ADVANCED MICRO DEVICES INC 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Advanced Micro Devices, Inc. Consolidated Statements of Operations Year Ended December 27, 2025 December 28, 2024 December 30, 2023 (In millions, except per share amounts) Net revenue $ 34,639 $ 25,785 $ 22,680 Cost of sales 16,456 12,114 11,278 Amortization of acquisition-related intangibles 1,031 946 942 Total cost of sales 17,487 13,060 12,220 Gross profit 17,152 12,725 10,460 Research and development 8,091 6,456 5,872 Marketing, general and administrative 4,144 2,735 2,318 Amortization of acquisition-related intangibles 1,223 1,448 1,869 Restructuring charges — 186 — Total operating expenses 13,458 10,825 10,059 Operating income 3,694 1,900 401 Interest expense ( 131 ) ( 92 ) ( 106 ) Other income (expense), net 577 181 197 Income from continuing operations before income taxes and equity income 4,140 1,989 492 Income tax provision (benefit) ( 103 ) 381 ( 346 ) Equity income in investee 26 33 16 Income from continuing operations, net of tax 4,269 1,641 854 Income from discontinued operations, net of tax 66 — — Net income $ 4,335 $ 1,641 $ 854 Earnings per share Earnings from continuing operations - basic $ 2.63 $ 1.01 $ 0.53 Earnings from discontinued operations - basic 0.04 — — Basic earnings per share $ 2.67 $ 1.01 $ 0.53 Earnings from continuing operations - diluted $ 2.61 $ 1.00 $ 0.53 Earnings from discontinued operations - diluted 0.04 — — Diluted earnings per share $ 2.65 $ 1.00 $ 0.53 Shares used in per share calculation Basic 1,624 1,620 1,614 Diluted 1,636 1,637 1,625 See accompanying notes to the Consolidated Financial Statements. 58 Table of Conten t s Advanced Micro Devices, Inc. Consolidated Statements of Comprehensive Income Year Ended December 27, 2025 December 28, 2024 December 30, 2023 (In millions) Net income $ 4,335 $ 1,641 $ 854 Other comprehensive income (loss), net of tax Net change in unrealized gains (losses) on cash flow hedges 66 ( 59 ) 31 Total comprehensive income $ 4,401 $ 1,582 $ 885 See accompanying notes to the Consolidated Financial Statements. 59 Table of Conten t s Advanced Micro Devices, Inc. Consolidated Balance Sheets December 27, 2025 December 28, 2024 (In millions, except par value amounts) ASSETS Current assets: Cash and cash equivalents $ 5,539 $ 3,787 Short-term investments 5,013 1,345 Accounts receivable, net 6,315 6,192 Inventories 7,920 5,734 Prepaid expenses and other current assets 2,160 1,991 Total current assets 26,947 19,049 Property and equipment, net 2,312 1,802 Goodwill 25,126 24,839 Acquisition-related intangibles, net 16,705 18,930 Deferred tax assets, net 384 688 Other non-current assets 5,452 3,918 Total assets $ 76,926 $ 69,226 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 2,929 $ 2,466 Accrued liabilities 5,250 4,260 Current portion of long-term debt, net 874 — Other current liabilities 402 555 Total current liabilities 9,455 7,281 Long-term debt, net of current portion 2,348 1,721 Long-term operating lease liabilities 625 491 Deferred tax liabilities 313 349 Other long-term liabilities 1,186 1,816 Commitments and contingencies (see Note 12) Stockholders’ equity: Capital stock: Common stock, par value $ 0.01 ; shares authorized: 4,000 ; shares issued: 1,695 and 1,680 ; shares outstanding: 1,630 and 1,622 17 17 Additional paid-in capital 63,365 61,362 Treasury stock, at cost (shares held: 65 and 58 ) ( 7,079 ) ( 6,106 ) Retained earnings 6,699 2,364 Accumulated other comprehensive loss ( 3 ) ( 69 ) Total stockholders’ equity 62,999 57,568 Total liabilities and stockholders’ equity $ 76,926 $ 69,226 See accompanying notes to the Consolidated Financial Statements. 60 Table of Conten t s Advanced Micro Devices, Inc. Consolidated Statements of Stockholders’ Equity Year Ended December 27, 2025 December 28, 2024 December 30, 2023 (In millions) Capital stock Common stock Balance, beginning of period $ 17 $ 17 $ 16 Common stock issued under employee equity plans — — 1 Balance, end of period $ 17 $ 17 $ 17 Additional paid-in capital Balance, beginning of period $ 61,362 $ 59,676 $ 58,005 Common stock issued under employee equity plans 285 279 273 Stock-based compensation 1,638 1,407 1,384 Issuance of common stock to settle convertible debt — — 1 Reissuance of treasury stock 80 — — Issuance of common stock warrants — — 13 Balance, end of period $ 63,365 $ 61,362 $ 59,676 Treasury stock Balance, beginning of period $ ( 6,106 ) $ ( 4,514 ) $ ( 3,099 ) Repurchases of common stock ( 1,316 ) ( 862 ) ( 985 ) Reissuance of treasury stock 968 — — Common stock repurchases for tax withholding on employee equity plans ( 625 ) ( 730 ) ( 430 ) Balance, end of period $ ( 7,079 ) $ ( 6,106 ) $ ( 4,514 ) Retained earnings (accumulated deficit) Balance, beginning of period $ 2,364 $ 723 $ ( 131 ) Net income 4,335 1,641 854 Balance, end of period $ 6,699 $ 2,364 $ 723 Accumulated other comprehensive loss Balance, beginning of period $ ( 69 ) $ ( 10 ) $ ( 41 ) Other comprehensive income (loss) 66 ( 59 ) 31 Balance, end of period $ ( 3 ) $ ( 69 ) $ ( 10 ) Total stockholders' equity $ 62,999 $ 57,568 $ 55,892 See accompanying notes to the Consolidated Financial Statements. 61 Table of Conten t s Advanced Micro Devices, Inc. Consolidated Statements of Cash Flows Year Ended December 27, 2025 December 28, 2024 December 30, 2023 (In millions) Cash flows from operating activities: Net income $ 4,335 $ 1,641 $ 854 Income from discontinued operations, net of tax ( 66 ) — — Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 750 671 642 Amortization of acquisition-related intangibles 2,254 2,393 2,811 Stock-based compensation 1,638 1,407 1,384 (Gains) losses on long-term investments, net ( 341 ) — ( 1 ) Deferred income taxes 248 ( 1,163 ) ( 1,019 ) Inventory loss at (recovery from) contract manufacturer ( 67 ) 65 — Other 120 125 45 Changes in operating assets and liabilities: Accounts receivable, net ( 121 ) ( 1,865 ) ( 1,339 ) Inventories ( 2,189 ) ( 1,458 ) ( 580 ) Prepaid expenses and other assets ( 11 ) 339 ( 390 ) Accounts payable 410 3 ( 519 ) Accrued and other liabilities ( 467 ) 883 ( 221 ) Net cash provided by operating activities of continuing operations 6,493 3,041 1,667 Net cash provided by operating activities of discontinued operations 1,216 — — Net cash provided by operating activities 7,709 3,041 1,667 Cash flows from investing activities: Purchases of property and equipment ( 974 ) ( 636 ) ( 546 ) Purchases of short-term investments ( 5,470 ) ( 1,493 ) ( 3,722 ) Proceeds from maturity of short-term investments 1,765 1,416 2,687 Proceeds from sale of short-term investments 80 616 300 Acquisitions, net of cash acquired ( 1,760 ) ( 548 ) ( 131 ) Related party loan and equity method investment — ( 117 ) — Purchases of long-term investments ( 502 ) ( 341 ) ( 11 ) Other 10 2 — Net cash used in investing activities of continuing operations ( 6,851 ) ( 1,101 ) ( 1,423 ) Proceeds from divestiture, net of cash divested 1,356 — — Purchases of property and equipment ( 38 ) — — Net cash provided by investing activities of discontinued operations 1,318 — — Net cash used in investing activities ( 5,533 ) ( 1,101 ) ( 1,423 ) Cash flows from financing activities: Proceeds from debt and commercial paper issuance, net of issuance costs 2,441 — — Repayment of debt and commercial paper ( 950 ) ( 750 ) — Proceeds from sales of common stock through employee equity plans 285 279 268 Repurchases of common stock ( 1,316 ) ( 862 ) ( 985 ) Stock repurchases for tax withholding on employee equity plans ( 607 ) ( 728 ) ( 427 ) Settlement of contingent consideration liability ( 284 ) — — Other — ( 1 ) ( 2 ) Net cash used in financing activities ( 431 ) ( 2,062 ) ( 1,146 ) Net increase (decrease) in cash, cash equivalents and restricted cash 1,745 ( 122 ) ( 902 ) Cash, cash equivalents and restricted cash at beginning of year 3,811 3,933 4,835 Cash, cash equivalents and restricted cash at end of year $ 5,556 $ 3,811 $ 3,933 62 Table of Conten t s Advanced Micro Devices, Inc. Consolidated Statements of Cash Flows Year Ended December 27, 2025 December 28, 2024 December 30, 2023 (In millions) Supplemental cash flow information: Cash paid during the year for: Interest $ 91 $ 72 $ 84 Income taxes, net of refund $ 884 $ 1,386 $ 523 Non-cash investing and financing activities: Purchases of property and equipment, accrued but not paid $ 129 $ 144 $ 106 Reissuance of treasury stock for acquisition $ 860 $ — $ — Reissuance of treasury stock to settle contingent consideration liability from acquisition $ 188 $ — $ — Non-cash consideration and earn-out receivable from divestiture $ 486 $ — $ — Non-cash activities for leases: Operating lease right-of-use assets acquired by assuming related liabilities $ 285 $ 102 $ 273 Reconciliation of cash, cash equivalents, and restricted cash Cash and cash equivalents $ 5,539 $ 3,787 $ 3,933 Restricted cash included in Prepaid expenses and other current assets 17 24 — Total cash, cash equivalents, and restricted cash $ 5,556 $ 3,811 $ 3,933 See accompanying notes to the Consolidated Financial Statements. 63 Table of Conten t s Advanced Micro Devices, Inc. Notes to Consolidated Financial Statements NOTE 1 – The Company Advanced Micro Devices, Inc. is a global semiconductor company. References herein to AMD or the Company mean Advanced Micro Devices, Inc. and its consolidated subsidiaries. AMD’s products include Artificial Intelligence (AI) Accelerators, microprocessors (CPUs) and graphics processing units (GPUs), as standalone devices or as incorporated into accelerated processing units (APUs), chipsets, data center and professional GPUs, embedded processors, semi-custom System-on-Chip (SoC) products, microprocessor and SoC development services and technology, data processing units (DPUs), Field Programmable Gate Arrays (FPGAs), System on Modules (SOMs), AI Network Interface Cards (AI NICs), and Adaptive SoC products. From time to time, the Company may also sell or license portions of its intellectual property (IP) portfolio. NOTE 2 – Basis of Presentation and Significant Accounting Policies Fiscal Year . The Company uses a 52- or 53-week fiscal year ending on the last Saturday in December. Fiscal years 2025, 2024 and 2023 ended on December 27, 2025, December 28, 2024 and December 30, 2023, respectively. Fiscal years 2025, 2024 and 2023 each consisted of 52 weeks. Principles of Consolidation. The Consolidated Financial Statements include the Company’s accounts and those of its wholly-owned subsidiaries. Reclassification and Change in Presentation. Certain amounts from fiscal years 2024 and 2023 were reclassified to conform to current period presentation. These include the balance sheet presentation of Receivables from related parties within Prepaid expenses and other current assets, Operating lease right-of-use assets and Investment: equity method within Other non-current assets, and Payables to related parties within Accounts payable. Use of Estimates. The preparation of Consolidated Financial Statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results are likely to differ from those estimates, and such differences may be material to the financial statements. Areas where management uses subjective judgment include, but are not limited to, revenue allowances, inventory valuation, valuation of goodwill and long-lived and intangible assets, business combination accounting, and income taxes. Revenue Recognition Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. Sales, value-added, and other taxes collected concurrently with the provision of goods or services are excluded from revenue. Shipping and handling costs associated with product sales are included in cost of sales. Substantially all of the Company’s revenue is derived from product sales. Customers are generally required to pay for products and services within the Company’s standard contractual terms, which are typically net 30 to 60 days. The Company has determined that it does not have significant financing components in its contracts with customers. Non-custom products The Company transfers control and recognizes revenue when non-custom products are shipped to customers, which includes original equipment manufacturers (OEM) and distributors, in accordance with the shipping terms of the sale. Certain OEMs may be entitled to rights of return and rebates under OEM agreements. The Company also sells to distributors under terms allowing the majority of distributors certain rights of return and price protection on unsold merchandise held by them. The Company estimates the amount of variable consideration under OEM and distributor arrangements and, accordingly, records a provision for product returns, allowances for price protection and rebates based on actual historical experience and any known events. 64 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. Where funds provided for such programs can be estimated, the Company recognizes a reduction to revenue at the time the related revenue is recognized; otherwise, the Company recognizes such reduction to revenue at the later of when: i) the related revenue transaction occurs; or ii) the program is offered. For transactions where the Company reimburses a customer for a portion of the customer’s cost to perform specific product advertising or marketing and promotional activities, such amounts are recognized as a reduction to revenue unless they qualify for expense recognition. Constraints of variable consideration have not been material. Custom products Custom products, which are primarily associated with the Company’s Client and Gaming segment, are sold under non-cancellable purchases orders, for which the Company has an enforceable right to payment, and which have no alternative use to the Company at contract inception, are recognized as revenue, over the time of production of the products by the Company. The Company utilizes a cost-based input method, calculated as cost incurred plus estimated margin, to determine the amount of revenue to recognize for in-process or completed customer orders at a reporting date. The Company believes that a cost-based input method is the most appropriate manner to measure how the Company satisfies its performance obligations to customers because the effort and costs incurred best depict the Company’s satisfaction of its performance obligation. Sales of custom products are not subject to a right of return and arrangements generally involve a single performance obligation. Generally, there are no variable consideration estimates associated with custom products. Development and intellectual property licensing agreements From time to time, the Company may enter into arrangements with customers that combine the provision of development services and a license to the right to use the Company’s IP. These arrangements are deemed to be single or multiple performance obligations based upon the nature of the arrangements. Revenue is recognized upon the transfer of control, over time or at a point in time, depending on the nature of the arrangements. The Company evaluates whether the licensing component is distinct. A licensing component is distinct if it is both (i) capable of being distinct and (ii) distinct in the context of the arrangement. If the license is not distinct, it is combined with the development services as a single performance obligation and recognized over time. If the license is distinct, revenue is recognized at a point in time when the customer has the ability to benefit from the license. From time to time, the Company may enter into arrangements with customers that solely involve the sale or licensing of its patents or IP. Generally, there are no performance obligations beyond transferring the designated license to the Company’s patents or IP. Accordingly, revenue is recognized at a point in time when the customer has the ability to benefit from the license. There are no variable consideration estimates associated with either combined development and IP arrangements or for standalone arrangements involving either the sale or licensing of IP. Inventories The Company values inventory at standard cost, adjusted to approximate the lower of actual cost or estimated net realizable value using assumptions about future demand and market conditions. In determining excess or obsolescence reserves for its products, the Company considers assumptions such as changes in business and economic conditions, other-than-temporary decreases in demand for its products, and changes in technology or customer requirements. In determining the lower of cost or net realizable value reserves, the Company considers assumptions such as recent historical sales activity and selling prices, as well as estimates of future selling prices. The Company fully reserves for inventories and non-cancellable purchase orders for inventory deemed obsolete. The Company performs periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances and non-cancellable purchase orders to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or market conditions become less favorable than those projected by the Company, additional inventory carrying value adjustments may be required . 65 Table of Conten t s Business Combinations The Company uses the acquisition method of accounting for business combinations which allocates the purchase consideration to the assets acquired and liabilities assumed from the acquiree based on their respective fair values as of the acquisition date. The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Significant estimates and inputs used in valuing acquired assets and liabilities held for sale, developed technology, and other identifiable intangible assets include, but are not limited to, expected future revenue, future changes in technology, useful lives, risk-adjusted discount rates, and time and costs to recreate certain assets. Fair value estimates are based on the assumptions that management believes a market participant would use in pricing the asset or liability. These estimates are inherently uncertain and, therefore, actual results may differ from the estimates made. Goodwill The Company performs its goodwill impairment analysis as of the first day of the fourth quarter of each year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on a more frequent basis. The analysis may include both qualitative and quantitative factors to assess the likelihood of an impairment. Long-Lived and Intangible Assets The Company reviews its long-lived and intangible assets for impairment if indicators of potential impairment are identified, at least quarterly. Indefinite-lived intangible assets are reviewed for impairment at least annually. Assets are grouped and evaluated for impairment at the lowest level of identifiable cash flows. Cash Equivalents Cash equivalents consist of financial instruments that are readily convertible into cash and have original maturities of three months or less at the time of purchase. Accounts Receivable Accounts receivable are primarily comprised of trade receivables presented net of rebates, price protection and an allowance for credit loss. The Company manages its exposure to customer credit risk through credit limits, credit lines, ongoing monitoring procedures and credit approvals. While the Company maintains an allowance for customer credit losses, its accounts receivable write-offs have historically not been significant. Unbilled Receivables Unbilled receivables are recorded within Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets. Unbilled receivables primarily represent work completed on development services and on custom products under non-cancellable purchase orders that have no alternative use to the Company at contract inception, recognized as revenue but not yet invoiced to customers. Investments Available-for-Sale Debt Securities. Investments in marketable debt securities are available for use in current operations, including those with maturity dates beyond one year, and are classified within current assets on the Consolidated Balance Sheets. Available-for-sale debt securities are recorded at fair value, with the change in unrealized gains and losses, net of tax, reported in the Consolidated Statements of Comprehensive Income until realized. Fair value is determined based on quoted market rates when observable or utilizing data points that are observable. Securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of the excess, if any, is caused by expected credit losses. The Company uses the first-in, first-out method as basis of the cost of securities sold. 66 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 The Company’s financial instruments are measured and recorded at fair value on a recurring basis, except for non-marketable equity investments in privately-held companies, which are generally accounted for under the measurement alternative. Fair Value Hierarchy The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. The guidance for fair value measurements requires that assets and liabilities carried at fair value be classified and disclosed in one of the following categories: Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation. Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of 2 to 7 years for equipment, up to 44 years for buildings, and leasehold improvements are measured by the shorter of the remaining terms of the leases or the estimated useful economic lives of the improvements. Leases The Company records operating and finance leases as right-of-use (ROU) assets and lease liabilities on the Company’s Consolidated Balance Sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating and finance lease ROU assets and liabilities are initially recognized based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses the implicit interest rate if readily determinable. When the implicit interest rate is not readily determinable, the Company uses its incremental borrowing rate, which is based on its collateralized borrowing capabilities over a similar term of the lease payments. When using the incremental borrowing rate, the Company utilizes the consolidated group incremental borrowing rate. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. The Company has elected the accounting policy to not recognize ROU assets and lease liabilities that arise from short-term (12 months or less) leases for any class of underlying asset. Operating leases are included in other non-current assets, other current liabilities, and long-term operating lease liabilities on the Company’s Consolidated Balance Sheets. The Company’s finance leases are immaterial. 67 Table of Conten t s Foreign Currency Translation/Transactions The functional currency of the Company’s foreign subsidiaries is the U.S. dollar. Assets and liabilities denominated in non-U.S. dollars have been remeasured into U.S. dollars at current exchange rates for monetary assets and liabilities and historical exchange rates for non-monetary assets and liabilities. Non-U.S. dollar denominated transactions have been remeasured at average exchange rates in effect during each period, except for those cost of sales and expense transactions related to non-monetary balance sheet amounts which have been remeasured at historical exchange rates. The gains or losses from foreign currency remeasurement are included in earnings. Marketing and Advertising Expenses Advertising costs are expensed as incurred. In addition, the Company’s marketing and advertising expenses include certain cooperative advertising funding obligations under customer incentive programs, which costs are recorded as incurred. Cooperative advertising expenses are recorded as marketing, general and administrative expenses to the extent the cash paid does not exceed the estimated fair value of the advertising benefit received. Any excess of cash paid over the estimated fair value of the advertising benefit received is recorded as a reduction of revenue. Marketing and advertising expenses for 2025, 2024 and 2023 were approximately $ 2.4 billion, $ 1.2 billion and $ 695 million, respectively. Stock-Based Compensation The Company estimates stock-based compensation cost for stock options at the grant date based on the option’s fair value as calculated by the Black-Scholes model. For time-based restricted stock units (RSUs), fair value is based on the closing price of the Company’s common stock on the grant date. The Company estimates the grant-date fair value of RSUs that involve a market condition using the Monte Carlo simulation model. The Company estimates the grant-date fair value of stock to be issued under the Company’s Employee Stock Purchase plan (ESPP) using the Black-Scholes model. Compensation expense is recognized over the vesting period of the applicable award using the straight-line method, except for the compensation expense related to RSUs with performance or market conditions (PRSUs), which are recognized ratably for each vesting tranche from the service inception date to the end of the requisite service period. Forfeiture rates are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Contingencies From time to time the Company may be a defendant or plaintiff in various legal actions that arise in the normal course of business. The Company is also subject to income tax, indirect tax or other tax claims by tax agencies in jurisdictions in which it conducts business. In addition, the Company is a party to environmental matters including local, regional, state and federal government clean-up activities at or near locations where the Company currently or has in the past conducted business. The Company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of reasonably possible losses. A determination of the amount of reserves required for these commitments and contingencies that would be charged to earnings, if any, includes assessing the probability of adverse outcomes and estimating the amount of potential losses. The required reserves, if any, may change due to new developments in each matter or changes in circumstances such as a change in settlement strategy. Income Taxes The Company computes the provision for income taxes using the liability method and recognizes deferred tax assets and liabilities for temporary differences between financial statement and income tax bases of assets and liabilities, as well as for operating loss and tax credit carryforwards. The Company measures deferred tax assets and liabilities using tax rates applicable to taxable income in effect for the years in which those tax assets are expected to be realized or settled and provides a valuation allowance against deferred tax assets when it cannot conclude that it is more likely than not that some or all deferred tax assets will be realized. The assessment requires significant judgment and is performed in each of the applicable taxing jurisdictions. In addition, the Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that they will be sustained, based on the technical merits of the positions, on examination by the jurisdictional tax authority. Interest and penalties related to uncertain tax positions are recorded within the Income tax provision (benefit) line in the Company’s Consolidated Statements of Operations. The Company is subject to the Global Intangible Low Taxed Income (GILTI) tax in the U.S. and recognizes deferred taxes for temporary basis differences that are expected to reverse as GILTI tax in future years. 68 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 December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) Income Taxes - Improvement to Income Tax Disclosures (ASU 2023-09) that requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The Company adopted ASU 2023-09 in the fourth quarter of 2025, with prospective application. See Note 17 - Income Taxes for further information. Recently Issued Accounting Standard Updates Not Yet Adopted In November 2024, the FASB issued ASU 2024-03 Disaggregation - Income Statement Expenses (DISE) that expanded the annual and interim disclosure of certain costs and expense categories into specified categories in the notes to the financial statements. The ASU will be effective for the Company beginning with the fiscal year 2027 and interim periods thereafter, and could be applied either prospectively or retrospectively, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its financial statements. Although there are several other new accounting pronouncements issued by the FASB, the Company does not believe any of these accounting pronouncements had or will have a material impact on its financial statements . NOTE 3 – Supplemental Financial Statement Information Inventories December 27, 2025 December 28, 2024 (In millions) Raw materials $ 909 $ 351 Work in process 4,768 4,289 Finished goods 2,243 1,094 Total inventories $ 7,920 $ 5,734 Property and Equipment, net December 27, 2025 December 28, 2024 (In millions) Land, building and leasehold improvements $ 967 $ 853 Equipment 3,453 2,798 Construction in progress 508 324 Property and equipment, gross 4,928 3,975 Accumulated depreciation ( 2,616 ) ( 2,173 ) Total property and equipment, net $ 2,312 $ 1,802 Depreciation expense for 2025, 2024 and 2023 was $ 521 million, $ 454 million and $ 441 million, respectively. Accrued Liabilities December 27, 2025 December 28, 2024 (In millions) Accrued marketing programs $ 1,454 $ 1,063 Accrued compensation and benefits 1,645 1,174 Customer-related liabilities 1,194 1,349 Other accrued expenses and liabilities 957 674 Total accrued liabilities $ 5,250 $ 4,260 69 Table of Conten t s Revenue Revenue allocated to remaining performance obligations that are unsatisfied or partially unsatisfied include amounts received from customers and amounts that will be invoiced and recognized as revenue in future periods for product revenue, development services, and IP licensing. As of December 27, 2025, the aggregate transaction price allocated to remaining performance obligations under contracts with an original expected duration of more than one year was $ 315 million, of which $ 201 million is expected to be recognized in the next 12 months. The revenue allocated to remaining performance obligations does not include amounts which have an original expected duration of one year or less. Revenue recognized over time associated with custom products and development services accounted for approximately 9 %, 8 % and 25 % of the Company’s revenue in 2025, 2024 and 2023, respectively. Cost of Sales During the year ended December 27, 2025, the Company recorded approximately $ 440 million of net inventory and related charges associated with the U.S. government export control on AMD Instinct™ MI308 Data Center GPU products in Cost of sales. The Company did not have any export control related charges in 2024 and 2023. NOTE 4 – Segment Reporting Management, including the Chief Operating Decision Maker (CODM), who is the Company’s Chief Executive Officer, reviews and assesses operating performance using segment net revenue, consolidated cost of sales and operating expenses and operating income (loss). These performance measures include the allocation of expenses to the reportable segments based on management’s judgment. The CODM is regularly provided segment operating income to assess relative segment performance. In the first quarter of fiscal year 2025, the Company changed its segment structure, combining the Client and Gaming segments into one reportable segment to align with how the Company manages its business. All prior period segment data were retrospectively adjusted. The Company’s three reportable segments are: • the Data Center segment, which primarily includes Artificial Intelligence (AI) accelerators, microprocessors (CPUs) for servers, graphics processing units (GPUs), accelerated processing units (APUs), data processing units (DPUs), AI Network Interface Cards (AI NICs), Field Programmable Gate Arrays (FPGAs) and adaptive System-on-Chip (SoC) products for data centers; • the Client and Gaming segment, which primarily includes CPUs, APUs, chipsets for desktops and notebooks, discrete GPUs, and semi-custom SoC products and development services; and • the Embedded segment, which primarily includes embedded CPUs, APUs, FPGAs, System on Modules (SOMs), and adaptive SoC products. From time to time, the Company may also sell or license portions of its IP portfolio. In addition to these reportable segments, the Company has an All Other category, which is not a reportable segment. This category primarily includes certain expenses and credits that are not allocated to any of the reportable segments because the CODM does not consider these expenses and credits in evaluating the performance of the reportable segments. This category primarily includes amortization of acquisition-related intangibles, employee stock-based compensation, acquisition-related and other costs, restructuring charges, inventory loss at (recovery from) contract manufacturer and licensing gain. Acquisition-related and other costs primarily include transaction costs, certain compensation charges, contract termination costs and workforce rebalancing charges. The following table provides a summary of net revenue, cost of sales and operating expenses, and operating income (loss) by segment. Segment cost of sales and operating expenses primarily include materials, external manufacturing, labor and marketing and advertising costs, and exclude expenses and credits that are recorded within the All Other category. Each of the Client and Gaming businesses do not qualify as a reportable operating segment, however, the Company continues to separately disclose revenue for each business. 70 Table of Conten t s Year Ended December 27, 2025 December 28, 2024 December 30, 2023 (In millions) Net revenue: Data Center $ 16,635 $ 12,579 $ 6,496 Client and Gaming Client 10,640 7,054 4,651 Gaming 3,910 2,595 6,212 Total Client and Gaming 14,550 9,649 10,863 Embedded 3,454 3,557 5,321 Total net revenue $ 34,639 $ 25,785 $ 22,680 Cost of sales and operating expenses: Data Center $ 13,032 $ 9,097 $ 5,229 Client and Gaming 11,695 8,462 9,938 Embedded 2,211 2,136 2,693 All Other 4,007 4,190 4,419 Total cost of sales and operating expenses $ 30,945 $ 23,885 $ 22,279 Operating income (loss): Data Center $ 3,603 $ 3,482 $ 1,267 Client and Gaming 2,855 1,187 925 Embedded 1,243 1,421 2,628 All Other ( 4,007 ) ( 4,190 ) ( 4,419 ) Total operating income $ 3,694 $ 1,900 $ 401 The following table provides items included in All Other category: Year Ended December 27, 2025 December 28, 2024 December 30, 2023 (In millions) Operating loss: Amortization of acquisition-related intangibles $ 2,254 $ 2,394 $ 2,811 Stock-based compensation expense 1,638 1,407 1,384 Acquisition-related and other costs 228 186 258 Restructuring charges — 186 — Inventory loss at (recovery from) contract manufacturer ( 67 ) 65 — Licensing gain ( 67 ) ( 48 ) ( 34 ) Other expense 21 — — Total operating loss $ 4,007 $ 4,190 $ 4,419 The Company does not discretely allocate assets to its operating segments, nor does management evaluate operating segments using discrete asset information. 71 Table of Conten t s The following table summarizes sales to external customers by geographic regions based on billing location of the customer: Year Ended December 27, 2025 December 28, 2024 December 30, 2023 (In millions) United States $ 11,363 $ 8,693 $ 7,837 China (including Hong Kong) 7,751 6,231 3,417 Taiwan 5,186 3,301 1,841 Singapore 4,284 3,614 2,231 Other regions 6,055 3,946 7,354 Total sales to external customers $ 34,639 $ 25,785 $ 22,680 No customer accounted for at least 10% of the Company’s consolidated net revenue in fiscal years 2025 and 2024. One Client and Gaming segment customer accounted for 18 % of consolidated net revenue in fiscal year 2023. The following table summarizes property and equipment, net by geographic areas: December 27, 2025 December 28, 2024 (In millions) United States $ 1,717 $ 1,312 Singapore 157 140 Canada 142 104 Other countries 296 246 Total property and equipment, net $ 2,312 $ 1,802 NOTE 5 – Acquisitions and Divestitures Fiscal Year 2025 Acquisitions ZT Systems Acquisition and ZT Manufacturing Business Divestiture On March 31, 2025 (the Acquisition Date), the Company completed the acquisition of all issued and outstanding shares of ZT Systems, a provider of AI and general-purpose compute infrastructure for hyperscale computing companies, for a total purchase consideration of $ 4.4 billion. The acquisition is expected to enable the Company to deliver end-to-end AI solutions and accelerate the design and deployment of AMD-powered AI infrastructure at scale optimized for the cloud. The purchase consideration was comprised of the following (in millions): Cash paid on Acquisition Date $ 3,188 Fair value of 8,335,849 shares (1) issued on Acquisition Date 860 Fair value of contingent consideration (2) on Acquisition Date 361 Total purchase consideration $ 4,409 (1) Represented the fair value based on the closing price of AMD common stock on March 28, 2025 of $ 103.22 per share, as the transaction closed prior to the opening of markets on March 31, 2025. (2) Represented the estimated fair value of additional consideration of up to 740,961 shares of AMD common stock to be issued and up to $ 300 million of cash to be paid to former ZT Systems stockholders and warrant holders when the contingencies are fully met. 72 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 5,965 Other assets 81 Total assets acquired 7,546 Liabilities held for sale 3,221 Other liabilities 124 Total liabilities assumed 3,345 Fair value of net assets acquired 4,201 Goodwill 208 Total purchase consideration $ 4,409 The Company preliminarily allocated the purchase price to identifiable tangible and intangible assets acquired and liabilities assumed based on estimates of their fair values, which were determined using generally accepted valuation techniques based on estimates and assumptions made by management. The assets and liabilities related to the data center infrastructure manufacturing business (ZT Manufacturing Business), which was divested on October 27, 2025, were classified as held for sale. Fair values of assets and liabilities classified as held for sale were determined using the income and cost valuation approaches, which incorporate significant unobservable inputs. Goodwill was assigned to the Company’s Data Center reporting unit, primarily attributed to the assembled workforce and is not expected to be deductible for income tax purposes. The Company retained select intellectual property and employees associated with the design operations (ZT Design Business). The purchase consideration allocation, including the fair value allocation between ZT Systems’ Manufacturing and Design Businesses, is preliminary and subject to revision as additional information about the fair value of assets acquired and liabilities assumed becomes available. The Company may continue to evaluate and further revise the preliminary purchase consideration allocation during the remainder of the measurement period, which will not exceed 12 months from the Acquisition Date. The results of operations of the ZT Design Business are included in the Company’s continuing operations within the Data Center segment and are not material. The results of operations of the ZT Manufacturing Business are presented as discontinued operations in the Company’s Consolidated Financial Statements. In 2025, acquisition-related transaction costs of $ 47 million were recorded within Marketing, general and administrative expenses. The following table presents a reconciliation of the contingent consideration liability (in millions): Initial valuation of contingent consideration liability on Acquisition Date $ 361 Change in fair value 121 Settlement in October 2025 ( 482 ) Contingent consideration liability, December 27, 2025 $ — The contingent consideration liability, which was measured at fair value on Acquisition Date and was remeasured to fair value until the contingencies were resolved, was settled in October 2025 with the former ZT shareholders and warrant holders as the contingencies were fully met. The change in fair value was recorded within Income from discontinued operations of the Company’s Consolidated Statements of Operations. On October 27, 2025, the Company completed the sale of the ZT Manufacturing Business to Sanmina Corporation (Sanmina) for $ 2.4 billion in cash, subject to certain purchase price adjustments and 1,151,052 shares of Sanmina common stock. Upon close of the sale, the Company received cash of $ 1.4 billion, net of cash divested and purchase price adjustments, and shares of Sanmina common stock valued at $ 154 million. The purchase consideration received from the sale of the ZT Manufacturing Business is subject to customary post-closing adjustments. 73 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 Silo AI Acquisition On August 9, 2024, the Company completed the acquisition of Silo AI Oy (Silo AI), an AI lab based in Finland, for $665 million in cash. The recorded purchase consideration of $ 553 million, net of closing adjustments, transaction costs and deferred cash compensation, was allocated to $ 19 million of identifiable intangible assets, $ 43 million of net liabilities assumed, and $ 577 million to goodwill. Goodwill was attributed to Silo AI’s workforce to accelerate the deployment and development of AI solutions on AMD hardware. Silo AI financial results, which were not material, were included in the Company's Statement of Operations since the date of acquisition, primarily within the Data Center segment. Fiscal Year 2023 Acquisitions During the year ended December 30, 2023, the Company completed business acquisitions for a total consideration of $ 134 million, recognizing $ 49 million of identifiable net assets and $ 85 million of goodwill. The financial results of these acquired businesses, which were not material, were included in the Company's Consolidated Statements of Operations from their respective dates of acquisition under the Data Center, Client and Gaming, and Embedded segments. NOTE 6 – Goodwill and Acquisition-related Intangibles, net Goodwill In the first quarter of fiscal year 2025, the Company assigned goodwill to its updated reporting units to reflect the change in its segment reporting structure and determined no impairment immediately prior to and after the change. 74 Table of Conten t s The following table summarizes Goodwill: Before segment change After segment change (in millions) Data Center Embedded Client Gaming Client and Gaming Total December 28, 2024 $ 3,403 $ 21,072 $ 126 $ 238 $ — $ 24,839 Reassignment due to segment change — — (126) (238) 364 — Acquisitions 287 — — — — 287 December 27, 2025 $ 3,690 $ 21,072 $ — $ — $ 364 $ 25,126 During the fourth quarter of fiscal years 2025 and 2024, the Company conducted its annual qualitative impairment tests of goodwill and concluded that there was no goodwill impairment with respect to its reporting units. Acquisition-related Intangible Assets The following table summarizes Acquisition-related Intangible Assets: December 27, 2025 December 28, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (In millions) (In millions) Developed technology $ 13,599 $ ( 3,560 ) $ 10,039 $ 13,408 $ ( 2,529 ) $ 10,879 Customer relationships 12,324 ( 6,267 ) 6,057 12,324 ( 5,124 ) 7,200 Product trademarks 914 ( 305 ) 609 914 ( 225 ) 689 Acquisition-related intangible assets subject to amortization 26,837 ( 10,132 ) 16,705 26,646 ( 7,878 ) 18,768 In-process research and development (IPR&D) not subject to amortization — — — 162 — 162 Total acquisition-related intangible assets, net $ 26,837 $ ( 10,132 ) $ 16,705 $ 26,808 $ ( 7,878 ) $ 18,930 In April 2025, $ 162 million of IPR&D intangible asset reached technological feasibility, was placed in service as developed technology and started amortization over its estimated useful life of 5 years. Acquisition-related intangible amortization expense was $ 2.3 billion, $ 2.4 billion and $ 2.8 billion in fiscal year 2025, 2024 and 2023, respectively. Based on the carrying value of acquisition-related intangibles recorded as of December 27, 2025, and assuming no subsequent impairment of the underlying assets, the estimated future annual amortization expense for acquisition-related intangibles is as follows: Fiscal Year 2026 2027 2028 2029 2030 2031 and thereafter Total (In millions) Future annual amortization $ 2,153 $ 2,036 $ 1,923 $ 1,691 $ 1,454 $ 7,448 $ 16,705 75 Table of Conten t s NOTE 7 – Related Parties—Equity Joint Ventures ATMP Joint Venture s The Company holds a 15 % equity interest in two joint ventures (collectively, the ATMP JV) with affiliates of Tongfu Microelectronics Co., Ltd, a Chinese joint stock company. The Company has no obligation to fund the ATMP JV. The Company accounts for its equity interests in the ATMP JV under the equity method of accounting due to its significant influence over the ATMP JV. The carrying value of the investment was $ 176 million and $ 149 million as of December 27, 2025 and December 28, 2024, respectively, and are recorded within Other non-current assets on the Company’s Consolidated Balance Sheets. The ATMP JV provides assembly, test, mark and packaging (ATMP) services to the Company. The Company’s purchases from the ATMP JV were $ 2.0 billion and $ 1.7 billion in 2025 and 2024, respectively. The amounts payable to the ATMP JV were $ 408 million and $ 476 million as of December 27, 2025 and December 28, 2024, respectively, and are recorded within Accounts payable on the Company’s Consolidated Balance Sheets. In 2024, the Company provided a $ 100 million term loan to one of the ATMP JVs for general corporate purposes, with interest at the three months term Secured Overnight Financing Rate (SOFR) plus 50 basis points, payable quarterly. The loan matures on October 16, 2026. The loan and related interest receivable are recorded within Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheets. During 2025, 2024 and 2023, the Company recorded income related to the ATMP JV of $ 26 million, $ 33 million and $ 16 million in Equity income in investee on its Consolidated Statement of Operations, respectively. NOTE 8 – Financial Instruments Financial Instruments Recorded at Fair Value on a Recurring Basis December 27, 2025 December 28, 2024 (In millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Cash equivalents Money market funds $ 620 $ — $ — $ 620 $ 1,496 $ — $ — $ 1,496 Corporate debt securities — 1,869 — 1,869 — 806 — 806 U.S. government and agency securities 1,148 300 — 1,448 130 — — 130 Non-U.S. government and agency securities — 245 — 245 — 116 — 116 Time deposits and certificates of deposits — 173 — 173 — 107 — 107 Short-term investments Corporate debt securities — 3,107 — 3,107 — 814 — 814 U.S. government and agency securities 901 718 — 1,619 332 82 — 414 Non-U.S. government and agency securities — 256 — 256 — 79 — 79 Time deposits and certificates of deposits — 10 — 10 — 10 — 10 Asset-backed and mortgage-backed securities — 22 — 22 — 28 — 28 Other non-current assets Long-term investments 198 — 202 400 — — 25 25 Deferred compensation plan investments 257 — — 257 197 — — 197 Total assets measured at fair value $ 3,124 $ 6,700 $ 202 $ 10,026 $ 2,155 $ 2,042 $ 25 $ 4,222 Deferred compensation plan investments are primarily mutual fund investments held in a Rabbi trust established to maintain the Company’s executive deferred compensation plan. 76 Table of Conten t s The following is a summary of cash equivalents and short-term investments: December 27, 2025 December 28, 2024 Cost/ Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cost/ Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (in millions) (in millions) Money market funds $ 620 $ — $ — $ 620 $ 1,496 $ — $ — $ 1,496 Corporate debt securities 4,974 2 — 4,976 1,621 — ( 1 ) 1,620 U.S. government and agency securities 3,065 2 — 3,067 544 — — 544 Non-U.S. government and agency securities 501 — — 501 195 — — 195 Time deposits and certificates of deposits 183 — — 183 117 — — 117 Asset-backed and mortgage-backed securities 23 — ( 1 ) 22 30 — ( 2 ) 28 $ 9,366 $ 4 $ ( 1 ) $ 9,369 $ 4,003 $ — $ ( 3 ) $ 4,000 As of December 27, 2025 and December 28, 2024, the Company did not have material available-for-sale debt securities which had been in a continuous unrealized loss position of more than twelve months. The contractual maturities of investments classified as available-for-sale are as follows: December 27, 2025 December 28, 2024 Amortized Cost Fair Value Amortized Cost Fair Value (In millions) (In millions) Due within 1 year $ 6,528 $ 6,528 $ 2,073 $ 2,073 Due in 1 year through 5 years 2,195 2,199 406 405 Due in 5 years and later 23 22 27 26 $ 8,746 $ 8,749 $ 2,506 $ 2,504 Financial Instruments Measured at Fair Value on a Non-Recurring Basis As of December 27, 2025 and December 28, 2024, the Company had long-term investments in non-marketable equity securities of $ 1.1 billion and $ 468 million, respectively, which are recorded at estimated fair value based on observable events or adjustments from impairments. As of December 27, 2025, non-marketable equity investments had cumulative gross unrealized gains of $ 291 million and cumulative gross unrealized losses and impairments of $ 51 million. During the year ended December 27, 2025, the Company recognized gross unrealized gains of $ 289 million and gross unrealized losses and impairments of $ 53 million. As of December 28, 2024, cumulative and annual gross unrealized gains, losses and impairments were not material. 77 Table of Conten t s Financial Instruments Not Recorded at Fair Value The carrying amounts and estimated fair values of the Company’s long-term debt are as follows: December 27, 2025 December 28, 2024 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value (In millions) (In millions) Current portion of long-term debt, net $ 874 $ 879 $ — $ — Long-term debt, net of current portion $ 2,348 $ 2,246 $ 1,721 $ 1,543 The estimated fair value of the Company’s long-term debt is based on Level 2 inputs of quoted prices for the Company’s debt and comparable instruments in inactive markets. The fair value of the Company’s accounts receivable, accounts payable and other short-term obligations approximate their carrying value based on existing terms. Hedging Transactions and Derivative Financial Instruments Foreign Currency Forward Contracts Designated as Accounting Hedges The Company enters into foreign currency forward contracts to hedge its exposure to foreign currency exchange rate risk related to future forecasted transactions denominated in currencies other than the U.S. Dollar. These contracts generally mature within 24 months and are designated as accounting hedges. As of December 27, 2025 and December 28, 2024, the notional value of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges was $ 2.3 billion and $ 2.2 billion, respectively. The fair value of these contracts as of December 27, 2025 and December 28, 2024 was not material. Foreign Currency Forward Contracts Not Designated as Accounting Hedges The Company also enters into foreign currency forward contracts to reduce the short-term effects of foreign currency fluctuations on certain receivables or payables denominated in currencies other than the U.S. Dollar. These forward contracts generally mature within 3 months and are not designated as accounting hedges. As of December 27, 2025 and December 28, 2024, the notional value of these outstanding contracts was $ 1.1 billion and $ 642 million, respectively. The fair value of these contracts as of December 27, 2025 and December 28, 2024 was not material. The cash flows associated with derivative instruments as cash flow hedging instruments are classified in the same category within the Consolidated Statement of Cash Flows as the cash flows of the related items. 78 Table of Conten t s NOTE 9 – Debt, Revolving Credit Facility and Commercial Paper Program Debt The Company’s total debt as of December 27, 2025 and December 28, 2024 consisted of: December 27, 2025 December 28, 2024 (In millions) 4.212% Senior Notes Due 2026 (4.212% Notes) $ 875 $ — 4.319% Senior Notes Due 2028 (4.319% Notes) 625 — 2.375% Senior Notes Due 2030 (2.375% Notes) 750 750 3.924% Senior Notes Due 2032 (3.924% Notes) 500 500 4.393% Senior Notes Due 2052 (4.393% Notes) 500 500 Total debt (principal amount) 3,250 1,750 Unamortized debt discount and issuance costs ( 28 ) ( 29 ) Total debt (net) 3,222 1,721 Less: current portion of long-term debt and related unamortized debt issuance costs ( 874 ) — Total long-term debt $ 2,348 $ 1,721 4.212% Senior Notes Due 2026 and 4.319% Senior Notes Due 2028 On March 24, 2025, the Company issued 4.212% Notes and 4.319% Notes in aggregate principal amount of $1.5 billion, which are general unsecured senior obligations of the Company. The interest is payable semi-annually on March 24 and September 24 of each year, commencing on September 24, 2025. The Company may redeem some or all of the 4.212% Notes prior to September 24, 2026 and the 4.319% Notes prior to February 24, 2028 at a price equal to the greater of the present value of the principal amount and future interest through the maturity of the debt or 100% of the principal amount plus accrued and unpaid interest. On or after February 24, 2028, the Company may also redeem some or all of the 4.319% Notes at 100% of the principal amount plus accrued and unpaid interest. Holders of the 4.212% Notes and the 4.319% Notes have the right to require the Company to repurchase all or a portion of their notes at 101% of the principal amount plus accrued and unpaid interest if the Company undergoes a change of control. An event of default may also accelerate the maturity of the 4.212% Notes and 4.319% Notes. 2.375% Senior Notes Due 2030, 3.924% Senior Notes Due 2032 and 4.393% Senior Notes Due 2052 The 2.375% Notes, 3.924% Notes and 4.393% Notes are general unsecured senior obligations of the Company with semi-annual fixed interest payments due on June 1 and December 1. The Company may redeem some or all of the 3.924% Notes and 4.393% Notes prior to March 1, 2032 and December 1, 2051, respectively, at a price equal to the greater of the present value of the principal amount and future interest through the maturity of the 3.924% Notes or 4.393% Notes or 100% of the principal amount plus accrued and unpaid interest. Holders have the right to require the Company to repurchase all or a portion of the 3.924% Notes or 4.393% Notes in the event that the Company undergoes a change of control as defined in the indenture, at a repurchase price of 101% of the principal amount plus accrued and unpaid interest. Additionally, an event of default may result in the acceleration of the maturity of the 3.924% Notes and 4.393% Notes. As of December 27, 2025, the Company was in compliance with the covenants associated with all of its debt. Future Payments on Total Debt As of December 27, 2025, the Company’s future debt payment obligations are as follows: Fiscal Year 2026 2027 2028 2029 2030 2031 and thereafter Total (In millions) Term Debt (Principal only) $ 875 $ — $ 625 $ — $ 750 $ 1,000 $ 3,250 79 Table of Conten t s Revolving Credit Facility The Company has $ 3 billion available under an unsecured revolving credit facility that expires on April 29, 2027. During 2025, the Company did not draw funds from the revolving credit facility. As of December 27, 2025, the Company was in compliance with the covenants under the revolving credit facility. Commercial Paper The Company has a commercial paper program under which it can issue unsecured commercial paper notes up to a principal amount of $ 3.0 billion at any time with maturities of up to 397 days from the date of issue. The commercial paper will be sold at a discount from par or, alternatively, will be sold at par and bear interest at rates that will vary based on market conditions at the time of the issuance. During the first quarter of fiscal year 2025, the Company issued $950 million in aggregate principal amount of commercial paper which was subsequently repaid in the second quarter of fiscal year 2025. As of December 27, 2025 and December 28, 2024, the Company had no commercial paper outstanding. NOTE 10 – Leases Operating Leases The Company has entered into operating and finance leases for its corporate offices, data centers, research and development facilities and certain equipment. The leases expire at various dates through 2038, some of which include options to extend the lease for up to ten years. For 2025, 2024 and 2023, the Company recorded $ 196 million, $ 147 million and $ 127 million, respectively, of operating lease expense, including short-term lease expense. For 2025, 2024, and 2023, the Company recorded $ 100 million, $ 83 million, and $ 46 million respectively, of variable lease expense, which primarily included operating expenses and property taxes associated with the usage of facilities under the operating leases. For 2025, 2024, and 2023 cash paid for operating leases included in operating cash flows was $ 176 million, $ 155 million, and $ 147 million respectively. Certain operating leases contain provisions for escalating lease payments subject to changes in the consumer price index. The Company’s finance and short-term leases are immaterial to the Company’s Consolidated Financial Statements. Supplemental information as of and for the year December 27, 2025 related to leases is as follows: December 27, 2025 December 28, 2024 Weighted-average remaining lease term in years – operating leases 6.95 7.28 Weighted-average discount rate – operating leases 4.74 % 4.63 % Future minimum lease payments under non-cancellable operating lease liabilities as of December 27, 2025 are as follows: Fiscal Year 2026 2027 2028 2029 2031 2031 and thereafter Total (In millions) Minimum lease payments $ 192 $ 149 $ 120 $ 113 $ 100 $ 263 $ 937 Less: interest ( 153 ) Present value of net minimum lease payments 784 Less: current portion 159 Total long-term operating lease liabilities $ 625 As of December 27, 2025, the Company has data center and other real estate leases that have not yet commenced with future lease payments of $ 1.3 billion. These leases are expected to commence in 2026 with lease terms of 1 year to 10 years. NOTE 11 – Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of investments in time deposits, available-for-sale debt securities, equity investments and trade receivables. 80 Table of Conten t s The Company places its investments with high credit quality financial institutions. At the time an investment is made, investments in commercial paper of industrial firms and financial institutions are rated A1, P1, F1 or better. The Company invests in bonds that are rated A, A2 or better and repurchase agreements, each of which have securities of the type and quality listed above as collateral. The Company believes that concentrations of credit risk with respect to trade receivables are limited because a large number of geographically diverse customers make up the Company’s customer base, thus diluting the trade credit risk. One customer accounted for approximately 11 % and another customer accounted for 24 % of the total consolidated accounts receivable balance as of December 27, 2025 and December 28, 2024, respectively. However, the Company does not believe the receivable balance from these customers represents a significant credit risk based on past collection experience and review of their current credit quality. The Company is exposed to credit losses from nonperformance by counterparties on foreign currency hedge contracts. These counterparties are large global institutions, and to date, no such counterparty has failed to meet its financial obligations to the Company. NOTE 12 – Commitments and Contingencies Commitments The Company’s commitments primarily include the Company’s obligations to purchase wafers and substrates from third parties, and future payments related to multi-year cloud service provider (CSP), software, and technology license agreements. Some cloud service capacity may be reduced, terminated or sold to others by the CSPs, in which case the Company’s commitments will be reduced. The Company expects to utilize the cloud service capacity in its operations or assign the capacity to third parties. These commitments were made under noncancellable purchase orders and contractual obligations requiring minimum commitments for which cancellation would lead to significant penalties. Total future unconditional commitments as of December 27, 2025 are as follows: Fiscal Year 2026 2027 2028 2029 2030 2031 and thereafter Total (In millions) Unconditional commitments $ 8,498 $ 1,099 $ 1,216 $ 1,197 $ 156 $ — $ 12,166 The Company continually works with suppliers and partners on the timing of payments and deliveries of purchase commitments, taking into account business conditions. Warranties and Indemnities The Company generally warrants that its products sold to its customers will conform to its approved specifications and be free from defects in material and workmanship under normal use and conditions for one year. The Company may also offer, in general, one to three-year limited warranties based on product type and negotiated warranty terms with certain customers. The Company accrues warranty costs to Cost of sales at the time of sale of warranted products. Changes in the Company’s estimated liability for product warranty during 2025 and 2024 are as follows: December 27, 2025 December 28, 2024 (In millions) Beginning balance $ 188 $ 85 Provisions during the period 358 213 Settlements during the period ( 238 ) ( 110 ) Ending balance $ 308 $ 188 81 Table of Conten t s In addition to product warranties, the Company from time to time in its normal course of business indemnifies other parties with whom it enters into contractual relationships, including customers, lessors and parties to other transactions with the Company, with respect to certain matters. In these limited matters, the Company has agreed to hold certain third parties harmless against specific types of claims or losses such as those arising from a breach of representations or covenants, third-party claims that the Company’s products when used for their intended purpose(s) and under specific conditions infringe the intellectual property rights of a third party, or other specified claims made against the indemnified party. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the unique facts and circumstances that are likely to be involved in each particular claim and indemnification provision. Historically, payments made by the Company under these obligations have not been material. In addition, the impact from changes in estimates for pre-existing warranties has been immaterial. Litigation and Other Legal Matters As of December 27, 2025, there were no material legal proceedings. The Company is a defendant or plaintiff in various actions that arose in the normal course of business. With respect to these matters, based on management’s current knowledge, the Company believes that the amount or range of reasonably possible loss, if any, will not, either individually or in the aggregate, have a material adverse effect on the Company’s financial condition, results of operations, or cash flows. NOTE 13 – Earnings Per Share The following table sets forth the components of basic and diluted earnings per share: Year Ended December 27, 2025 December 28, 2024 December 30, 2023 (In millions, except per share amounts) Numerator Income from continuing operations $ 4,269 $ 1,641 $ 854 Income from discontinued operations 66 — — Net income $ 4,335 $ 1,641 $ 854 Denominator Basic weighted average shares 1,624 1,620 1,614 Potentially dilutive shares from employee equity plans 12 17 11 Diluted weighted average shares 1,636 1,637 1,625 Earnings per share: Earnings per share from continuing operations - basic $ 2.63 $ 1.01 $ 0.53 Earnings per share from discontinued operations - basic 0.04 — — Basic earnings per share $ 2.67 $ 1.01 $ 0.53 Earnings per share from continuing operations - diluted $ 2.61 $ 1.00 $ 0.53 Earnings per share from discontinued operations - diluted 0.04 — — Diluted earnings per share $ 2.65 $ 1.00 $ 0.53 Potential shares from employee equity plans totaling 9 million, 1 million and 6 million weighted-average shares for 2025, 2024 and 2023, respectively, were not included in the earnings per share calculation because their inclusion would have been anti-dilutive. 82 Table of Conten t s NOTE 14– Common Stock and Stock-Based Compensation Common Stock Shares of common stock outstanding were as follows: Year Ended December 27, 2025 December 28, 2024 December 30, 2023 (In millions) Balance, beginning of period 1,622 1,616 1,612 Common stock issued in the acquisition of ZT Systems 9 — — Common stock issued under employee equity plans 15 17 17 Repurchases of common stock ( 12 ) ( 6 ) ( 10 ) Common stock repurchases for tax withholding on equity awards ( 4 ) ( 5 ) ( 4 ) Issuance of common stock upon warrant exercise — — 1 Balance, end of period 1,630 1,622 1,616 Stock Repurchase Program 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. Warrant 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). 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. Generally, stock options granted under the 2023 Plan vest and become exercisable over a four-year period from the date of grant and expire within seven years after the grant date. Unvested shares from the 2023 Plan that are reacquired by the Company from forfeited outstanding equity awards become available for grant and may be reissued as new awards. Under the 2023 Plan, the Company can grant (i) stock options, and (ii) RSUs, including time-based RSUs and PRSUs. Stock Options. 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. 83 Table of Conten t s Time-based RSUs. Time-based RSUs are awards that can be granted to any employee, director or consultant and that obligate the Company to issue a specific number of shares of the Company’s common stock in the future if the vesting terms and conditions are satisfied. PRSUs. PRSUs can be granted to certain of the Company’s senior executives. The performance metrics can be financial performance, non-financial performance and/or market conditions. Each PRSU award reflects a target number of shares (Target Shares) that may be issued to an award recipient before adjusting based on the Company’s financial performance, non-financial performance and/or market conditions. The actual number of shares that a grant recipient receives at the end of the period may range from 0 % to 250 % of the Target Shares granted, depending upon the degree of achievement of the performance target designated by each individual award. ESPP. Under the 2017 Plan, eligible employees who participate in an offering period may have up to 15 % of their eligible earnings withheld, up to certain limitations, to purchase shares of common stock at 85 % of the lower of the fair market value on the first or the last business day of the six-month offering period. The offering periods commence in May and November each year. 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 Stock-based compensation expense was allocated in the Company’s Consolidated Statements of Operations as follows: Year Ended December 27, 2025 December 28, 2024 December 30, 2023 (In millions) Cost of sales $ 26 $ 21 $ 30 Research and development 1,287 1,079 1,002 Marketing, general, and administrative 325 307 352 Total stock-based compensation expense before income taxes 1,638 1,407 1,384 Income tax benefit ( 293 ) ( 251 ) ( 249 ) Total stock-based compensation expense, net of income taxes $ 1,345 $ 1,156 $ 1,135 Stock Options. The weighted-average estimated fair value of employee stock options granted during 2025, 2024 and 2023 was $ 89.01 , $ 68.38 and $ 53.72 per share, respectively, using the following assumptions: December 27, 2025 December 28, 2024 December 30, 2023 Expected volatility 52.25 % 54.34 % 52.36 % - 52.42 % Risk-free interest rate 3.82 % 3.80 % 3.93 % - 4.11 % Expected dividends — % — % — % Expected life (in years) 4.97 4.98 4.96 - 5.04 The Company uses a combination of the historical volatility of its common stock and the implied volatility for publicly traded options on the Company’s common stock as the expected volatility assumption. The risk-free interest rate is based on the rate for a U.S. Treasury zero-coupon yield curve with a term that approximates the expected life of the option grant at the date closest to the option grant date. The expected dividend yield is zero as the Company does not expect to pay dividends in the near future. The expected term of employee stock options represents the weighted-average period the stock options are expected to remain outstanding. 84 Table of Conten t s The following table summarizes stock option activity and related information: Outstanding Number of Shares Weighted- Average Exercise Price Aggregate Intrinsic Value Weighted-Average Remaining Contractual Life (in years) (In millions, except share price) Balance as of December 28, 2024 2 $ 89.73 Granted — $ 177.51 Forfeited — $ 110.30 Exercised — $ 43.04 Balance as of December 27, 2025 2 $ 117.60 $ 77 4.17 Exercisable December 27, 2025 1 $ 98.94 $ 58 3.06 The total intrinsic value of stock options exercised for 2025, 2024 and 2023 was $ 65 million, $ 86 million and $ 173 million, respectively. As of December 27, 2025, the Company had $ 51 million of total unrecognized compensation expense related to stock options, which will be recognized over the weighted-average period of 2.55 years. Time-based RSUs. The weighted-average grant date fair values of time-based RSUs granted during 2025, 2024 and 2023 were $ 158.26 , $ 141.95 and $ 106.28 per share, respectively. The following table summarizes time-based RSU activity and related information: Number of Shares Weighted- Average Grant Date Fair Value (In millions) Unvested shares as of December 28, 2024 30 $ 116.77 Granted 16 $ 158.26 Forfeited ( 2 ) $ 120.12 Vested ( 11 ) $ 113.34 Unvested shares as of December 27, 2025 33 $ 138.14 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. PRSUs. The weighted-average grant date fair values of PRSUs granted during 2025, 2024 and 2023 were $ 263.71 , $ 118.98 and $ 134.87 , respectively, using the following assumptions: December 27, 2025 December 28, 2024 December 30, 2023 Expected volatility 50.74 % - 51.77 % 52.68 % - 53.19 % 51.12 % - 56.22 % Risk-free interest rate 3.70 %- 4.22 % 3.82 % - 4.41 % 4.30 %- 4.36 % Expected dividends — % — % — % Expected term (in years) 3.00 2.48 - 3.00 2.17 - 3.00 The Company uses the historical volatility of its common stock and risk-free interest rate based on the rate for a U.S. Treasury zero-coupon yield curve with a term that approximates the expected life of the PRSUs grant at the date closest to the grant date. The expected dividend yield is zero as the Company does not expect to pay dividends in the near future. The expected term of PRSUs represents the requisite service periods of these PRSUs. 85 Table of Conten t s The following table summarizes PRSU activity and related information: Number of Shares Weighted-Average Grant Date Fair Value (In millions) Unvested shares as of December 28, 2024 2 $ 139.31 Granted 1 $ 263.71 Forfeited — $ 142.51 Vested ( 1 ) $ 120.06 Unvested shares as of December 27, 2025 2 $ 180.93 The total fair value of PRSUs vested during 2025, 2024 and 2023 was $ 78 million, $ 226 million and $ 100 million, respectively. As of December 27, 2025, the Company had $ 232 million of total unrecognized compensation expense related to PRSUs, which will be recognized over the weighted-average period of 1.42 years. ESPP. The weighted-average grant date fair value for the ESPP during 2025, 2024 and 2023 was $ 48.39 , $ 43.8 0 and $ 31.11 per share, respectively, using the following assumptions: December 27, 2025 December 28, 2024 December 30, 2023 Expected volatility 56.47 % - 56.79 % 48.14 % - 49.38 % 45.74 % - 49.40 % Risk-free interest rate 3.79 % - 4.28 % 4.42 % - 5.41 % 5.13 % - 5.46 % Expected dividends — % — % — % Expected term (in years) 0.50 0.50 0.50 The Company uses the historical volatility of its common stock and the risk-free interest rate based on the rate for a U.S. Treasury zero-coupon yield curve with a term that approximates the expected life of the ESPP grant at the date closest to the ESPP grant date. The expected dividend yield is zero as the Company does not expect to pay dividends in the near future. The expected term of the ESPP represents the six-month offering period. During 2025, 3 million shares of common stock were purchased under the ESPP at an average purchase price of $ 89.22 resulting in aggregate cash proceeds of $ 263 million. As of December 27, 2025, the Company had $ 52 million of total unrecognized compensation expense related to the ESPP, which will be recognized over the weighted-average period of 0.37 years. NOTE 15 – Retirement Benefit Plans The Company provides retirement benefit plans in the United States and certain foreign countries. The Company has a 401(k) retirement plan that allows participating employees in the United States to contribute as defined by the plan and subject to Internal Revenue Service limitations. The Company matches 75 % of employees’ contributions up to 6 % of their eligible compensation. The Company’s contributions to the 401(k) plan for 2025, 2024 and 2023 were approximately $ 84 million, $ 78 million and $ 70 million, respectively. NOTE 16 – Restructuring Charges 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. 86 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: Year Ended December 27, 2025 December 28, 2024 December 30, 2023 (In millions) U.S. $ 4,588 $ 2,369 $ 454 Non-U.S. ( 422 ) ( 347 ) 54 Total pre-tax income including equity income in investee $ 4,166 $ 2,022 $ 508 The income tax provision (benefit) consists of: Year Ended December 27, 2025 December 28, 2024 December 30, 2023 (In millions) Current: U.S. federal $ ( 493 ) $ 1,338 $ 496 U.S. state and local 32 64 27 Non-U.S. 106 142 150 Total ( 355 ) 1,544 673 Deferred: U.S. federal 308 ( 311 ) ( 860 ) U.S. state and local ( 16 ) 6 ( 29 ) Non-U.S. ( 40 ) ( 858 ) ( 130 ) Total 252 ( 1,163 ) ( 1,019 ) Income tax provision (benefit) $ ( 103 ) $ 381 $ ( 346 ) 87 Table of Conten t s Year Ended 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 Canada Scientific Research and Experimental Development investment tax credits ( 55 ) ( 1.3 ) % Valuation allowance 51 1.2 % Other 25 0.6 % Singapore Development and expansion incentive 70 1.7 % Other 31 0.7 % Other foreign jurisdictions 43 1.0 % 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 ) % Tax credits 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 47 1.1 % 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 ) Interest and penalty 136 53 State income taxes, net of federal benefit 22 ( 2 ) Foreign-Derived Intangible Income (FDII) deduction ( 275 ) ( 185 ) Research credits ( 232 ) ( 169 ) GILTI and other foreign inclusion ( 133 ) ( 138 ) Stock-based and non-deductible compensation ( 101 ) ( 17 ) Other 13 16 Income tax provision (benefit) $ 381 $ ( 346 ) 88 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. Deferred income taxes reflect the net tax effects of tax carryovers and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the balances for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 27, 2025 and December 28, 2024 were as follows: December 27, 2025 December 28, 2024 (In millions) Deferred tax assets: Capitalized R&D $ 2,556 $ 2,892 Net operating loss carryovers 61 962 Accruals and reserves not currently deductible 727 829 Federal and state tax credit carryovers 709 679 Foreign R&D and investment tax credits 631 579 Employee benefits not currently deductible 402 334 Lease liability 231 182 Foreign tax credits 91 77 Other 85 111 Total deferred tax assets 5,493 6,645 Less: valuation allowance ( 1,338 ) ( 2,136 ) Total deferred tax assets, net of valuation allowance 4,155 4,509 Deferred tax liabilities: Acquired intangibles ( 3,227 ) ( 3,614 ) GILTI ( 348 ) ( 222 ) Right-of-use assets ( 228 ) ( 182 ) Depreciation ( 101 ) ( 75 ) Other ( 180 ) ( 77 ) Total deferred tax liabilities ( 4,084 ) ( 4,170 ) Net deferred tax assets $ 71 $ 339 89 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: December 27, 2025 December 28, 2024 December 30, 2023 (In millions) Balance at beginning of year $ 2,136 $ 2,124 $ 2,078 Charges to income tax expense and other accounts ( 798 ) 9 41 Acquisition-related — 3 5 Balance at end of year $ 1,338 $ 2,136 $ 2,124 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. $ 20 million of U.S. federal NOLs will expire between 2027 and 2036, and $ 74 million of federal NOLs have no expiration date. State NOLs will expire at various dates through 2045. The federal tax credits of $ 6 million will expire at various dates between 2040 and 2042. The state tax return credits of $ 848 million will expire at various dates between 2026 and 2040, except for the California R&D credit, which does not expire. The Company also has $ 678 million of credit carryforward in Canada that will expire between 2028 and 2045. A reconciliation of the Company's gross unrecognized tax benefits was as follows: December 27, 2025 December 28, 2024 December 30, 2023 (In millions) Balance at beginning of year $ 1,498 $ 1,463 $ 1,361 Increases for tax positions taken in the current year 50 57 53 Increases for tax positions taken in prior years 10 24 57 Decreases for tax positions taken in prior years ( 4 ) ( 18 ) ( 8 ) Decreases for settlements with taxing authorities ( 685 ) — — 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 $ 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 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. and foreign jurisdictions. Earnings from non-U.S. activities are subject to local country income tax. The material jurisdiction in which the Company is subject to potential examination by the taxing authority is the United States, where tax years from 2007 are open for audit. Pre-acquisition Xilinx U.S. tax returns for fiscal years 2018 and 2019 are currently under audit by the IRS. Under current 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. The deferred tax liability on these undistributed earnings is not material. 90 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. Year Ended December 27, 2025 Cash paid for income taxes, net of refunds: (In millions) Federal $ 578 State 149 Foreign 157 Total cash paid for income taxes, net of refunds $ 884 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 The following table summarizes the components of Other income (expense), net: Year Ended December 27, 2025 December 28, 2024 December 30, 2023 (In millions) Interest income $ 215 $ 182 $ 206 Gains (losses) on long-term investments, net 366 ( 2 ) 1 Other income (expense) ( 4 ) 1 ( 10 ) Other income (expense), net $ 577 $ 181 $ 197 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. 91 Table of Conten t s Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Advanced Micro Devices, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Advanced Micro Devices, Inc. (the Company) as of December 27, 2025 and December 28, 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 27, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 27, 2025 and December 28, 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 27, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 27, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 3, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. 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. 92 Table of Conten t s Inventory Valuation Description of the Matter At December 27, 2025, the Company’s net inventory balance was $7,920 million. As discussed in Note 2 to the consolidated financial statements, the Company adjusts the inventory carrying value to the lower of actual cost or the estimated net realizable value after completing ongoing reviews of on-hand inventory quantities exceeding forecasted demand, and by considering recent historical activity as well as anticipated demand. Auditing management’s inventory excess and obsolescence reserves involved significant judgment because the estimates are based on several factors that are affected by market, industry, and competitive conditions outside the Company's control. In estimating excess and obsolescence reserves, management developed certain assumptions, including forecasted demand which are sensitive to the competitiveness of product offerings, customer requirements, and product life cycles. These significant assumptions are forward-looking and could be affected by future economic and market conditions. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company's inventory excess and obsolescence reserves estimation process, including the basis for developing the above-described assumptions and management’s judgments. Our audit procedures included, among others, testing the reasonableness of management’s key assumptions and judgments and testing the accuracy and completeness of the underlying data used to determine the amount of excess and obsolescence reserves. We compared the quantities and carrying value of on-hand inventories to related unit sales, both historical and forecasted, and evaluated the appropriateness and adequacy of management’s adjustments to such sales forecasts by analyzing potential technological changes in line with product life cycles. We also assessed the accuracy of forecasts underlying management's estimates by comparing management’s historical forecasts to actual results, evaluated industry and market factors and performed sensitivity analyses over the forecasted demand used by management to determine inventory excess and obsolescence reserves. /s/ Ernst & Young LLP We have served as the Company’s auditor since 1970. San Jose, California February 3, 2026 93 Table of Conten t s Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Advanced Micro Devices, Inc. Opinion on Internal Control Over Financial Reporting We have audited Advanced Micro Devices, Inc.’s internal control over financial reporting as of December 27, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Advanced Micro Devices, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 27, 2025, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 27, 2025 and December 28, 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 27, 2025, and the related notes and our report dated February 3, 2026 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP San Jose, California February 3, 2026 94 Table of Conten t s ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.