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Advanced Micro Devices, Inc. (AMD) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Advanced Micro Devices, Inc. (AMD)

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Intrinsic Value (DCF)

Current$220.97
→
Intrinsic$57.21
-74%
$38.58$57.21$94.23
Current price reflects execution expectations above 25% growth — not unreasonable for quality businesses.
Range: Bear $39 → Bull $94. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $94).
Discount ↓Growth →21%23%25%27%
8%$72$78$84$91
10%$49$53$57$62
12%$37$40$43$46
14%$30$32$34$37

Bull Case

  • Bull case ($94) with 30% growth, 8% discount rate

Bear Case

  • Bear case ($39) implies 83% downside at 20% growth, 12% discount
  • Trading 74% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($94) — requires exceptional execution
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5-Year Free Cash Flow Projection

Year 1$3.01B
Year 2$3.76B
Year 3$4.70B
Year 4$5.87B
Year 5$7.34B
Terminal$116.30B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$2.40BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is AMD stock undervalued or overvalued?
🔴 OVERVALUED

AMD trades at $220.97 vs. our DCF-derived intrinsic value of $39.24, implying -82% downside. Using a 9.5% WACC and 25.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($57.74) suggests limited upside.

What is AMD's intrinsic value?

Using a 5-year DCF model: Base FCF of $2.40B, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-1.57B net debt and dividing by 1.64B shares: Bear $26.61 | Base $39.24 | Bull $57.74. Current price $220.97 implies -82% to base case.

How is AMD's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($62.65B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 26.1x.