( 110 )
Ending balance $ 308   $ 188  

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Table of Conten t s

In addition to product warranties, the Company from time to time in its normal course of business indemnifies other parties with whom it enters into contractual relationships, including customers, lessors and parties to other transactions with the Company, with respect to certain matters. In these limited matters, the Company has agreed to hold certain third parties harmless against specific types of claims or losses such as those arising from a breach of representations or covenants, third-party claims that the Company’s products when used for their intended purpose(s) and under specific conditions infringe the intellectual property rights of a third party, or other specified claims made against the indemnified party. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the unique facts and circumstances that are likely to be involved in each particular claim and indemnification provision. Historically, payments made by the Company under these obligations have not been material. In addition, the impact from changes in estimates for pre-existing warranties has been immaterial.
Litigation and Other Legal Matters

As of December 27, 2025, there were no material legal proceedings.

The Company is a defendant or plaintiff in various actions that arose in the normal course of business. With respect to these matters, based on management’s current knowledge, the Company believes that the amount or range of reasonably possible loss, if any, will not, either individually or in the aggregate, have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

NOTE 13 – Earnings Per Share
The following table sets forth the components of basic and diluted earnings per share:
Year Ended
December 27, 2025 December 28, 2024 December 30, 2023
  (In millions, except per share amounts)
Numerator
Income from continuing operations $ 4,269   $ 1,641   $ 854  
Income from discontinued operations 66   —   —  
Net income $ 4,335   $ 1,641   $ 854  

Denominator
Basic weighted average shares 1,624   1,620   1,614  
Potentially dilutive shares from employee equity plans 12   17   11  
Diluted weighted average shares 1,636   1,637   1,625  

Earnings per share:
Earnings per share from continuing operations - basic $ 2.63   $ 1.01   $ 0.53  
Earnings per share from discontinued operations - basic 0.04   —   —  
Basic earnings per share $ 2.67   $ 1.01   $ 0.53  

Earnings per share from continuing operations - diluted $ 2.61   $ 1.00   $ 0.53  
Earnings per share from discontinued operations - diluted 0.04   —   —  
Diluted earnings per share $ 2.65   $ 1.00   $ 0.53  

Potential shares from employee equity plans totaling 9 million, 1 million and 6  million weighted-average shares for 2025, 2024 and 2023, respectively, were not included in the earnings per share calculation because their inclusion would have been anti-dilutive.
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NOTE 14–  Common Stock and Stock-Based Compensation
Common Stock
Shares of common stock outstanding were as follows:
Year Ended
December 27,
2025 December 28,
2024 December 30,
2023
(In millions)
Balance, beginning of period 1,622   1,616   1,612  
Common stock issued in the acquisition of ZT Systems
9   —   —  
Common stock issued under employee equity plans 15   17   17  
Repurchases of common stock ( 12 ) ( 6 ) ( 10 )
Common stock repurchases for tax withholding on equity awards ( 4 ) ( 5 ) ( 4 )
Issuance of common stock upon warrant exercise —   —   1  
Balance, end of period 1,630   1,622   1,616