# [Butler Post] AMD and Intel

## AMD’s Cash Flow

AMD’s cash-flow engine is finally purring instead of coughing, its server-CPU and AI-accelerator share keep ratcheting up, and the stock is *way* cheaper than Nvidia—but still isn’t screaming “dollar-store“ bargain on classic value metrics. If you’ve got a 10-year horizon and can stomach semiconductor mood-swings, AMD is credible compounder-candidate, not a deep-value play.

### 1\. Cash-flow check-up (yes, it’s looking healtier)

| Fiscal period | Operating CF | Free CF | Free CF margin |
| --- | --- | --- | --- |
| **FY 2023** | $1.67 B | $1.12 B | 5 % |
| **FY 2024** | **$3.04 B** | **$2.41 B** | **9 %** |
| Q4 2024 | $1.30 B | $1.09 B | 14 % |
| Q1 2025 | $0.73 B | $0.73 B | 10 % |

*Key takeaways*

* **Double the horsepower**: Operating cash flow almost **doubled** YoY in 2024, and Q4’s 17% OCF margin shows the model scaling.
    
* **Cap-light build-out**: CapEx ran ~$636M in 2024 (just 2.5% of revenue), leaving plenty of runway before AMD needs to tap debt markets again.
    
* **Cash cushion**: $3.8 B in cash vs. net debt near zero after repaying a $750 M note. Balance-sheet risk is now “small-yappy-dog“ rather than “angry-pit-bull.“
    

Verdict: **Healthy**. Not Nvidia-level cash-gushing yet, but AMD is no longer living paycheck-to-paycheck.

---

### 2\. Market-share momentum (the flywheel that feeds the cash)

* **Server CPUs (EPYC)**: Shares hit 27.2% in Q12025—another record, eating into Intel every quarter.
    
* **AI GPUSs (Instinct MI300/350)**: Street models now pencil in **$15B+** annual accelerator revenue by 2026, thanks to hyperscaler design-wins and even a cheeky 67% price hike on the MI350.
    
* **Client CPUs**: Ryzen 7000/8000 (“Zen5”) finally pushed notebook ASPs above Intel’s H1 2025, flipping a decade-old script.
    

Translation: **Growing pie slice = optionality**. Every 1 ppt of extra server share roughly adds $1B-$1.2B annual revenue at current pricing.

---

### 3\. Valuation sanity check

| Metric (7/29/25 close) | AMD | Nvidia | Intel |
| --- | --- | --- | --- |
| Market cap | ~$282 B | $4.33 T | $100 B |
| P/E (TTM GAAP) | **~59×** ([Macrotrends](https://macrotrends.net/stocks/charts/AMD/amd/pe-ratio)) | ~72× | ~18× |
| P/S (TTM) | ~11× | ~36× | ~1.8× |
| Free‑CF yield | **~0.85 %** | ~1.0 % | ~5 % |

*Is that “undervalued“?*

* Versus **Nvidia**: *Yes*, AMD is the discount rack.
    
* Versus the S&P 500 or legacy chipmakers: *No*, it’s still growth-stock territory.
    
* Free-CF needs to tripple before the sticker looks like a classic “value stock.”
    

---

### 4\. 10-year scenario sketch (back-of-napkin, coffee-stained)

| Scenario | 2035 share/pricing assumptions | Sales CAGR | EPS CAGR | Implied annual return\* |
| --- | --- | --- | --- | --- |
| **Bull (“EPYC + MI = 40 % server/AI share”)** | MI & EPYC mainstream, gross margin 55 % | 15–18 % | 20 %+ | **18–22 %** |
| **Base (“steady nibble to 30 % share”)** | Margin 52 %, modest PC growth | 9–11 % | 12–14 % | **10–12 %** |
| **Bear (“Intel fights back; AI capex cools”)** | Share stalls <25 %, margin dips <50 % | 3–4 % | 4–5 % | **1–3 %** |

---

### 5\. Red‑flag risk round‑up (a.k.a. why your future self might face‑palm)

1. **Supply‑chain choke points** (CoWoS capacity, HBM3E, export controls).
    
2. **Gross‑margin whiplash** if hyperscalers start demanding Costco pricing for AI GPUs.
    
3. **Intel rebound + ARM wildcards** could cap server upside.
    
4. **Valuation compression** once the AI sugar‑rush normalizes.
    

---

### Bottom line—should you buy now?

* **Cash flow:** **Solid and trending up**—passes the sniff test.
    
* **Undervaluation:** Relative to Nvidia, sure. *Absolute* bargain? Nope.
    
* **10‑year lens:** If you believe AMD can keep compounding share in both servers *and* AI accelerators, today’s premium could look cheap in hindsight.
    
* **Risk budget:** Treat this as a growth stock in a cyclical sector—position‑size accordingly and expect volatility spikes big enough to rattle your coffee mug.
    

> **My non‑advisory gut‑check:** Start nibbling on red days, build a position over time, and keep Dramamine handy for the inevitable semiconductor roller‑coaster ride.

*(Not financial advice. Do your own due diligence, double‑check the numbers, and blame only the cat if you lose money.)*

---

## Intel’s Cash Flow

Cash‑flow face‑off: AMD vs Intel (2024 → mid‑2025)

|  | AMD | Intel |
| --- | --- | --- |
| Revenue 2024 | **$25.8 B** | $53.1 B ([download.intel.com](https://download.intel.com/newsroom/2025/c8e6h3a2/intel-q4-2024y-earnings.pdf)) |
| Op. Cash Flow 2024 | **$3.04 B** (12 % margin) ([Advanced Micro Devices, Inc.](https://ir.amd.com/news-events/press-releases/detail/1236/amd-reports-fourth-quarter-and-full-year-2024-financial-results)) | $8.29 B (16 % margin) ([download.intel.com](https://download.intel.com/newsroom/2025/c8e6h3a2/intel-q4-2024y-earnings.pdf)) |
| Free Cash Flow 2024 | **+$2.41 B** | **‑$2.23 B** (cap‑ex >$10 B) ([download.intel.com](https://download.intel.com/newsroom/2025/c8e6h3a2/intel-q4-2024y-earnings.pdf)) |
| Q1 ’25 FCF | **+$0.73 B** on $7.4 B sales ([Advanced Micro Devices, Inc.](https://ir.amd.com/financial-information/sec-filings/content/0000002488-25-000045/0000002488-25-000045.pdf)) | **‑$3.68 B** on $12.7 B sales ([download.intel.com](https://download.intel.com/newsroom/2025/corporate/67s2p/Intel-1Q2025-Earnings.pdf)) |
| Q2 ’25 FCF | (results Aug 6) | **‑$1.05 B**, despite $2.05 B OCF ([download.intel.com](https://download.intel.com/newsroom/2025/corporate/29r29Xn/Intel-2Q2025-Earnings.pdf)) |
| Net cash / (net debt) | **+$6.1 B** (Q1 ’25) ([Advanced Micro Devices, Inc.](https://ir.amd.com/financial-information/sec-filings/content/0000002488-25-000045/0000002488-25-000045.pdf)) | Roughly flat after July asset sales |
| Cap‑ex intensity | ~2.5 % of rev. | ~20 % of rev. (foundry build‑out) |
| Shareholder returns | Aggressive buy‑backs but only when cash‑flow‑positive | 1.9 % dividend but just slashed; buy‑backs halted |

### What the numbers shout

1. **AMD is throwing off real, discretionary cash.**  
    After the Xilinx digested, cap‑ex settled near $200 M/quarter, so >70 % of OCF drops through to FCF. The first quarter of 2025 kept that streak. Cash pile hit $6 B with < $4 B gross debt, leaving optionality for more AI‑GPU tape‑outs or bolt‑on deals.
    
2. **Intel is still in cap‑ex purgatory.**  
    The core business generated >$10 B OCF in the last twelve months, but **every nickel—and then some—gets sucked into fabs.** Free‑cash‑flow stays **negative** while 18A and Ohio fabs soak up >$18 B gross cap‑ex in 2025. Partner contributions and government incentives mask the burn but don’t reverse it.
    
3. **Balance‑sheet risk diverges.**  
    AMD can self‑fund aggressive R&D and still repurchase stock without borrowing. Intel is issuing debt, selling Mobileye shares, and cutting 24 k heads to keep liquidity intact.
    
4. **Return math**
    
    * **AMD:** Trailing FCF ≈ $2.7 B. At a $283 B cap, FCF yield ≈ 1 %. You’re paying for growth—but growth is visible in EPYC + MI350 share gains.
        
    * **Intel:** Trailing FCF negative; value hinges on *future* foundry profits plus a turnaround in CPUs/AI accelerators. If it works, multiple expands *and* FCF flips positive—huge upside, but only after years of heavy lifting.
        

### 10‑year bet — my chips go to…

**💰 AMD.** It already generates positive, scal­able free cash, has a clean balance sheet, and keeps nibbling share in both servers and AI GPUs. If Lisa Su keeps compounding FCF even at 15 % CAGR, today’s rich multiple looks reasonable.

**🤞 Intel = lottery ticket.** A foundry comeback *could* quintuple earnings, but you must finance years of red ink and trust a culture mid‑overhaul. Great if you need asymmetry and can wait, but risk‑adjusted it loses to AMD for most portfolios.

> **My (non‑advisor) move:** 70 % of the silicon sleeve to AMD, 30 % to Intel *only* if you crave a speculative turnaround kicker. Otherwise, park the whole bet with AMD and sleep better.

—*Butler ☕️*