Advanced Micro Devices Inc. (NASDAQ:AMD)

The profitability ratios demonstrate a generally improving trend over the observed period, although with notable fluctuations. Initial values indicate a strong profitability position, which experienced a decline through 2022 before beginning a recovery and sustained growth into the forecast period of 2025. The pace of improvement varies across the different metrics.

Gross Profit Margin

The gross profit margin exhibited a consistent decline from 48.53% in March 2022 to a low of 43.70% in July 2023. Following this, the margin steadily increased, reaching 49.52% in December 2025. This suggests improving cost management or pricing power in more recent periods.

Operating Profit Margin

The operating profit margin experienced a more significant decline than the gross profit margin, falling from 20.86% in March 2022 to a negative value of -1.73% in July 2023. A substantial recovery commenced after this point, with the margin reaching 10.66% by December 2025. This indicates that improvements in operational efficiency and cost control have been crucial to the company’s turnaround.

Net Profit Margin

Mirroring the trend of the operating profit margin, the net profit margin decreased from 17.98% in March 2022 to -0.11% in July 2023. A strong upward trajectory followed, culminating in a net profit margin of 12.51% in December 2025. This demonstrates the impact of operational improvements flowing through to the bottom line.

Return on Equity (ROE)

ROE followed a similar pattern to the profit margins, declining from 6.13% in March 2022 to a low of -0.05% in July 2023. The metric then showed consistent growth, reaching 6.88% in December 2025. This suggests increasing efficiency in utilizing shareholder equity to generate profits.

Return on Assets (ROA)

ROA also exhibited a decline initially, from 5.07% in March 2022 to -0.04% in July 2023. Subsequently, ROA increased steadily, reaching 5.64% in December 2025. This indicates improved efficiency in utilizing assets to generate earnings.

Overall, the period demonstrates a challenging phase followed by a robust recovery in profitability. The consistent improvement across all ratios from mid-2023 through the forecast period suggests successful implementation of strategic initiatives focused on cost control, operational efficiency, and potentially, pricing strategies. The increasing ROE and ROA indicate a more effective use of both equity and assets to generate profits.

The gross profit margin exhibited a generally increasing trend over the observed period, although with notable fluctuations. Initial values were relatively high, followed by a decline, and then a recovery culminating in a peak before a slight decrease in the most recent quarter.

Initial Period (Mar 26, 2022 – Dec 31, 2022)

The gross profit margin began at 48.53% and experienced a gradual decline over the first four quarters, reaching 44.93% by the end of 2022. This suggests potential pressures on input costs or pricing during this timeframe.

Recovery and Peak (Apr 1, 2023 – Dec 28, 2024)

From the first quarter of 2023, the gross profit margin demonstrated a recovery, increasing from 43.98% to a peak of 49.35% in the fourth quarter of 2024. This improvement indicates successful cost management, increased pricing power, or a shift towards higher-margin products. The rate of increase was most pronounced between September 2023 and December 2024.

Recent Trend (Mar 30, 2024 – Dec 27, 2025)

Following the peak, the gross profit margin experienced a slight decrease to 49.52% in the final quarter of 2025. While still elevated compared to earlier periods, this recent dip warrants monitoring to determine if it represents a temporary fluctuation or the beginning of a new downward trend. The margin remained above 48% throughout this period.

Overall Volatility

The gross profit margin demonstrated a range of approximately 4.6 percentage points, from a low of 43.70% to a high of 49.35%. This indicates a degree of sensitivity to underlying business conditions and suggests that the company’s profitability is not entirely stable.

The observed fluctuations in gross profit margin correlate with changes in both gross profit and net revenue. Further investigation into the drivers of these changes, such as product mix, manufacturing costs, and competitive pricing, would provide a more comprehensive understanding of the company’s profitability dynamics.

The operating profit margin exhibited significant fluctuations throughout the analyzed period, spanning from March 2022 to December 2025. Initially strong, the margin experienced a marked decline before recovering and ultimately demonstrating a positive trend towards the end of the period.

Initial Performance & Decline (Mar 2022 - Dec 2022)

The operating profit margin began at 20.86% in March 2022, indicating a robust level of profitability. A consistent downward trend was then observed through the remainder of 2022, falling to 16.83% in June, 11.48% in September, and reaching a low of 5.36% by December. This period reflects a contraction in profitability relative to revenue.

Volatility & Initial Recovery (Apr 2023 - Sep 2023)

The first half of 2023 continued to show volatility. The margin decreased further to 0.73% in April, and even entered negative territory at -1.73% in July. A slight recovery began in September 2023, with the margin reaching -0.41%, though remaining below 1%.

Consistent Improvement (Dec 2023 - Dec 2025)

From December 2023 onwards, a clear upward trend in the operating profit margin is evident. The margin increased to 1.77% in December 2023, then to 2.55% in March 2024, and continued to climb, reaching 3.74% in June 2024, 5.64% in September 2024, 7.37% in December 2024, 9.62% in March 2025, 7.66% in June 2025, 8.78% in September 2025, and culminating in 10.66% by December 2025. This represents a substantial improvement in operational profitability over the latter portion of the analyzed timeframe.

The operating profit margin’s trajectory suggests a period of initial strength followed by challenges, and ultimately a successful recovery and expansion. The significant increase in the margin towards the end of the period indicates improved operational efficiency or pricing power.

The net profit margin exhibited considerable fluctuation throughout the observed period. Initially strong, the margin experienced a marked decline before stabilizing and ultimately demonstrating a positive trend towards the end of the analysis timeframe.

Initial Performance (Mar 26, 2022 – Dec 31, 2022)

The net profit margin began at 17.98% in March 2022, indicating a robust level of profitability. A consistent downward trend was then observed through the end of 2022, decreasing to 5.59% by December. This suggests increasing costs or decreasing revenue, or a combination of both, impacting profitability during this period.

Volatility and Recovery (Apr 1, 2023 – Dec 30, 2023)

The first quarter of 2023 saw a significant drop, with the net profit margin falling to 1.71% and even registering a loss of -0.11% in the subsequent quarter. However, a recovery commenced in the latter half of 2023, with the margin reaching 3.77% by December. This indicates potential corrective actions or favorable market conditions beginning to take effect.

Consistent Improvement (Mar 30, 2024 – Dec 27, 2025)

From March 2024 onwards, the net profit margin demonstrated a consistent upward trajectory. It increased from 4.89% to 12.51% by December 2025. This sustained improvement suggests successful implementation of strategies to enhance profitability, potentially through cost management, increased sales, or a shift towards higher-margin products. The margin reached its highest point at 12.51% in December 2025, signifying a substantial improvement from the low point experienced in early 2023.

Overall Trend

The overall trend reveals a period of initial strength followed by a substantial decline, a period of volatility, and ultimately, a strong and sustained recovery. The final values indicate a significantly improved profitability position compared to the earlier periods analyzed.

The Return on Equity (ROE) exhibited considerable fluctuation over the analyzed period, spanning from March 2022 to December 2025. Initially, the ROE demonstrated a declining trend, reaching a low point in December 2022 before embarking on a recovery phase. This recovery continued through the subsequent quarters, culminating in a peak in December 2025.

Initial Decline (Mar 26, 2022 – Dec 31, 2022)

The ROE began at 6.13% in March 2022 and progressively decreased to 2.41% by December 2022. This decline coincided with a decrease in net income, suggesting diminishing profitability relative to stockholders’ equity during this period. The most significant drop occurred between June 2022 and September 2022, and again between September 2022 and December 2022.

Recovery and Growth (Apr 1, 2023 – Dec 27, 2025)

From April 2023 onwards, the ROE began a consistent upward trajectory. A brief negative value of -0.05% was recorded in July 2023, but was quickly followed by positive growth. The ROE increased from 0.72% in April 2023 to 6.88% in December 2025. This positive trend aligns with increasing net income figures, particularly in the later quarters of the period. The most substantial gains were observed between September 2024 and December 2025.

Stockholders’ Equity

Stockholders’ equity generally increased throughout the period, moving from US$55,333 million in March 2022 to US$62,999 million in December 2025. While equity growth was relatively stable, the ROE fluctuations suggest that changes in net income were the primary driver of the observed ROE trends, rather than significant shifts in the equity base.

Net Income Correlation

A strong correlation exists between net income and ROE. Periods of declining net income, such as the first three quarters of 2022, were associated with decreasing ROE. Conversely, periods of increasing net income, particularly from late 2023 through 2025, corresponded with rising ROE. The negative net income in December 2022 directly contributed to the lowest ROE value observed during the analyzed timeframe.

In summary, the ROE experienced a period of decline followed by a substantial recovery and growth phase. This pattern appears closely linked to the company’s net income performance, with stockholders’ equity exhibiting a more stable, upward trend.

The Return on Assets (ROA) exhibited a generally increasing trend over the analyzed period, though with significant fluctuations. Initial values demonstrated a relatively strong performance, followed by a period of decline, and then a substantial recovery and continued growth.

Initial Performance & Decline (Mar 26, 2022 – Dec 31, 2022)

The ROA began at 5.07% in March 2022, indicating a solid level of profitability relative to total assets. A gradual decline was observed through the end of 2022, reaching 1.95% in December. This suggests a weakening in the company’s ability to generate earnings from its asset base during this timeframe.

Volatility & Recovery (Apr 1, 2023 – Dec 30, 2023)

The first half of 2023 presented considerable volatility. The ROA decreased to 0.58% in April, followed by a negative value of -0.04% in July, representing a loss relative to assets. A recovery commenced in the latter half of the year, with the ROA reaching 1.26% in December. This indicates a turnaround in asset utilization and profitability.

Sustained Growth (Mar 30, 2024 – Dec 27, 2025)

From March 2024 onwards, the ROA demonstrated consistent and accelerating growth. It increased from 1.64% to 5.64% by December 2025. This sustained improvement suggests increasingly efficient asset management and a strengthening ability to generate profits from the company’s investments. The most recent value of 5.64% represents the highest ROA observed within the analyzed period.

Correlation with Net Income

The fluctuations in ROA closely mirror the trends in net income. Periods of declining net income, such as those observed in late 2022 and the first half of 2023, corresponded with lower ROA values. Conversely, increasing net income, particularly from late 2023 through 2025, coincided with the observed ROA growth. This highlights the direct relationship between profitability and the efficient utilization of assets.

Asset Base Stability

Total assets remained relatively stable throughout the period, fluctuating within a narrow range. The observed changes in ROA are therefore primarily driven by variations in net income, rather than significant shifts in the asset base. This suggests that improvements in operational efficiency and profitability are the key factors contributing to the ROA trend.