What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-04 compared with 2025-02-05 · 443 added, 371 removed, 756 unchanged (52% of the section changed)

14 unchanged sentences

Restructuring charges — 186 —

Licensing gain ( 48 ) ( 34 ) ( 102 )

Total operating expenses 13,458 10,825 10,059

Operating income 3,694 1,900 401

1 unchanged sentence

Other income (expense), net 577 181 197

Income before income taxes and equity income 1,989 492 1,184

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

Basic $ 1.01 $ 0.53 $ 0.85

Diluted $ 1.00 $ 0.53 $ 0.84

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

2 unchanged sentences

See accompanying notes to the Consolidated Financial Statements.

Table of Conten t s

Advanced Micro Devices, Inc.

8 unchanged sentences

See accompanying notes to the Consolidated Financial Statements.

Table of Conten t s

Advanced Micro Devices, Inc.

7 unchanged sentences

Inventories 7,920 5,734

Receivables from related parties 113 9

Prepaid expenses and other current assets 2,160 1,991

1 unchanged sentence

Property and equipment, net 2,312 1,802

Operating lease right-of-use assets 623 633

Goodwill 25,126 24,839

Acquisition-related intangibles 18,930 21,363

equity method 149 99

Acquisition-related intangibles, net 16,705 18,930

Deferred tax assets, net 384 688

4 unchanged sentences

Accounts payable $ 2,929 $ 2,466

Payables to related parties 476 363

Accrued liabilities 5,250 4,260

6 unchanged sentences

Other long-term liabilities 1,186 1,816

Commitments and Contingencies (see Notes 17 and 18)

Commitments and contingencies (see Note 12)

Stockholders’ equity:

14 unchanged sentences

See accompanying notes to the Consolidated Financial Statements.

Table of Conten t s

Advanced Micro Devices, Inc.

6 unchanged sentences

Common stock issued under employee equity plans — — 1

Issuance of common stock as consideration for acquisition — — 4

Balance, end of period $ 17 $ 17 $ 17

4 unchanged sentences

Issuance of common stock to settle convertible debt — — 1

Issuance of common stock as consideration for acquisition — — 45,372

Fair value of replacement share-based awards related to acquisition — — 275

Reissuance of treasury stock 80 — —

Issuance of common stock warrants — — 13

3 unchanged sentences

Repurchases of common stock ( 1,316 ) ( 862 ) ( 985 )

Reissuance of treasury stock as consideration for acquisition — — 3,138

Reissuance of treasury stock

Common stock repurchases for tax withholding on employee equity plans ( 625 ) ( 730 ) ( 430 )

10 unchanged sentences

See accompanying notes to the Consolidated Financial Statements.

Table of Conten t s

Advanced Micro Devices, Inc.

5 unchanged sentences

Net income $ 4,335 $ 1,641 $ 854

Income from discontinued operations, net of tax

Adjustments to reconcile net income to net cash provided by operating activities:

1 unchanged sentence

Amortization of acquisition-related intangibles 2,254 2,393 2,811

2,393 2,811 3,548

Stock-based compensation 1,638 1,407 1,384

Amortization of operating lease right-of-use assets 113 98 88

Amortization of inventory fair value adjustment — 3 189

(Gains) losses on long-term investments, net

( 341 ) — ( 1 )

Deferred income taxes 248 ( 1,163 ) ( 1,019 )

Inventory loss at contract manufacturer 65 — —

Inventory loss at (recovery from) contract manufacturer ( 67 ) 65 —

Other 120 125 45

3 unchanged sentences

Prepaid expenses and other assets ( 11 ) 339 ( 390 )

Receivables from and payable to related parties, net 108 ( 107 ) 366

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

4 unchanged sentences

Proceeds from sale of short-term investments 80 616 300

Cash received from acquisition of Xilinx — — 2,366

Acquisitions, net of cash acquired ( 1,760 ) ( 548 ) ( 131 )

Related party equity method investment ( 17 ) — —

Issuance of loan to related party ( 100 ) — —

Purchases of strategic investments

Related party loan and equity method investment — ( 117 ) —

Purchases of long-term investments

( 502 ) ( 341 ) ( 11 )

Other 2 — ( 11 )

Net cash provided by (used in) investing activities ( 1,101 ) ( 1,423 ) 1,999

Net cash used in investing activities of continuing operations

( 6,851 ) ( 1,101 ) ( 1,423 )

Proceeds from divestiture, net of cash divested

Purchases of property and equipment

Net cash provided by investing activities of discontinued operations

Net cash used in investing activities ( 5,533 ) ( 1,101 ) ( 1,423 )

Cash flows from financing activities:

Proceeds from debt, net of issuance costs — — 991

Repayment of debt ( 750 ) — ( 312 )

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

1 unchanged sentence

Stock repurchases for tax withholding on employee equity plans ( 607 ) ( 728 ) ( 427 )

Settlement of contingent consideration liability

Other — ( 1 ) ( 2 )

Net cash used in financing activities ( 431 ) ( 2,062 ) ( 1,146 )

( 2,062 ) ( 1,146 ) ( 3,264 )

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

3,933 4,835 2,535

Cash, cash equivalents and restricted cash at end of year $ 5,556 $ 3,811 $ 3,933

$ 3,811 $ 3,933 $ 4,835

Table of Conten t s

Advanced Micro Devices, Inc.

9 unchanged sentences

Purchases of property and equipment, accrued but not paid $ 129 $ 144 $ 106

Issuance of common stock and treasury stock for the acquisition of Xilinx $ — $ — $ 48,514

Fair value of replacement share-based awards related to acquisition of Xilinx $ — $ — $ 275

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:

5 unchanged sentences

See accompanying notes to the Consolidated Financial Statements.

Table of Conten t s

Advanced Micro Devices, Inc.

5 unchanged sentences

and its consolidated subsidiaries.

AMD’s products include Artificial Intelligence (AI) Accelerators, x86 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), Smart Network Interface Cards (SmartNICs), and Adaptive SoC products.

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.

3 unchanged sentences

Fiscal years 2025, 2024 and 2023 ended on December 27, 2025, December 28, 2024 and December 30, 2023, respectively.

Fiscal years 2024 and 2023 each consisted of 52 weeks, while fiscal year 2022 consisted of 53 weeks.

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.

Upon consolidation, all inter-company accounts and transactions have been eliminated.

Reclassification and Change in Presentation.

Unbilled receivables of $ 1.1 billion as of December 30, 2023 were reclassified from within Accounts receivable, net to within Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets and in the Statements of Cash Flows to conform to current period 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.

3 unchanged sentences

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, and income taxes.

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

10 unchanged sentences

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.

Table of Conten t s

The Company offers incentive programs to certain customers, including cooperative advertising, marketing promotions, volume-based incentives and special pricing arrangements.

6 unchanged sentences

Custom products

Custom products, which are primarily associated with the Company’s 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.

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.

20 unchanged sentences

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 .

Table of Conten t s

Business Combinations

The Company is required to use the acquisition method of accounting for business combinations.

The acquisition method of accounting requires the Company to allocate 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 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.

Critical estimates in valuing intangible assets include, but are not limited to, expected future revenue growth rates and margins, future changes in technology, time to recreate customer relationships, useful lives, and discount rates.

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.

2 unchanged sentences

The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment.

The Company has the option to first perform qualitative testing to determine if it is more likely than not that the fair value of a reporting unit exceeds its carrying amount.

Qualitative factors include industry and market considerations, overall financial performance, share price trends and market capitalization and Company-specific events.

If the Company concludes it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, the Company does not proceed to perform a quantitative impairment test.

If the Company concludes it is more likely than not that the fair value of a reporting unit is less than its carrying value or elects to bypass the qualitative test, a quantitative goodwill impairment test will be performed by comparing the fair value of each reporting unit to its carrying value.

If a reporting unit’s fair value is determined to be less than its carrying value, a goodwill impairment charge is recognized for the amount by which the reporting unit’s fair value is less than its carrying value, not to exceed the total amount of goodwill allocated to that reporting unit.

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.

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.

When indicators of impairment exist and assets are held for use, the Company estimates 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.

Factors affecting impairment of assets held for use include the ability of the specific assets to generate separately identifiable positive cash flows.

When assets are removed from operations and held for sale, the Company estimates impairment losses as the excess of the carrying value of the assets over their fair value.

Market conditions are among the factors affecting impairment of assets held for sale.

Changes in any of these factors could necessitate impairment recognition in future periods for assets held for use or assets held for sale.

Cash Equivalents

9 unchanged sentences

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 as a separate component on the Consolidated Statements of Comprehensive Income until realized.

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.

Expected credit losses on securities are recognized in other income (expense) on the Consolidated Statements of Operations, and any remaining unrealized losses, net of tax, are included in Accumulated other comprehensive income (loss), in Consolidated Statements of Stockholders’ Equity.

The Company uses the first-in, first-out method as basis of the cost of securities sold.

Strategic Non-marketable Equity Securities.

The Company’s investments in non-marketable securities of privately-held companies are 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.

The Company's periodic assessment of impairment is made by considering available evidence, including the investee’s general market and industry conditions and product development status.

The Company also assesses the investee’s ability to meet business milestones, its financial condition, and near-term prospects, including the rate at which the investee is using its cash, the investee’s need for possible additional funding at a lower valuation and any bona fide offer to purchase the investee.

Table of Conten t s

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

11 unchanged sentences

Property and equipment are stated at cost.

Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of two to 15 years for equipment, 34 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.

Operating and finance leases are recorded as right-of-use (ROU) assets and lease liabilities on the Company’s Consolidated Balance Sheets.

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.

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.

5 unchanged sentences

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 operating lease ROU assets, other current liabilities, and long-term operating lease liabilities on the Company’s Consolidated Balance Sheets.

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.

Table of Conten t s

Foreign Currency Translation/Transactions

7 unchanged sentences

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 upon agreement with customers and vendor partners.

Cooperative advertising expenses are recorded as marketing, general and administrative expense to the extent the cash paid does not exceed the estimated fair value of the advertising benefit received.

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.

Total marketing and advertising expenses for 2024, 2023 and 2022 were approximately $ 1.2 billion, $ 695 million and $ 683 million, respectively.

Marketing and advertising expenses for 2025, 2024 and 2023 were approximately $ 2.4 billion, $ 1.2 billion and $ 695 million, respectively.

Stock-Based Compensation

6 unchanged sentences

Contingencies

From time to time the Company is a defendant or plaintiff in various legal actions that arise in the normal course of business.

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.

7 unchanged sentences

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 income taxes are recorded within the Income tax provision (benefit) line in the Company’s Consolidated Statements of Operations.

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.

Table of Conten t s

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 November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2023-07 Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures to enhance disclosures about significant segment expenses.

This ASU is effective for the Company’s fiscal year 2024 and interim periods in fiscal year 2025.

The Company adopted this standard in the fourth quarter of 2024.

See Note 4 - Segment Reporting for further information.

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 December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures 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.

This ASU is effective for the Company’s fiscal year 2025.

Early adoption is permitted.

The Company is currently evaluating income tax disclosures related to its annual report for fiscal year 2025.

In November 2024, the FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

The new guidance is intended to provide investors enhanced disclosures and requires public companies to disaggregate key expense types.

The update is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

The disclosure updates are required to be applied prospectively with the option for retrospective application.

The Company is currently evaluating the impact of this new standard on its Consolidated 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 Consolidated Financial Statements .

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.

NOTE 3 – Supplemental Financial Statement Information

5 unchanged sentences

Total inventories $ 7,920 $ 5,734

Prepaid Expenses and Other Current Assets

2024 December 30,

(In millions)

Unbilled receivables

$ 628 $ 1,053

Total prepaid expenses and other current assets

$ 1,878 $ 2,312

Property and Equipment, net

14 unchanged sentences

Customer-related liabilities 1,194 1,349

Other accrued and current liabilities 674 583

Other accrued expenses and liabilities 957 674

Total accrued liabilities $ 5,250 $ 4,260

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 development services, IP licensing and product revenue.

Table of Conten t s

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.

1 unchanged sentence

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

2 unchanged sentences

The CODM is regularly provided segment operating income to assess relative segment performance.

The Company’s four reportable segments are:

• the Data Center segment, which primarily includes Artificial Intelligence (AI) accelerators, server microprocessors (CPUs), graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), Smart Network Interface Cards (SmartNICs) and Adaptive System-on-Chip (SoC) products for data centers;

• the Client segment, which primarily includes CPUs, APUs, and chipsets for desktops and notebooks;

• the Gaming segment, which primarily includes discrete GPUs, and semi-custom SoC products and development services;

• the Embedded segment, which primarily includes embedded CPUs, GPUs, APUs, FPGAs, System on Modules (SOMs), and Adaptive SoC products.

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;

• 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.

1 unchanged sentence

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 and licensing gain.

Acquisition-related and other costs primarily include transaction costs, purchase price fair value adjustments for inventory, certain compensation charges, contract termination costs and workforce rebalancing charges.

The following table provides a summary of net revenue and operating income (loss) by segment for 2024, 2023 and 2022.

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.

Table of Conten t s

2025 December 28,

2 unchanged sentences

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

2 unchanged sentences

$ 13,032 $ 9,097 $ 5,229

6,157 4,697 5,011

Client and Gaming

11,695 8,462 9,938

5 unchanged sentences

Data Center $ 3,603 $ 3,482 $ 1,267

Client 897 ( 46 ) 1,190

Gaming 290 971 953

Client and Gaming

2,855 1,187 925

Embedded 1,243 1,421 2,628

All Other ( 4,190 ) ( 4,419 ) ( 4,979 )

( 4,007 ) ( 4,190 ) ( 4,419 )

Total operating income

$ 3,694 $ 1,900 $ 401

Segment cost of sales and operating expenses primarily include material, external manufacturing, labor and marketing and advertising costs, and exclude expenses and credits that are recorded within the All Other category.

The following table provides items included in All Other category:

7 unchanged sentences

Restructuring charges — 186 —

Inventory loss at contract manufacturer 65 — —

Inventory loss at (recovery from) contract manufacturer ( 67 ) 65 —

Licensing gain ( 67 ) ( 48 ) ( 34 )

Other expense

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.

Table of Conten t s

The following table summarizes sales to external customers by geographic regions based on billing location of the customer:

4 unchanged sentences

China (including Hong Kong) 7,751 6,231 3,417

Singapore 3,614 2,231 1,380

Taiwan 5,186 3,301 1,841

Japan 1,767 4,629 4,177

Europe 1,625 2,030 1,773

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

The following table summarizes sales to a major customer that accounted for at least 10% of the Company’s consolidated net revenue for the respective years:

2024 December 30,

2023 December 31,

Customer A Gaming * 18 % 16 %

Less than 10%

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:

4 unchanged sentences

Canada 142 104

Ireland 46 46

China (including Hong Kong) 38 42

Other countries 296 246

Total property and equipment, net $ 2,312 $ 1,802

NOTE 5 – Business Combinations

NOTE 5 – Acquisitions and Divestitures

Fiscal Year 2025 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 in an all-cash transaction of $665 million.

Net of closing adjustments, transaction costs and deferred cash compensation, the purchase consideration of $ 553 million 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 who will help the Company accelerate the deployment and development of AI models and software solutions on AMD hardware.

Silo AI financial results, which were not material, were included in the Company's Statement of Operations from the date of acquisition primarily within the Data Center segment.

Pending Acquisition of ZT Systems

On August 17, 2024, the Company entered into an agreement (the Agreement) to acquire ZT Group Int’l, Inc.

(ZT Systems), a provider of AI and general purpose compute infrastructure for hyperscale computing companies, in a cash and stock transaction valued at approximately $4.9 billion (the Acquisition).

The aggregate closing consideration payable by the Company consists of 8,335,852 shares of the Company’s common stock and $ 3.4 billion in cash.

Contingent consideration of up to 740,964 shares of the Company’s common stock and up to $ 300 million of cash is payable by the Company to the extent certain conditions are met.

The Agreement provides that if the Acquisition is not completed by August 17, 2025, subject to two automatic extensions until February 17, 2026, the Company will pay a termination fee of $ 300 million.

The Acquisition is expected to close in the first half of 2025, subject to certain regulatory approvals and other customary closing conditions.

The Company intends to seek a strategic partner to acquire ZT Systems' manufacturing business.

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

Fair value of 8,335,849 shares (1) issued on Acquisition Date

Fair value of contingent consideration (2) on Acquisition Date

Total purchase consideration

(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.

Table of Conten t s

The purchase consideration was preliminarily allocated as follows (in millions):

Cash and cash equivalents $ 1,500

Assets held for sale

Total assets acquired

Liabilities held for sale

Other liabilities

Total liabilities assumed

Fair value of net assets acquired 4,201

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

Change in fair value 121

Settlement in October 2025

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.

Table of Conten t s

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

During the year ended December 30, 2023, the Company completed business acquisitions for a total consideration of $ 134 million that resulted in the recognition of $ 49 million of identifiable net assets and $ 85 million of goodwill.

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

Pensando Acquisition

On May 26, 2022, the Company completed the acquisition of all issued and outstanding shares of Pensando, a leader in next-generation distributed computing, for a transaction valued at approximately $ 1.9 billion.

The recorded purchase consideration of $ 1.7 billion is net of deferred cash compensation requiring future services and other customary closing adjustments.

The purchase consideration was allocated to $ 349 million of intangible assets, $ 208 million of identifiable net assets, and $ 1.1 billion of goodwill.

From the acquisition date to December 30, 2022, the Consolidated Statements of Operations include immaterial revenue and operating results attributable to Pensando, which are reported under the Data Center segment.

In 2023 and 2022, Pensando acquisition-related costs of $ 190 million and $ 102 million were recorded under Cost of sales, Research and development, and Marketing, general and administrative expenses on the Company’s Consolidated Statements of Operations.

Pensando acquisition-related costs were immaterial in 2024.

Acquisition-related costs are primarily comprised of direct transaction costs, fair value adjustments for acquired inventory and certain compensation charges.

Xilinx Acquisition

On February 14, 2022 (Xilinx Acquisition Date), the Company completed the acquisition of all issued and outstanding shares of Xilinx, a leading provider of adaptive computing solutions, for a total purchase consideration of $ 48.8 billion ($ 46.4 billion, net of cash acquired of $ 2.4 billion).

The purchase consideration was allocated to $ 27.3 billion of intangible assets, $ 1.3 billion of identifiable net liabilities, and $ 22.8 billion of goodwill.

The Consolidated Statements of Operations include the following revenue and operating income attributable to Xilinx in 2022:

(In millions)

Net revenue $ 4,612

Operating income $ 2,247

In 2022, operating income attributable to Xilinx recorded under the Embedded and Data Center segments does not include $4.2 billion of amortization of acquisition-related intangibles, employee stock-based compensation expense and acquisition-related costs, which are recorded under the “All Other” segment.

In 2023 and 2022, Xilinx acquisition-related costs of $ 26 million and $ 350 million were recorded under Cost of sales, Research and development, and Marketing, general and administrative expenses on the Company’s Consolidated Statements of Operations.

Xilinx acquisition-related costs in 2024 were immaterial.

Acquisition-related costs are primarily comprised of direct transaction costs, fair value adjustments for acquired inventory and certain compensation charges.

Supplemental Unaudited Pro Forma Information

Following are the supplemental consolidated financial results of the Company, Xilinx and Pensando on an unaudited pro forma basis, as if the acquisitions had been consummated as of the beginning of the fiscal year 2022.

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.

NOTE 6 – Goodwill and Acquisition-related Intangibles, net

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.

Table of Conten t s

The following table summarizes Goodwill:

Before segment change

After segment change

(in millions)

Net revenue $ 24,117

Net income $ 2,311

NOTE 6 – Acquisition-related Intangible Assets and Goodwill

Client and Gaming

December 28, 2024

$ 3,403 $ 21,072 $ 126 $ 238 $ — $ 24,839

Reassignment due to segment change

— — (126) (238) 364 —

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

5 unchanged sentences

Customer relationships 12,324 ( 6,267 ) 6,057 12,324 ( 5,124 ) 7,200

Customer backlog 809 ( 809 ) — 809 ( 809 ) —

Corporate trade name 65 ( 65 ) — 65 ( 65 ) —

Product trademarks 914 ( 305 ) 609 914 ( 225 ) 689

Intangible assets subject to amortization

27,520 ( 8,752 ) 18,768 27,502 ( 6,359 ) 21,143

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 $ 27,682 $ ( 8,752 ) $ 18,930 $ 27,722 $ ( 6,359 ) $ 21,363

Acquisition-related intangible amortization expense was $ 2.4 billion and $ 2.8 billion in fiscal year 2024 and 2023, respectively.

During the fourth quarter of fiscal year 2024, the Company determined that the fair value of certain IPR&D recorded within the Data Center segment was not recoverable resulting from actions related to the 2024 Restructuring Plan, and recorded an impairment charge of $ 58 million within Restructuring charges in the Company’s Consolidated Statement of Operations.

Based on the carrying value of acquisition-related intangibles recorded as of December 28, 2024, and assuming no subsequent impairment of the underlying assets, the estimated annual amortization expense for acquisition-related intangibles is expected to be as follows:

Fiscal Year (In millions)

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:

2026 2027 2028 2029 2030 2031 and thereafter

Total $ 18,768

The following table summarizes changes in the carrying amount of Goodwill:

December 31, 2022 Acquisitions December 30, 2023 Acquisitions December 28,

(In millions) (In millions)

Data Center $ 2,884 $ 58 $ 2,942 $ 461 $ 3,403

Client — 18 18 108 126

Gaming 238 — 238 — 238

Embedded 21,055 9 21,064 8 21,072

Total $ 24,177 $ 85 $ 24,262 $ 577 $ 24,839

During the fourth quarter of fiscal years 2024 and 2023, the Company conducted its annual qualitative impairment tests of goodwill and concluded that there was no goodwill impairment with respect to its reporting units.

(In millions)

Future annual amortization

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

Table of Conten t s

NOTE 7 – Related Parties—Equity Joint Ventures

3 unchanged sentences

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 assists the ATMP JV in its management of certain raw material inventory.

The purchases from and resales to the ATMP JV of inventory under the Company’s inventory management program are reported within purchases and resales with the ATMP JV and do not impact the Company’s Consolidated Statement of Operations.

The Company’s purchases from the ATMP JV during each of the years 2024 and 2023 amounted to $ 1.7 billion .

As of December 28, 2024 and December 30, 2023, the amounts payable to the ATMP JV were $ 476 million and $ 363 million, respectively, and are included in Payables to related parties on the Company’s Consolidated Balance Sheets.

The Company’s resales to the ATMP JV during 2024 and 2023 amounted to $ 121 million and $ 14 million, respectively .

As of December 28, 2024 and December 30, 2023, the Company had receivables from ATMP JV of $ 12 million and $ 9 million, respectively , included in Receivables from related parties on the Company’s Consolidated Balance Sheets.

On October 9, 2024, the Company entered into a one-year term loan agreement with one of the ATMP JVs for $ 100 million to provide funds for the ATMP JV’s general corporate purposes.

The loan bears interest, payable quarterly, at the three months term Secured Overnight Financing Rate (SOFR) plus 50 basis points.

The loan is secured by the ATMP JV’s receivable balance due from the Company.

The loan may be extended for further terms of up to twelve months.

The loan is recorded within Receivables from related parties on the Company’s Consolidated Balance Sheets.

During 2024, 2023 and 2022, the Company recorded gains of $ 33 million, $ 16 million and $ 14 million in Equity income in investee on its Consolidated Statement of Operations, respectively.

On August 8, 2024, the Company contributed $ 17 million to the ATMP JV, representing additional equity that is in proportion to the Company’s existing 15% equity interest.

As of December 28, 2024 and December 30, 2023, the carrying value of the Company’s investment in the ATMP JV was approximately $ 149 million and $ 99 million, respectively, recorded as Investments:

equity method on the Company’s Consolidated Balance Sheets.

THATIC Joint Ventures

The Company holds equity interests in two joint ventures (collectively, the THATIC JV) with Higon Information Technology Co., Ltd.

(THATIC), a third-party Chinese entity.

As of December 28, 2024 and December 30, 2023, the carrying value of the investment was zero.

In February 2016, the Company licensed certain of its intellectual property (Licensed IP) to the THATIC JV, payable over several years upon achievement of certain milestones.

The Company also receives a royalty based on the sales of the THATIC JV’s products developed on the basis of such Licensed IP.

The Company classifies Licensed IP and royalty income associated with the February 2016 agreement as Licensing gain within operating income.

During 2024 and 2023, the Company recognized $ 48 million and $ 34 million of licensing gain from royalty income under the agreement, respectively.

As of December 28, 2024 and December 30, 2023, the Company had no receivables from the THATIC JV.

In June 2019, the Bureau of Industry and Security of the United States Department of Commerce added certain Chinese entities to the Entity List, including THATIC and the THATIC JV.

The Company is complying with U.S.

law pertaining to the Entity List designation.

NOTE 8 – Debt and Revolving Credit Facility

The Company’s total debt as of December 28, 2024 and December 30, 2023 consisted of:

2024 December 30,

(In millions)

2.950 % Senior Notes Due 2024 (2.950% Notes)

2.375 % Senior Notes Due 2030 (2.375% Notes)

3.924 % Senior Notes Due 2032 ( 3.924 % Notes)

4.393 % Senior Notes Due 2052 ( 4.393 % Notes)

Total debt (principal amount) 1,750 2,500

Unamortized debt discount and issuance costs ( 29 ) ( 32 )

Total debt (net) 1,721 2,468

current portion of long-term debt and related unamortized debt premium and issuance costs — ( 751 )

Total long-term debt $ 1,721 $ 1,717

Assumed Xilinx Notes due 2024 and 2030

In connection with the acquisition of Xilinx, the Company assumed $ 1.5 billion in aggregate principal of Xilinx’s 2.950% Notes due 2024 and 2.375% Notes due 2030 (together, the Assumed Xilinx Notes ) which were recorded at fair value as of the Xilinx Acquisition Date.

The Assumed Xilinx Notes are general unsecured senior obligations of the Company with semi-annual fixed interest payments due on June 1 and December 1.

The 2.95% Notes with a principal amount of $750 million were repaid in June 2024.

3.924% Senior Notes Due 2032 and 4.393% Senior Notes Due 2052

On June 9, 2022, the Company issued $1.0 billion in aggregate principal amount of 3.924 % Notes and 4.393 % Notes.

The 3.924 % Notes and 4.393 % Notes are general unsecured senior obligations of the Company.

The interest is payable semi-annually on June 1 and December 1 of each year, commencing on December 1, 2022.

The 3.924 % and 4.393 % Notes are governed by the terms of an indenture dated June 9, 2022 between the Company and US Bank Trust Company, National Association as trustee.

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.

Future Payments on Total Debt

As of December 28, 2024, the Company’s future debt payment obligations were as follows:

(Principal only)

(In millions)

2030 and thereafter

Total $ 1,750

Revolving Credit Facility

The Company has $ 3 billion available under a revolving credit agreement, as amended, that expires on April 29, 2027 (Revolving Credit Agreement).

As of December 28, 2024 and December 30, 2023, the Company had no outstanding borrowings under the Revolving Credit Agreement.

Revolving loans under the Revolving Credit Agreement can be either Secure Overnight Financing Rate (SOFR) Loans or Base Rate Loans (each as defined in the Revolving Credit Agreement) at the Company's option.

Each SOFR Loan will bear interest at a rate per annum equal to the applicable SOFR plus a margin between 0.575% and 1.20%.

Each Base Rate Loan will bear interest equal to the Base Rate plus a margin between 0.000% and 0.20%.

The Revolving Credit Agreement also contains a sustainability-linked pricing component which provides for interest rate and facility fee reductions or increases based on the Company meeting or missing targets related to environmental sustainability, specifically greenhouse gas emissions.

The Revolving Credit Agreement contains customary representations and warranties, affirmative and negative covenants, and events of default applicable to the Company and its subsidiaries.

As of December 28, 2024, the Company was in compliance with these covenants.

Commercial Paper

On November 3, 2022, the Company established a commercial paper program, under which the Company may issue unsecured commercial paper notes up to a maximum principal amount outstanding at any time of $ 3 billion with a maturity 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 issuance.

During 2024 and 2023, the Company did not issue any commercial paper under the program and as of December 28, 2024 and December 30, 2023, the Company had no commercial paper outstanding.

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

2 unchanged sentences

(In millions) Level 1 Level 2 Level 3

Total Level 1 Level 2 Total

Total Level 1 Level 2 Level 3

Cash equivalents

6 unchanged sentences

Corporate debt securities — 3,107 — 3,107 — 814 — 814

Time deposits and certificates of deposits — 10 — 10 — 9 9

Asset-backed and mortgage-backed securities — 28 — 28 — 34 34

government and agency securities 901 718 — 1,619 332 82 — 414

government and agency securities — 256 — 256 — 79 — 79

Other non-current assets

Time deposits and certificates of deposits — 10 — 10 — 10 — 10

Deferred compensation plan and other investments 197 — 25 222 133 — 133

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.

Table of Conten t s

The following is a summary of cash equivalents and short-term investments:

2 unchanged sentences

(in millions) (in millions)

Asset-backed and mortgage-backed securities $ 30 $ — $ ( 2 ) $ 28 $ 35 $ — $ ( 2 ) $ 33

Corporate debt securities 1,621 — ( 1 ) 1,620 1,259 — — 1,259

Money market funds $ 620 $ — $ — $ 620 $ 1,496 $ — $ — $ 1,496

Time deposits and certificates of deposits 117 — — 117 214 — — 214

Corporate debt securities 4,974 2 — 4,976 1,621 — ( 1 ) 1,620

government and agency securities 3,065 2 — 3,067 544 — — 544

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

9 unchanged sentences

Financial Instruments Measured at Fair Value on a Non-Recurring Basis

As of December 28, 2024 and December 30, 2023, the Company had non-marketable securities in privately-held companies of $ 468 million and $ 155 million, respectively, which are recorded at estimated fair value based on Level 3 inputs.

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.

Table of Conten t s

Financial Instruments Not Recorded at Fair Value

14 unchanged sentences

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 28, 2024 is recorded within Prepaid expenses and other current assets, Accrued liabilities and Other long-term liabilities of $ 6 million, $ 60 million and $ 11 million, respectively.

As of December 30, 2023, the fair value of these contracts was recorded within Prepaid expenses and other current assets and Accrued liabilities of $ 24 million and $ 18 million, 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

1 unchanged sentence

These forward contracts generally mature within 3 months and are not designated as accounting hedges.

As of December 28, 2024 and December 30, 2023, the notional value of these outstanding contracts was $ 642 million and $ 568 million, respectively.

The fair value of these contracts was not material as of December 28, 2024 and December 30, 2023.

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.

Table of Conten t s

NOTE 9 – Debt, Revolving Credit Facility and Commercial Paper Program

The Company’s total debt as of December 27, 2025 and December 28, 2024 consisted of:

2025 December 28,

(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

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:

2026 2027 2028 2029 2030 2031 and thereafter

(In millions)

Term Debt (Principal only)

$ 875 $ — $ 625 $ — $ 750 $ 1,000 $ 3,250

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:

2025 December 28,

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:

2026 2027 2028 2029 2031 2031 and thereafter

(In millions)

Minimum lease payments

$ 192 $ 149 $ 120 $ 113 $ 100 $ 263 $ 937

Present value of net minimum lease payments

current portion

Total long-term operating lease liabilities

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.

Table of Conten t s

The Company places its investments with high credit quality financial institutions.

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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

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:

2026 2027 2028 2029 2030 2031 and thereafter

(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:

2025 December 28,

(In millions)

Beginning balance $ 188 $ 85

Provisions during the period 358 213

Settlements during the period ( 238 ) ( 110 )

Ending balance $ 308 $ 188

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

Basic earnings per share is computed based on the weighted-average number of shares outstanding.

Diluted earnings per share is computed based on the weighted-average number of shares outstanding plus potentially dilutive shares outstanding during the period.

Potentially dilutive shares are determined by applying the treasury stock method to the Company’s stock options, RSUs (including PRSUs), common stock to be issued under the ESPP and warrants.

The following table sets forth the components of basic and diluted earnings per share:

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(In millions, except per share amounts)

Net income for basic earnings per share $ 1,641 $ 854 $ 1,320

Income from continuing operations $ 4,269 $ 1,641 $ 854

Income from discontinued operations 66 — —

Net income $ 4,335 $ 1,641 $ 854

Basic weighted average shares 1,624 1,620 1,614

Effect of potentially dilutive shares from employee equity plans

Potentially dilutive shares from employee equity plans 12 17 11

Diluted weighted average shares 1,636 1,637 1,625

Earnings per share:

Basic $ 1.01 $ 0.53 $ 0.85

Diluted $ 1.00 $ 0.53 $ 0.84

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.

Table of Conten t s

NOTE 14– Common Stock and Stock-Based Compensation

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Balance, beginning of period 1,622 1,616 1,612

Common stock issued in the acquisition of Xilinx — — 429

Common stock issued in the acquisition of ZT Systems

Common stock issued under employee equity plans 15 17 17

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Stock Repurchase Program

The Company has an approved stock repurchase program authorizing repurchases of up to $ 12 billion of the Company’s common stock (Repurchase Program).

During the year ended December 28, 2024, the Company repurchased 5.9 million shares of its common stock under the Repurchase Program for $ 862 million.

As of December 28, 2024, $ 4.7 billion remained available for future stock repurchases under this program.

This Repurchase Program does not obligate the Company to acquire any common stock, has no termination date and may be suspended or discontinued at any time.

On May 13, 2025, the Company’s board of directors approved a new $6 billion share repurchase program.

The authorization is in addition to the Company’s existing share repurchase program (collectively, the Repurchase Program), increasing the total repurchase authority to $ 14 billion.

During 2025, the Company repurchased 12 million shares of its common stock under the Repurchase Program for $ 1.3 billion.

The repurchased amounts do not include the 1% excise tax on stock repurchases enacted by the Inflation Reduction Act of 2022.

As of December 27, 2025, $ 9.4 billion remained available for future stock repurchases under the Repurchase Program.

The Repurchase Program does not obligate the Company to acquire any common stock, has no termination date and may be suspended or discontinued at any time.

In October 2025, the Company issued to OpenAI OpCo, LLC (the Warrantholder) a warrant to purchase up to an aggregate of 160 million shares of the Company’s common stock at an exercise price of $ 0.01 per share.

The warrant shares will vest in tranches based on AMD Instinct GPU purchase milestones by the Warrantholder, or its affiliates, or indirectly through third parties, and achievement of specified Company 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 terms and conditions, the warrant is exercisable through October 5, 2030.

None of the warrant shares had met the vesting or exercise conditions as of December 27, 2025 and the issuance of the warrant had no impact to the Company's financial statements for the year ended December 27, 2025.

The Company will account for the warrant shares as a liability until certain conditions for equity classification are satisfied.

Stock-Based Compensation

The Company’s employee equity programs are intended to attract, retain and motivate highly qualified employees.

On May 18, 2023, the Company’s stockholders approved the AMD 2023 Equity Incentive Plan (the 2023 Plan), which supersedes the AMD 2004 Equity Incentive Plan and the Xilinx, Inc.

2007 Equity Incentive Plan (the Prior Plans).

Outstanding awards granted under the Prior Plans will continue to be governed by the terms of the Prior Plans but no awards may be made under the Prior Plans on or after May 18, 2023.

On May 18, 2023, the Company’s stockholders approved the AMD 2023 Equity Incentive Plan (the 2023 Plan).

Under the 2023 Plan, 87,645,874 shares of the Company’s common stock are reserved and available for delivery pursuant to awards granted under the 2023 Plan.

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Stock Options.

Under the 2023 Plan, nonstatutory and incentive stock options may be granted.

Nonstatutory and incentive stock options may be granted to certain of the Company’s senior executives.

The exercise price of the shares subject to each nonstatutory stock option and incentive stock option cannot be less than 100 % of the fair market value of the Company’s common stock on the date of the grant.

The exercise price of each option granted under the 2023 Plan must be paid in full at the time of the exercise.

Table of Conten t s

Time-based RSUs.

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The offering periods commence in May and November each year.

As of December 28, 2024, the Company had 60 million shares of common stock that were available for future grants and 34 million shares reserved for issuance upon the exercise of outstanding stock options or the vesting of unvested RSUs, including PRSUs, under the 2023 Plan and the Prior Plans.

As of December 27, 2025, the Company had 47 million shares of common stock that were available for future grants and 36 million shares reserved for issuance upon the exercise of outstanding stock options or the vesting of unvested RSUs, including PRSUs.

Valuation and Expense

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The expected term of employee stock options represents the weighted-average period the stock options are expected to remain outstanding.

Table of Conten t s

The following table summarizes stock option activity and related information:

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Unvested shares as of December 27, 2025 33 $ 138.14

The total fair value of time-based RSUs vested during 2024, 2023 and 2022 was $ 2.0 billion, $ 1.1 billion and $ 889 million, respectively.

The total fair value of time-based RSUs vested during 2025, 2024 and 2023 was $ 1.8 billion, $ 2.0 billion and $ 1.1 billion, respectively.

As of December 27, 2025, the Company had $ 3.5 billion of total unrecognized compensation expense related to time-based RSUs, which will be recognized over the weighted-average period of 2.64 years.

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The expected term of PRSUs represents the requisite service periods of these PRSUs.

Table of Conten t s

The following table summarizes PRSU activity and related information:

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NOTE 16 – Restructuring Charges

In the fourth quarter of 2024, the Company implemented a restructuring plan (the 2024 Restructuring Plan) focused on driving efficiencies and aligning resources with the Company’s largest growth opportunities in the AI and enterprise markets.

The 2024 Restructuring Plan will primarily reduce global workforce by approximately 4% of headcount.

Restructuring charges are included within the All Other category presented in Note 4 – Segment Reporting.

Significant asset impairment charges are discussed in Note 6 - Acquisition-related Intangible Assets and Goodwill.

The Company expects actions associated with the 2024 Restructuring Plan to be substantially completed by the end of the first quarter of fiscal year 2025.

As of December 28, 2024, $ 89 million of accrued restructuring charges are recorded within Accrued liabilities of the Company’s Consolidated Balance Sheets.

The following table summarizes activities and components of liabilities related to the 2024 Restructuring Plan:

Employee severance and benefits

Asset impairment

(in millions)

Liability as of December 30, 2023

Current period costs

Cash payments

( 24 ) — ( 24 )

Non-cash charges

— ( 73 ) ( 73 )

Liability as of December 28, 2024

$ 89 $ — $ 89

In the fourth quarter of 2024, the Company implemented a restructuring plan (the 2024 Restructuring Plan) which reduced the global workforce by approximately 4% of headcount.

Actions associated with the 2024 Restructuring Plan were substantially completed in the first quarter of fiscal year 2025.

The 2024 Restructuring Plan charges to date were $ 186 million, of which $ 113 million was related to employee severance and benefits and $ 73 million was related to asset impairment.

For 2025 and 2024, the Company made $ 79 million and $ 24 million of severance payments, respectively.

In 2025, there were no charges or adjustments to period expenses under the 2024 Restructuring Plan.

As of December 27, 2025 and December 28, 2024, restructuring plan liabilities of $ 10 million and $ 89 million, respectively, were recorded within Accrued liabilities in the Company’s Consolidated Balance Sheets.

Table of Conten t s

NOTE 17 – Income Taxes

Continuing Operations

In 2025, the Company adopted ASU 2023-09 with prospective application.

ASU 2023-09 updates disclosure requirements for the reconciliation of tax expense from continuing operations, income taxes paid and modifies other income tax-related disclosures.

Income before income taxes consists of the following:

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Income tax provision (benefit) $ ( 103 ) $ 381 $ ( 346 )

The table below displays the reconciliation between statutory federal income taxes and the total income tax provision (benefit).

December 28, 2024 December 30, 2023 December 31, 2022

Table of Conten t s

December 27, 2025

Amount Percentage

(In millions)

Statutory federal income tax expense at 21% $ 875 21.0 %

State taxes, net of federal benefit* 8 0.2 %

Foreign tax effects

Scientific Research and Experimental Development investment tax credits

( 55 ) ( 1.3 ) %

Valuation allowance

Other 25 0.6 %

Development and expansion incentive

Other 31 0.7 %

Other foreign jurisdictions

Effect of changes in tax laws or rates enacted in the current period

( 18 ) ( 0.4 ) %

Effect of cross-border tax laws

Global Intangible Low-Taxed Income (GILTI) 157 3.8 %

Foreign-Derived Intangible Income (FDII) deduction ( 195 ) ( 4.7 ) %

Other ( 27 ) ( 0.6 ) %

Research credits

( 211 ) ( 5.1 ) %

Other tax credits

( 31 ) ( 0.7 ) %

Nontaxable or nondeductible items

Stock-based and non-deductible employee compensation ( 88 ) ( 2.1 ) %

Tax effect from post-acquisition transaction

Other 8 0.2 %

Changes in unrecognized tax benefits (including interest and penalties)

( 793 ) ( 19.0 ) %

Income tax (benefit) $ ( 103 ) ( 2.5 ) %

* State tax expense in Illinois and Arizona made up the majority (greater than 50%) of the tax effect in this category

The following table presents required disclosures prior to the adoption of ASU 2023-09 and displays the reconciliation between statutory federal income taxes and the total income tax provision (benefit).

December 28, 2024 December 30, 2023

(in millions)

Statutory federal income tax expense at 21% $ 425 $ 107

Tax effect from intercompany integration transaction 373 —

Foreign rate detriment (benefit) 153 ( 11 )

153 ( 11 ) 195

Interest and penalty 136 53

State income taxes, net of federal benefit 22 ( 2 )

22 ( 2 ) ( 3 )

Foreign-Derived Intangible Income (FDII) deduction ( 275 ) ( 185 )

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Stock-based and non-deductible compensation ( 101 ) ( 17 )

Other 13 16 5

Income tax provision (benefit) $ 381 $ ( 346 )

The Company recorded an income tax provision of $ 381 million and an income tax benefit of $ 346 million in 2024 and 2023, respectively, representing effective tax rates of 19 % and ( 68 )%, respectively.

The increase in income tax provision in 2024 was primarily due to higher pre-tax income and a $373 million tax effect from an intercompany integration transaction.

Beginning in 2022, provisions in the U.S.

Tax Cuts and Jobs Act of 2017 require the Company to capitalize and amortize R&D expenditures rather than deducting the costs as incurred.

The capitalization resulted in an increase in 2024 and 2023 taxable income which also increased the income eligible for the FDII tax benefit.

As a part of the Xilinx acquisition and as a result of certain employment and operational commitments the Company has made in Singapore, the Company has been granted a Development and Expansion Incentive (DEI) that is effective through 2031.

Table of Conten t s

The Company 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 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 OBBBA was enacted into law.

For fiscal year 2025, the primary impact of the OBBBA to the Company’s tax provision was the accelerated expensing of domestic R&D activities which decreased the Company’s income eligible for FDII, reduced the Company’s deferred tax assets, and reduced the Company’s current income tax liability.

To the extent OBBBA changes impacted the Company’s effective tax rate reconciliation, the impacts are presented in the respective line items in the effective tax rate reconciliation table above.

The OBBBA also resulted in a remeasurement of GILTI deferred tax balances as presented on the line “Effect of changes in tax laws or rates enacted in the current period” in the effective tax rate reconciliation table above.

Other OBBBA changes did not have a material impact on the Company’s financial statements.

As part of the Xilinx acquisition and as a result of certain employment and operational commitments the Company has made in Singapore, the Company has been granted a Development and Expansion Incentive (DEI) that is effective through 2031.

The DEI reduces the local tax on Singapore income from a statutory rate of 17% to 5% through 2031.

The tax expense reflected in the Company’s effective tax rate reconciliation is primarily due to the difference in tax rates applied to the current year pre-tax loss.

Due to the current year pre-tax loss in Singapore, the Company did not receive any income tax or earnings per share benefit.

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Right-of-use assets ( 228 ) ( 182 )

Depreciation ( 101 ) ( 75 )

Other ( 180 ) ( 77 )

Total deferred tax liabilities ( 4,084 ) ( 4,170 )

Net deferred tax assets (liabilities) $ 339 $ ( 836 )

During 2024, the Company executed an intercompany integration transaction and remeasured associated deferred taxes, resulting in increases to the deferred tax liability for acquisition-related intangibles and the deferred tax asset for Capitalized R&D, partially offset by a decrease in the deferred tax liability for GILTI.

Net deferred tax assets $ 71 $ 339

Table of Conten t s

The reduction in the Company’s Net operating loss carryovers and the valuation allowance items followed the receipt of the reasonable cause relief for dual consolidated losses approved by the IRS in April 2025.

Other reductions in the Company’s net deferred tax assets during 2025 were primarily driven by the impact of OBBBA.

The movement in the deferred tax valuation allowance was as follows:

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Balance at end of year $ 1,338 $ 2,136 $ 2,124

Through the end of fiscal year 2024, the Company continued to maintain a valuation allowance of approximately $2.1 billion for certain federal, state, and foreign tax attributes.

The federal valuation allowance maintained is due to limitations under Internal Revenue Code Section 382 or 383, separate return loss year rules, or dual consolidated loss rules.

Certain state and foreign valuation allowance maintained is due to lack of sufficient sources of future taxable income.

Through the end of fiscal year 2025, the Company continued to maintain a valuation allowance of approximately $ 1.3 billion for certain state, and foreign tax attributes due to lack of sufficient sources of future taxable income.

The Company’s U.S.

federal and state net operating losses (NOLs) carryforwards as of December 27, 2025, were $ 94 million and $ 367 million, respectively.

NOLs may be subject to limitations by the Internal Revenue Code and similar provisions.

$ 20 million of U.S.

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State NOLs will expire at various dates through 2045.

The difference between the amount of federal NOLs which are recorded on the Company’s Consolidated Balance Sheets as deferred tax assets and their related valuation allowance, and the amounts reported on the Company’s tax returns are the result of uncertain tax positions the Company has taken for which an income tax reserve has been recorded.

The federal tax credits of $ 6 million will expire at various dates between 2040 and 2042.

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Decreases for tax positions taken in prior years ( 4 ) ( 18 ) ( 8 )

Increases to tax positions taken in prior years through acquisitions — — 252

Decreases for settlements with taxing authorities and statute of limitation lapses ( 28 ) — ( 6 )

Decreases for settlements with taxing authorities

Decreases for lapses in statutes of limitation

( 63 ) ( 28 ) —

Balance at end of year $ 806 $ 1,498 $ 1,463

The amount of unrecognized tax benefits that would impact the effective tax rate if recognized was $ 1.3 billion, $ 1.3 billion and $ 1.2 billion as of December 28, 2024, December 30, 2023 and December 31, 2022, respectively.

The amount of unrecognized tax benefits that would impact the effective tax rate if recognized was $ 571 million, $ 1.3 billion and $ 1.3 billion as of December 27, 2025, December 28, 2024 and December 30, 2023, respectively.

The Company had $ 190 million, $ 298 million and $ 142 million of accrued penalties and interest related to unrecognized tax benefits as of December 27, 2025, December 28, 2024 and December 30, 2023, respectively.

As of December 28, 2024 and December 30, 2023, the Company had long-term income tax liabilities related to unrecognized tax benefits of $ 1.4 billion, recorded under Other long-term liabilities in the Company’s Consolidated Balance Sheets.

As of December 27, 2025 and December 28, 2024, the Company had long-term income tax liabilities related to unrecognized tax benefits, which include interest and penalties, of $ 806 million and $ 1.5 billion, respectively, recorded under Other long-term liabilities in the Company’s Consolidated Balance Sheets.

The reduction in long-term income tax liabilities was primarily due to the release of $ 853 million of uncertain tax positions (including interest and penalties) following receipt of reasonable cause relief for dual consolidated losses approved by the IRS in April 2025.

The Company is subject to taxation in the U.S.

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tax returns for fiscal years 2018 and 2019 are currently under audit by the IRS.

It is possible the Company may have tax audits close in the next 12 months that could materially change the balance of the uncertain tax benefits;

however, the timing of tax audit closures and settlements are highly uncertain.

Under current U.S.

tax law, the impact of future distributions of undistributed earnings that are indefinitely reinvested are anticipated to be subject to withholding taxes from local jurisdictions and non-conforming U.S.

tax law, the impact of future distributions of earnings from foreign subsidiaries are anticipated to be subject to withholding taxes from local jurisdictions and non-conforming U.S.

state jurisdictions.

There were no cumulative undistributed earnings that are indefinitely reinvested that could be subject to withholding taxes as of December 28, 2024.

The deferred tax liability on these undistributed earnings is not material.

Table of Conten t s

The table below provides the updated requirements of ASU 2023-09 for cash paid for income taxes, net of refunds.

December 27, 2025

Cash paid for income taxes, net of refunds:

(In millions)

Federal $ 578

Total cash paid for income taxes, net of refunds

In 2025, cash paid for income taxes in California was $ 62 million.

The Company has elected a refundable credit for the payments made as a result of the Business Credit Limitation in California.

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.

NOTE 18 – Other Income (Expense), Net

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Interest income $ 215 $ 182 $ 206

Gains (losses) on equity investments, net 2 ( 1 ) ( 62 )

Gains (losses) on long-term investments, net

Other income (expense) ( 4 ) 1 ( 10 )

Other income (expense), net $ 577 $ 181 $ 197

NOTE 17 – Commitments and Guarantees

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 2024, 2023 and 2022, the Company recorded $ 147 million, $ 127 million and $ 118 million, respectively, of operating lease expense, including short-term lease expense.

For 2024, 2023, and 2022, the Company recorded $ 83 million, $ 46 million, and $ 40 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 2024, 2023, and 2022 cash paid for operating leases included in operating cash flows was $ 155 million $ 147 million and $ 108 million, respectively.

The Company’s finance and short-term leases are immaterial to the Company’s consolidated financial statements.

Supplemental information related to leases is as follows:

December 28, 2024

Weighted-average remaining lease term in years – operating leases 7.28

Weighted-average discount rate – operating leases 4.63 %

Future minimum lease payments under non-cancellable operating lease liabilities as of December 28, 2024 are as follows:

Year (In millions)

2030 and thereafter 235

Total minimum lease payments 724

interest ( 124 )

Present value of net minimum lease payments 600

current portion ( 109 )

Total long-term operating lease liabilities $ 491

Certain other operating leases contain provisions for escalating lease payments subject to changes in the consumer price index.

The Company’s purchase commitments primarily include the Company’s obligations to purchase wafers and substrates from third parties and future payments related to certain software and technology licenses and IP licenses.

Purchase commitments include obligations made under noncancellable purchase orders and contractual obligations requiring minimum purchases or for which cancellation would lead to significant penalties.

Total future unconditional purchase commitments as of December 28, 2024 were as follows:

Year (In millions)

2030 and thereafter 56

Total unconditional purchase commitments $ 4,968

On an ongoing basis, the Company works with suppliers on the timing of payments and deliveries of purchase commitments, taking into account business conditions.

Warranties and Indemnities

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 2024 and 2023 are as follows:

2024 December 30,

(In millions)

Beginning balance $ 85 $ 65

Provisions during the period 213 126

Settlements during the period ( 110 ) ( 106 )

Ending balance $ 188 $ 85

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.

NOTE 18 – Contingencies

Litigation and Other Legal Matters

As of December 28, 2024, there were no material legal proceedings.

The Company is a defendant or plaintiff in various actions that arose in the normal course of business.

NOTE 19 – Subsequent Events

Subsequent to December 27, 2025, the Company entered into an agreement to guarantee a commercial partner's data center lease obligations in the event of their default.

The maximum gross exposure is $ 4.1 billion, which will be reduced as the commercial partner makes payments to the lessor over 15 years, or if the commercial partner enters into an agreement to sell the data center capacity to a third party.

The fair value of the guarantee liability is not expected to be material to the Consolidated Financial Statements.

Table of Conten t s

Report of Independent Registered Public Accounting Firm

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The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Table of Conten t s

Inventory Valuation

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February 3, 2026

Table of Conten t s

Report of Independent Registered Public Accounting Firm

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February 3, 2026

Table of Conten t s

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data