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AMD Fair Value Estimate and AI Insights

The Morningstar report on Advanced Micro Devices Inc (AMD) maintains a fair value estimate of $145, with the current price at $156.68, indicating the stock is modestly overvalued. AMD is making strides in the AI semiconductor market, although it is unlikely to surpass Nvidia's dominance soon, while also gaining market share in server processors. The company has a narrow economic moat and is positioned for growth in data centers and AI, despite facing challenges from competitors like Intel and Nvidia.

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AMD Fair Value Estimate and AI Insights

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Morningstar Equity Analyst Report | Report as of 16 Oct 2024 00:25, UTC | Reporting Currency: USD | Trading Currency: USD

| Exchange: NASDAQ - ALL MARKETS Page 1 of 22

Advanced Micro Devices Inc AMD QQQ 15 Oct 2024 21:25, UTC

Last Price Fair Value Estimate Price/FVE Market Cap Economic MoatTM Equity Style Box Uncertainty Capital Allocation ESG Risk Rating Assessment1
156.68 USD 145.00 USD 1.08 253.52 USD Bil Narrow 3 Large Growth High Exemplary ;;;;;
15 Oct 2024 31 Jan 2024 03:44, UTC 15 Oct 2024 2 Oct 2024 05:00, UTC

Price vs. Fair Value

Last Close: 156.68

167 Fair Value: 145.00
31 Jan 2024 03:44, UTC

127 Overvalued
Undervalued
87

7
2019 2020 2021 2022 2023 YTD
Analysis
2.41 1.37 1.32 0.56 1.18 1.08 Price/Fair Value
148.43 99.98 56.91 -54.99 127.59 6.29 Total Return %
Morningstar Rating

Total Return % as of 15 Oct 2024. Last Close as of 15 Oct 2024. Fair Value as of 31 Jan 2024 03:44, UTC.
Contents
Analyst Note (10 Oct 2024) AMD: We Maintain $145 Fair Value as AMD’s “Advancing AI”
Business Description
Business Strategy & Outlook (31 Jan 2024) Event Highlights Its Strong Road Map
Bulls Say / Bears Say (31 Jan 2024)
Analyst Note Brian Colello, CFA, Strategist, 10 Oct 2024
Economic Moat (30 Jan 2024)
Fair Value and Profit Drivers (30 Jan 2024)
AMD's "Advancing AI" event on Oct. 10 highlighted some solid milestones as, in our opinion, the
Risk and Uncertainty (30 Jan 2024) company continues to progress in AI across a variety of products—processors (both CPUs and GPUs),
Capital Allocation (30 Jan 2024) software, and networking hardware. On the whole, the event announcements are consistent with our
Analyst Notes Archive thesis that AMD is quite likely to carve out a piece of the AI semiconductor and hardware pie over time
Financials
but is unlikely to displace industry leader Nvidia anytime soon. We maintain our $145 fair value estimate
ESG Risk
for narrow-moat AMD and view shares as modestly overvalued.
Appendix
Research Methodology for Valuing Companies
Our biggest industrywide takeaway is that AMD increased its forecast for the AI accelerator industry to
Important Disclosure
$500 billion of revenue in 2028, up from its prior forecast of $400 billion in 2027. The forecast may have
The conduct of Morningstar’s analysts is governed by Code of Ethics/Code of
Conduct Policy, Personal Security Trading Policy (or an equivalent of), and underwhelmed some investors, as we saw AMD's stock selloff about 3% immediately after the forecast
Investment Research Policy. For information regarding conflicts of interest, please
visit: [Link] announcement. However, a 25% growth rate in 2028 wouldn't disappoint us. AMD's line of sight into
The primary analyst covering this company does not own its stock. data center buildouts suggests that no AI chip bubble is imminent. Further, we've received many
The ESG Risk Rating Assessment is a representation of Sustainalytics’ ESG Risk
1 questions about what the size of the AI chip market might look like at maturity (whenever that might
Rating.
be), and although we're confident the industry won't grow 25% per year forever, it might not decelerate
into a flattish market in the next five or 10 years either.

We were also pleased with AMD's disclosure that it has 34% revenue share of server processors,
highlighting the firm's share gains over Intel in recent quarters. Given Intel's near-term struggles, we
© Morningstar 2024. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 16 Oct 2024 00:25, UTC | Reporting Currency: USD | Trading Currency: USD | Exchange: NASDAQ - ALL MARKETS Page 2 of 22

Advanced Micro Devices Inc AMD QQQ 15 Oct 2024 21:25, UTC

Sector Industry
a Technology Semiconductors anticipate AMD's server share gains will continue. We foresee these gains being gradual over the next
few years, but if Intel can't deliver on its manufacturing road map, there's a bullish scenario where
Business Description
Advanced Micro Devices designs a variety of digital AMD's ongoing share gains might accelerate rather rapidly.
semiconductors for markets such as PCs, gaming
consoles, data centers, industrial, and automotive Business Strategy & Outlook Brian Colello, CFA, Strategist, 31 Jan 2024
applications, among others. AMD’s traditional strength Advanced Micro Devices has a wealth of digital semiconductor expertise and is well positioned to
was in central processing units, CPUs, and graphics prosper from favorable trends in data centers, artificial intelligence, and gaming. We consider AMD to
processing units, or GPUs, used in PCs and data centers.
be one of two notable firms in graphics processing units, which are especially well suited for AI. The
Additionally, the firm supplies the chips found in
prominent game consoles such as the Sony PlayStation
company may play second fiddle to Nvidia in AI GPUs, but its GPU expertise should become increasingly
and Microsoft Xbox. In 2022, the firm acquired field- valuable, and lucrative, in the years ahead.
programmable gate array, or FPGA, leader Xilinx to
diversify its business and augment its opportunities in AMD’s primary products include processors and GPUs tailored to PCs, game consoles, and servers. In
key end markets such as the data center and our view, AMD’s PC and server success stems from the rare x86 architecture license that it possesses
automotive. from Intel, which allows AMD and Intel to build x86 CPUs for Microsoft Windows PCs. We view it as a
heavy lift for Windows to rewrite its x86 software to work with other processors, but Apple made this
move in recent years to support its internal ARM-based processors. ARM will likely gain share in the PC
market, but we still expect x86-based chips from AMD and Intel to retain leadership in the Windows PC
market for quite some time.

AMD has benefited from its outsourced manufacturing model, as its tight relationship with industry
leader Taiwan Semiconductor enabled AMD to grab a technological lead as its rival, Intel, stumbled
with its internal manufacturing roadmap. We anticipate that AMD will continue to gain market share
over the next three years as Intel strives to turn it around, but AMD's gains could be longer lasting if
Intel were to stumble further.

We think AMD's data center business should boom over the next few years. Its server CPUs should be in
high demand, as should its GPUs suited for AI workloads. AMD pegs the total addressable market for AI
accelerators, such as GPUs, at $150 billion by 2027. While we foresee Nvidia capturing the bulk of this
value over the next several years, we think that all AI vendors and customers will seek alternatives to
keep Nvidia's dominance at bay, and AMD might be the best positioned company to emerge as a
second source in AI.

Bulls Say Brian Colello, CFA, Strategist, 31 Jan 2024

u AMD has gained market share in the PC CPU market as Intel’s manufacturing prowess has hit several
road bumps in recent years.
u AMD’s partnership with chip manufacturing leader Taiwan Semi, plus its adoption of a chiplet
manufacturing strategy, has allowed the company to come to market with more formidable products
and greater flexibility to bring new products to market quickly.

© Morningstar 2024. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 16 Oct 2024 00:25, UTC | Reporting Currency: USD | Trading Currency: USD | Exchange: NASDAQ - ALL MARKETS Page 3 of 22

Advanced Micro Devices Inc AMD QQQ 15 Oct 2024 21:25, UTC

Competitors
Advanced Micro Devices Inc AMD Intel Corp INTC NVIDIA Corp NVDA

Last Close
Last Close Last Close 131.60
156.68 22.66
Fair Value Fair Value Fair Value
145.00 21.00 105.00
Uncertainty : High Uncertainty : Very High Uncertainty : Very High

Security
Analysis
Economic4Moat Security
Narrow 1 Security
None 2 Security
Wide 3
Currency USD USD USD
Fair Value 145.00 31 Jan 2024 03:44, UTC 21.00 2 Aug 2024 03:48, UTC 105.00 23 May 2024 02:37, UTC
1-Star Price 87.00 36.75 183.75
5-Star Price 224.75 10.50 52.50
Assessment Fairly Valued 15 Oct 2024 Fairly Valued 15 Oct 2024 Overvalued 15 Oct 2024
Morningstar Rating QQQ15 Oct 2024 21:25, UTC QQQ15 Oct 2024 21:26, UTC QQ15 Oct 2024 21:25, UTC
Analyst Brian Colello, Strategist Brian Colello, Strategist Brian Colello, Strategist
Capital Allocation Exemplary Standard Exemplary
Price/Fair Value 1.08 1.08 1.25
Price/Sales 11.63 1.81 35.70
Price/Book 4.73 0.87 58.31
Price/Earning 196.75 55.43 64.73
Dividend Yield 0.00% 2.13% —
Market Cap 253.58 Bil 96.89 Bil 3,233.91 Bil
52-Week Range 93.12—227.30 18.51—51.28 39.23—140.76
Investment Style Large Growth Large Value Large Growth

u AI offers a massive opportunity to GPU makers, and while AMD lags industry leader Nvidia, we see
plenty of room in the AI market for GPU alternatives such as AMD’s products.

Bears Say Brian Colello, CFA, Strategist, 31 Jan 2024

u Despite AMD’s recent share gains, Intel remains the industry leader in PC CPUs and it might recapture
the vast majority of the market if it can deliver industry-leading manufacturing capabilities once again.
u AMD will need to improve its software capabilities to make a dent into Nvidia’s AI dominance, as Nvidia
is strong not only GPUs, but associated AI software tools.
u AMD’s gaming semi-custom chip business is beholden to the design cycles and launches of new
gaming consoles, and it might be a couple of more years until next generation consoles arrive.

Economic Moat Brian Colello, CFA, Strategist, 30 Jan 2024

We assign AMD a narrow economic moat, based on intangible assets around a variety of chip designs
© Morningstar 2024. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Advanced Micro Devices Inc AMD QQQ 15 Oct 2024 21:25, UTC

(including those from Xilinx, which we rated as narrow moat prior to the business being acquired in
2022). We think it is more likely than not that AMD will generate excess returns on capital over the next
10 years, and perhaps even longer.

AMD is perhaps best known for its CPUs for PC desktops and notebooks within its Client business
segment. We think that AMD has a moat in this business, not only because of chip design expertise
honed over decades, but also because AMD is one of two prominent firms to hold an x86 instruction set
architecture license.

Intel initially developed x86 in the 1970s and licensed the architecture to AMD, to satisfy conditions
from IBM that required a second source of chips. Intel and AMD are the primary licensees of x86 and
owners of x86 intellectual property, as they have a cross-licensing agreement that covers the x86 patent
portfolio and would be terminated if either firm was acquired or had a change of control. The exclusivity
of the x86 license serves as a significant barrier to entry for other chipmakers (such as Qualcomm,
Apple, or others) that cannot make an x86 processor without a license.

For many years, effectively all PC software (including Microsoft's Windows, Apple's Mac operating
systems, and any desktop software applications running on both operating systems) was designed for
the x86 architecture. Software makers could not easily deviate from building x86-optimized applications,
while Microsoft and Apple would have a heavy lift to convert their operating systems to alternate
instruction sets (such as those by ARM, which is the dominant instruction set for mobile devices, used
in processors from Qualcomm, Samsung, Apple's iPhone and others). In turn, Apple (for the Mac) and PC
vendors (for Windows machines) had little choice than to buy x86 processors from (mostly) Intel or (on
occasion) AMD to run their PCs.

Today, however, Apple has already done the heavy lifting of converting its Mac software to ARM and
has now built excellent in-house processors for its Mac lineup. Further, an increasing portion of
software is hosted in the cloud and can run on multiple operating systems and isn't tied to only x86
devices. Microsoft has dabbled in ARM-based versions of Windows and may increase these
investments over time. We still think it would be a heavy lift for any on-device software makers to port
their software to be compatible with ARM-based PCs, but we think the writing is on the wall here to
move such software to the cloud or on to ARM-based devices like the Mac. Thus, we don't think the x86
architecture is as moaty as it once was, although we still foresee x86 based processors from Intel and
AMD as making up a significant portion of the PC market for the next several years.

In years past, Intel dominated the PC market, not only because of its x86 know-how, but also its internal
manufacturing advantage over virtually any other chipmaker, which allowed Intel to come out with
best-of-breed products that made it nearly impossible for AMD to gain meaningful market share. These
dynamics have flipped in recent years, however, as Intel has stumbled in internal manufacturing.

Advanced Micro Devices Inc AMD QQQ 15 Oct 2024 21:25, UTC

Meanwhile, AMD has partnered closely with Taiwan Semi (TSMC), the world's largest outsourced chip
manufacturer or foundry. TSMC now has a market lead in making cutting edge chips, and AMD is
bringing more competitive products to the PC market. Further, AMD has focused on a chiplet strategy
with TSMC that is improving yields and flexibility, boosting AMD's portfolio even further.

In turn, AMD has gained market share over Intel in PCs in recent years. Intel is investing heavily in new
process nodes to strive for manufacturing parity, if not leadership, with TSMC. If Intel is successful, it
could regain some lost x86 PC market share. However, we no longer view AMD as an also-ran in PC
CPUs, and even if Intel were to improve, we still think AMD could retain enough customers to maintain
a healthy PC business.

In server CPUs within AMD's Data Center segment, we see similar dynamics where most of the
software (particularly in the enterprise) is based on x86, and we think AMD has a moat in this segment
too. Again, Intel's manufacturing stumbles and AMD's partnership with TSMC has enabled AMD to gain
market share and profitability, and we don't think Intel will easily recapture such share even if its
internal manufacturing were to improve.

We also think that any cloud-based software vendors face high switching costs to move their software
from x86 servers and on to ARM-based servers, although the switching costs are likely far lower
between hosting software on an Intel x86 server versus an AMD one. Still, like the PC market, we see
ARM-based processors as a threat, as Amazon, Nvidia and others are developing ARM-based
processors to run traditional server workloads, as well as AI applications. Optimizing data center
architectures and workloads for ARM-based servers, rather than x86 ones, is again a heavy lift, from
what we can gather. Still, we recognize that mega-cap tech firms and cloud leaders (Microsoft, Apple,
Amazon) may have the incentive to do so if they can use ARM-based processors to elevate their data
centers and devices. Ultimately, we don't foresee a mass exodus away from x86 architectures in the
data center for the next several years.

Looking ahead, we think AMD's graphics processing unit (GPU) expertise is becoming increasingly
valuable in AI applications. GPUs perform parallel processing, in contrast to the serial processing
performed by CPUs to run the software and applications on PCs, and so on In the past decade, the
parallel processing of GPUs was found to more efficiently run the matrix multiplication algorithms
needed to power artificial intelligence models. AMD is working diligently to deliver AI-centric GPUs to
market.

However, Nvidia has a clear lead in GPU hardware and has captured the vast majority of AI training
workloads today. Further, Nvidia has spent a decade or more developing its CUDA software platform,
creating and hosting a variety of libraries, compilers, frameworks, and development tools that allowed
AI professionals to build their models. CUDA is proprietary to Nvidia and only runs on Nvidia GPUs, so
© Morningstar 2024. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
Morningstar Equity Analyst Report | Report as of 16 Oct 2024 00:25, UTC | Reporting Currency: USD | Trading Currency: USD | Exchange: NASDAQ - ALL MARKETS Page 6 of 22

Advanced Micro Devices Inc AMD QQQ 15 Oct 2024 21:25, UTC

we think it will take some effort for AI customers to port any AI models based on CUDA over to AMD's
hardware.

That said, since Nvidia and CUDA are clearly dominant in AI GPUs today, we think that leading cloud
vendors will continue to seek second sources for AI and have the necessary incentives to port AI models
from Nvidia to other vendors, at least enough to keep Nvidia honest as a vendor. In-house chip
development by the hyperscalers will continue, but partnerships with AMD may emerge as well,
assuming AMD can improve upon its software chops to allow new customers to use AMD's GPUs for AI
training.

We view AMD's embedded business as moaty, as this business is mostly inorganic from the acquisition
of Xilinx. We long believed that Xilinx warranted a narrow moat, based on its expertise in the field-
programmable gate array niche of the broader chip industry (with Intel-Altera being the other major
FPGA supplier). Although FPGAs are standard components that can be sold to many different users for a
multitude of applications, converting a complex algorithm to an efficient custom hardware architecture
can be an arduous task. Customers are generally reluctant to switch FPGA vendors, which would require
their engineers to learn new software and design tools. Some of Xilinx's FPGAs are used extensively in
communication equipment that may have operational lifetimes of at least a decade if not longer. Thus, it
can not only be difficult for new entrants to gain market share but also less likely that existing
customers defect from Altera (owned by Intel) to Xilinx or vice versa.

We generally do not view AMD's discrete GPU business for gaming, nor its semicustom chip business
for gaming consoles as moaty, although we acknowledge that the chip design expertise for both likely
aided AMD in its ability to deliver profitable GPUs to the data center in the future. In gaming, we think
AMD has intangible assets related to GPU patents and chip design expertise. However, it did not lead to
excess returns on capital for AMD when its CPU business was lagging, and we believe AMD's GPU
operating margins lag its CPU business.

Fair Value and Profit Drivers Brian Colello, CFA, Strategist, 30 Jan 2024
Our fair value estimate for AMD is $145 per share, which implies a 2024 adjusted price/earnings ratio of
37 times, respectively, and a 2% free cash flow yield.

We expect AMD to achieve a top-line compound annual growth rate of 17% through 2028, which
includes the acquisition of Xilinx in 2022. This CAGR also includes the 4% decline that AMD generated
in 2023 because of the slump in PC demand. However, we model 12% growth in 2024 and average
annual growth of 19% from 2025 to 2028 as AMD’s data center GPU business takes off in artificial
intelligence applications.

We are most bullish on AMD's data center segment, in which AMD foresees a $150 billion total
© Morningstar 2024. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Advanced Micro Devices Inc AMD QQQ 15 Oct 2024 21:25, UTC

available market, or TAM, for AI accelerators, such as GPUs, by 2027. Although AMD raised this forecast
to $400 billion, we think this TAM includes memory and other items that are not pure accelerators, and
we’re skeptical that AMD’s pure-play accelerator opportunity is this large (and was revised upward so
significantly) in just a few years.

We think AMD can carve out a decent portion of this market over time. Over the next five years, we
model AMD’s data center revenue growing at a 37% CAGR, even ahead of AMD’s target made in June
2022 of 20% (albeit before the launch of ChatGPT and exponential boom in AI GPU spending). In turn,
we model AMD’s data center revenue rising from $1.7 billion in 2020 and $6.5 billion in 2023 to just over
$12 billion in 2024 and exceeding $31 billion in 2028.

In GPUs used in large language model training and inference, we expect AMD to generate $4 billion of
revenue in 2024, ahead of management’s forecast of $3.5 billion. We anticipate AMD reaching $10
billion of GPU revenue in 2026 and $13 billion in 2027, ahead of our prior estimate of $9 billion in 2027.
While these estimates pale in comparison to the $100 billion of revenue that we anticipate for Nvidia’s
DC GPU business in 2027, this revenue was virtually zero just a couple of years ago and it should
represent an impressive windfall for AMD in the years ahead.

In client revenue (that is, PC CPUs), we model a 7% CAGR over the next five years as demand rebounds
from a severe slump in PC demand in 2023. AMD prospered from the remote working trend during
COVID-19, with Client revenue peaking at $6.9 billion of revenue in 2021, followed by $6.2 billion in
2022. Client revenue fell 25% in 2023 to $4.65 billion but we foresee a rebound to $6.4 billion in 2028,
thanks to a rebound in PC demand and some modest share gains over Intel.

On the profitability front, Xilinx is margin-accretive to AMD's financials. Adjusted gross margin has
expanded from 45% in 2020 to 52% in 2022. The slump in PC demand and stagnant revenue caused
adjusted gross margin to be 50% in 2023. Yet as AMD recovers in PCs and grows in data center chips,
we think AMD’s adjusted gross margin can reach management’s long-term target of 57%. Similarly,
adjusted operating margin was 27% in 2022 and fell to 21% in 2023, but data center growth should lead
to operating margin expansion to 39% in 2028, ahead of management’s long-term target.

Risk and Uncertainty Brian Colello, CFA, Strategist, 30 Jan 2024

We assign AMD with a Morningstar Uncertainty Rating of High. AMD sees a massive opportunity to
gain share in GPUs targeting AI applications, but we view Nvidia as a clear leader here with a wide
economic moat in not only hardware design but associated software tools. Even if AMD’s GPU designs
are up to par (or better), we view the associated software tools as a hurdle where AMD is behind today
and will need to catch up to Nvidia. Further, we expect leading hyperscale cloud computing customers
to continue to invest in AI processors. Google’s TPUs and Amazon’s Trainium and Inferentia chips were
designed with AI workloads in mind, while Microsoft and Meta have announced semiconductor design
© Morningstar 2024. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Advanced Micro Devices Inc AMD QQQ 15 Oct 2024 21:25, UTC

plans.

In PC’s, AMD continues to square off against Intel, formerly the dominant market leader but a company
that has lost its manufacturing edge in recent years. If Intel can regain its manufacturing lead (it hopes
to do so by 2025), AMD will face a more formidable x86 foe. Additionally, if Microsoft were to continue
to push its Windows PC ecosystem toward PCs with ARM-based processors, new entrants could pose
credible threats to both AMD and Intel. All the while, the PC market remains cyclical, and AMD will
have to navigate the cycles accordingly.

In other segments, AMD’s gaming business often faces boom-or-bust cycles along with PC demand and,
more recently, the sharp rise and fall of cryptocurrency mining. AMD also has customer concentration in
its semi-custom business—it supplies processors into both Sony’s PlayStation and Microsoft’s Xbox
today, and it would be a blow to the firm if it were to miss out on either of these sockets in the next
console cycle.

On the environmental, social, and governance front, we do not foresee any material issues on the
horizon. Perhaps the greatest risk is the potential scarcity of experienced chip design talent within the
industry. We think the firm has done a solid job in developing chip designers internally.

Capital Allocation Brian Colello, CFA, Strategist, 30 Jan 2024

We assign AMD an Exemplary Morningstar Capital Allocation Rating. The rating reflects our
assessments of a sound balance sheet, exceptional investments associated with the firm’s strategy and
execution, and attractive and appropriate shareholder distribution policies.

Lisa Su took over as CEO in October 2014; she was previously COO. In February 2022, Su was named
chair of the board as well. In 2023, Jean Hu took over as CFO from Devinder Kumar, having served as
Marvell's CFO previously. Since Su took charge of AMD, we think management has done a solid job in
driving a more focused long-term plan across both PC and server end markets. The firm has adopted a
chiplet strategy (which disaggregates parts of chips and utilizes the most practical manufacturing
process) and tapped TSMC to manufacturing its leading-edge processors. As a result of this strategy,
AMD has been capturing market share at Intel’s expense as the latter has struggled with its advanced
manufacturing processes.

We think AMD has made nice strategic moves in recent years to expand beyond the PC CPU market.
Most recently, in February 2022, AMD closed the purchase of FPGA leader Xilinx in an all-stock deal
worth about $50 billion. Xilinx represents a margin accretive business for AMD and gives AMD entry
into industrial, automotive, and communications infrastructure end markets, all while helping AMD offer
more robust products in the data center. Organically, we like AMD’s focus on the data center end
market, as the company is well positioned to carve out a piece of the AI pie with its GPU expertise.

Advanced Micro Devices Inc AMD QQQ 15 Oct 2024 21:25, UTC

We view AMD as having a solid balance sheet. As of December 2023, AMD has $5.8 billion in cash and
cash equivalents against total debt of $2.5 billion. AMD does not pay a dividend but has bought back
shares in recent years as part of an $8 billion share-repurchase program announced in February 2022.
We’d expect any capital distributions in the years ahead to be done via additional buybacks as part of
this program.

Analyst Notes Archive

AMD: Acquisition of ZT Systems Should Aid AI Efforts; Maintain $145 Fair Value Estimate Brian
Colello, CFA, Strategist, 19 Aug 2024
We maintain our $145 fair value estimate for narrow-moat Advanced Micro Devices after the company
announced a definitive agreement to acquire privately held ZT Systems for $4.9 billion. Strategically, we
think the deal is reasonable as it will provide AMD with expertise in artificial intelligence infrastructure
systems and services. We agree with AMD, Nvidia, and others that suggest that AI is a systems problem
that is more complex than merely buying the best AI graphics processor off the shelf. We think the
inclusion of ZT’s design enablement and services business will make AMD a bit more competitive with
Nvidia, as we think that the latter’s strength stems at least in part from selling full AI solutions,
including software and networking. However, we don’t view this deal as a tectonic shift in the AI
landscape, and we still foresee AMD carving out only a sliver of the total AI pie over time.

AMD did not raise its 2024 graphics processor revenue forecast (currently at $4.5 billion) while
discussing the deal, but management was clear that ZT will help the company win incremental AI
revenue in 2026 and beyond to make the deal accretive. ZT supports the largest hyperscale cloud
customers, and we speculate that this deal might help AMD cozy up to one or more of the mega-cap
tech companies hosting AI workloads. AMD is taking on $150 million of operating expenses by acquiring
ZT but thinks the deal will be accretive (or slightly better than breakeven on a non-GAAP basis) by the
end of 2025. AMD expects profitability to accelerate in 2026 and beyond.

Management disclosed that ZT generates over $10 billion of annual revenue, but most of this is low-
margin and pertains to ZT’s data center infrastructure manufacturing business, which is a segment that
AMD will seek to spin off (and will be classified as an asset for sale in the meantime). AMD instead sees
ZT’s design enablement and services segment as the crown jewel.

Advanced Micro Devices Earnings: Fair Value Estimate Intact as Firm Provides Good News on AI
GPUs Brian Colello, CFA, Strategist, 31 Jul 2024
Narrow-moat Advanced Micro Devices reported solid second-quarter results and provided investors with
a healthy third-quarter forecast, highlighted by the firm’s upbeat commentary around its artificial
intelligence graphics processor, or GPU, business. We maintain our $145 fair value estimate and view
shares as fairly valued. While we’re pleased to see the firm lift its 2024 AI GPU revenue outlook to $4.5
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Advanced Micro Devices Inc AMD QQQ 15 Oct 2024 21:25, UTC

billion from $4.0 billion, we’re not altering our long-term AI GPU forecast too much and acknowledge
the wide range of outcomes for the fast-moving AI GPU industry.

Revenue in the June quarter was $5.83 billion, up 7% sequentially, up 9% year over year, and above the
midpoint of guidance of $5.70 billion. Data center revenue was the bright spot, up 21% sequentially and
115% year over year to $2.83 billion. AMD crossed the $1 billion mark in quarterly AI GPU revenue,
while we were also impressed with AMD’s comments around share gains over Intel in x86 processors
(CPUs) used in traditional servers. Client revenue, including PC CPUs, rose 9% sequentially and 49% year
over year, thanks to an ongoing recovery in the PC market. On the downside, gaming revenue fell 59%
year over year, albeit as expected, due to limited demand for semi-custom chips used in gaming
consoles. Adjusted gross margin expanded 80 basis points sequentially, as expected, to 53.1%.

AMD expects revenue in the June quarter to be $6.7 billion, which would represent growth of 15%
sequentially and 16% year over year. Data center should again be the biggest growth driver for the firm,
while client revenue should also increase nicely. Embedded chip revenue should expand modestly,
while gaming revenue should be down 10%-plus sequentially yet again. Yet the more important factor
in our AMD investment thesis is the higher AI GPU forecast for 2024 as well as optimistic commentary
that AMD is ramping up more GPU supply to satisfy healthy demand.

AMD Earnings: Maintaining $145 Valuation as AI GPU Sales Met Our Expectations Brian Colello,
CFA, Strategist, 1 May 2024
Narrow-moat Advanced Micro Devices reported solid first-quarter results and provided investors, in our
view, with a decent second-quarter forecast. However, we suspect some investors were hoping for a
higher forecast for AMD’s budding data center graphics processing unit business for artificial
intelligence. Shares fell 8% afterhours and approached our unchanged fair value estimate of $145 per
share. We anticipate that AMD will take a piece of the AI GPU pie. Its revenue coming from a brand-
new business is quite impressive in absolute terms, but we don’t see many signs that AMD will reach
parity with Nvidia in AI GPUs soon.

Revenue in the March quarter was $5.47 billion, down 11% sequentially due to typical seasonal
weakness, but up 2% year over year and ahead of the midpoint of guidance of $5.40 billion. Data Center
revenue remains the bright spot, up 80% year over year and up 2% sequentially. We estimate that AMD
earned around $600 million of GPU revenue in the first quarter versus virtually zero in the year-ago
quarter. AMD believes it gained share in server central processing units. Still, the market isn’t growing
strongly as leading cloud and enterprise customers are focused on buying GPU servers to run AI
workloads rather than CPU servers running traditional workloads. Client revenue (PC CPUs) was down
6% sequentially but up 85% year over year versus the dreadful March 2023 quarter for the PC market.
Adjusted gross margin expanded 150 basis points sequentially to 52.3%.

Advanced Micro Devices Inc AMD QQQ 15 Oct 2024 21:25, UTC

AMD expects revenue in the June quarter to be $5.7 billion at the midpoint of guidance, which would
be up 4% sequentially and 6% year over year. Data center and client revenue should be up sharply year
over year, but gaming and embedded revenue should be down significantly as demand headwinds
continue. We estimate AMD will reach $900 million in AI GPU revenue in the June quarter and $4.2
billion for 2024, ahead of the new $4.0 billion guidance.

AMD Earnings: Raising Valuation to $145 From $125 as AI GPU Revenue Is on the Rise Brian Colello,
CFA, Strategist, 31 Jan 2024
Narrow-moat Advanced Micro Devices reported solid fourth-quarter results, but we consider the firm’s
first-quarter forecast to be a mixed bag. We raise our fair value estimate for AMD to $145 from $125,
thanks to more optimistic long-term data center revenue assumptions, but after a 78% increase in share
price in the past three months (versus 16% for the Morningstar Global Markets Index), we still view
shares as overvalued.

We’re encouraged that AMD lifted its data center graphics processor forecast to $3.5 billion from its
prior guidance of “exceeding $2 billion.” We foresee AMD beating this new target and model $4 billion
in DC GPU revenue in 2024, but we suspect this new estimate is still short of the expectations of at least
some investors, perhaps leading to the 6% selloff in shares afterhours. Further, AMD’s first-quarter
forecast fell short of our prior estimates, as management cited seasonal weakness in PC processor, or
CPU, demand and sharp drops in gaming and embedded chip sales.

Revenue in the December quarter was $6.17 billion, up 6% sequentially, up 10% year over year, and
above the midpoint of guidance of $6.10 billion. Data center revenue was the bright spot, up 43%
sequentially and 38% year over year, with record revenue in server CPU and DC GPU revenue, the latter
of which exceeded management’s forecast of $400 million as its latest MI300X GPU appears to be off to
a decent start in the marketplace against Nvidia. AMD’s PC processor segment (client) was up 1%
sequentially but 62% year over year as the PC market continues to rebound from the severe pause in
prior quarters.

AMD expects March-quarter revenue to be $5.4 billion, which would represent 1% growth year over
year but a 12.5% sequential decline. Data center revenue should be flattish, as a seasonal downturn in
server CPUs, offsetting sequential growth in DC GPUs. Client revenue should face seasonal weakness
too but would still be up significantly year over year.

AMD Earnings: Embedded Chip Weakness Leads to a Soft Forecast, but AI Roadmap Is on Track
Brian Colello, CFA, Strategist, 1 Nov 2023
Narrow-moat Advanced Micro Devices reported solid third-quarter results but provided investors with a
fourth-quarter outlook that fell short of our expectations, due to struggles within its embedded business.

Advanced Micro Devices Inc AMD QQQ 15 Oct 2024 21:25, UTC

More importantly, AMD provided insight into its artificial intelligence accelerator growth trajectory,
expecting $400 million of revenue in the fourth quarter and over $2 billion in 2024. These forecasts were
below our prior estimates, but we don’t consider them to be a huge disappointment either, and it’s
quite possible that such estimates could be conservative. We still think AMD will emerge as the number
two player in merchant AI semis, behind only Nvidia. We trim our fair value slightly to $125 from $130,
based on lower long-term gaming and embedded growth assumptions, but shares still appear cheap.

Revenue in the September quarter was $5.8 billion, up 8% sequentially, up 4% year over year, and
above the midpoint of guidance of $5.7 billion. Data center revenue was the bright spot, up 21%
sequentially to $1.6 billion with a nice recovery in server processor sales for traditional workloads. PC
processor revenue recovered well, up over 40% both sequentially and year over year to $1.45 billion, as
PC chip demand is coming off a cyclical bottom. Embedded revenue faced weakness, however, with
muted demand from telecom customers and other broad-based industries, as revenue fell 15%
sequentially to $1.2 billion, worse than guidance. Higher sales levels enabled the adjusted gross margin
to rise 140 basis points sequentially to 51.1%, just ahead of guidance.

For the December quarter, AMD expects revenue in the range of $5.8 billion-$6.4 billion, which, at the
midpoint, represents growth of 5% sequentially and 9% year over year, but is below our prior
expectations. Data center should deliver strong growth in both AI accelerators and server processors,
but embedded weakness should continue, while gaming revenue should also be soft.

AMD: Shares Undervalued as It Takes a Piece of the AI Pie Brian Colello, CFA, Strategist, 23 Aug 2023
We maintain our $130 fair value estimate, narrow moat rating, and Exemplary capital allocation rating
for Advanced Micro Devices, as we continue to like the firm’s chances of carving out a decent position
in the artificial intelligence accelerator chip market in the years ahead. With shares trading near $106,
we view AMD's shares as undervalued.

AMD is a digital semiconductor leader and is well positioned to prosper from a host of favorable trends
in the data center, AI, and gaming. We think AMD benefits from intangible assets across a variety of
products—traditionally from central processing units and field-programmable gate arrays, or FPGAs,
acquired from Xilinx. However, AMD is one of two notable firms in graphics processing units, or GPUs,
which are especially well suited for AI, and its GPU expertise may become increasingly valuable, and
lucrative, in the years ahead.

We think AMD’s data center business should boom over the next few years, thanks to the rise of AI
workloads within enterprises and leading cloud computing vendors. AMD pegs the total addressable
market for AI accelerators, such as GPUs, at $150 billion by 2027. While we foresee Nvidia capturing the
bulk of this value over the next several years, we surmise that all AI vendors and customers will seek
alternatives to keep Nvidia’s dominance at bay, and AMD might be the best positioned company to

Advanced Micro Devices Inc AMD QQQ 15 Oct 2024 21:25, UTC

emerge as a second source in AI.

AMD has benefitted from its outsourced manufacturing model, as its tight relationship with industry
leader Taiwan Semiconductor, enabled AMD to grab a technological lead as its rival, Intel, stumbled
with its internal manufacturing roadmap. We anticipate that AMD will continue to gain market share
over the next three years as Intel strives to turn it around, but AMD’s gains could be longer lasting if
Intel were to stumble further. K

Advanced Micro Devices Inc AMD QQQ 15 Oct 2024 21:25, UTC

Competitors Price vs. Fair Value

Intel Corp INTC

Last Close: 22.66

74 Fair Value: 21.00
2 Aug 2024 03:48, UTC

59 Overvalued
Undervalued
44

14
2019 2020 2021 2022 2023 YTD
0.92 0.71 0.79 0.59 1.26 1.08 Price/Fair Value
30.22 -14.55 6.16 -45.84 92.92 -54.16 Total Return %
Morningstar Rating

Total Return % as of 15 Oct 2024. Last Close as of 15 Oct 2024. Fair Value as of 2 Aug 2024 03:48, UTC.

NVIDIA Corp NVDA

Last Close: 131.60

120 Fair Value: 105.00
23 May 2024 02:37, UTC

90 Overvalued
Undervalued
60

0
2019 2020 2021 2022 2023 YTD
1.62 1.54 1.52 0.73 1.03 1.25 Price/Fair Value
76.73 122.20 125.41 -50.26 238.98 165.79 Total Return %
Morningstar Rating

Total Return % as of 15 Oct 2024. Last Close as of 15 Oct 2024. Fair Value as of 23 May 2024 02:37, UTC.

Advanced Micro Devices Inc AMD QQQ 15 Oct 2024 21:25, UTC

Morningstar Historical Summary

Financials as of 30 Jun 2024
Fiscal Year, ends 31 Dec 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 YTD TTM
Revenue (USD Bil) 5.51 3.99 4.32 5.25 6.48 6.73 9.76 16.43 23.60 22.68 11.31 23.28
Revenue Growth % 3.9 -27.5 8.2 21.6 23.3 4.0 45.1 68.3 43.6 -3.9 5.6 6.4
EBITDA (USD Mil) -18 -319 -160 262 621 724 1,676 4,166 5,534 4,149 2,018 4,364
EBITDA Margin % -0.3 -8.0 -3.7 5.0 9.6 10.8 17.2 25.4 23.5 18.3 17.8 18.8
Operating Income (USD Mil) 149 -352 -383 127 451 631 1,369 3,648 1,264 401 305 871
Operating Margin % 2.7 -8.8 -8.9 2.4 7.0 9.4 14.0 22.2 5.4 1.8 2.7 3.7
Net Income (USD Mil) -403 -660 -498 -33 337 341 2,490 3,162 1,320 854 388 1,354
Net Margin % -7.3 -16.5 -11.5 -0.6 5.2 5.1 25.5 19.2 5.6 3.8 3.4 5.8
Diluted Shares Outstanding (Mil) 768 783 835 952 1,064 1,120 1,207 1,229 1,571 1,625 1,638 1,638
Diluted Earnings Per Share (USD) -0.53 -0.84 -0.60 -0.03 0.32 0.30 2.06 2.57 0.84 0.53 0.24 0.84
Dividends Per Share (USD) — — — — — — — — — — — —

Valuation as of 30 Sep 2024

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Recent Qtr TTM
Price/Sales 0.3 0.5 2.2 2.0 3.2 8.4 12.7 11.9 4.2 10.8 11.5 11.5
Price/Earnings 38.2 -2.4 -16.7 Years
-172.4 55.9 243.9 Years
123.5 44.2 39.7 Years
1,428.6 196.1 Years
196.1
Price/Cash Flow -10.6 -12.9 Years
-232.6 -76.3 60.2 294.1 Years
114.9 54.1 24.9 Years
129.9 140.8 Years
140.8
Dividend Yield % — — — — — — — — — — — —
Price/Book 3.9 -6.8 27.5 19.1 16.5 24.6 28.7 24.3 1.9 4.3 4.7 4.7
EV/EBITDA -185.7 -11.8 -68.0 39.9 30.3 74.0 65.6 41.0 18.4 56.7 0.0 0.0
Operating Performance / Profitability as of 30 Jun 2024
Fiscal Year, ends 31 Dec 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 YTD TTM
ROA % -10.0 -19.3 -15.6 -1.0 8.3 6.4 33.2 29.6 3.3 1.3 0.6 2.0
ROE % -110 — -24900 -6.5 36.2 16.7 57.5 47.4 4.2 1.5 0.7 2.4
ROIC % -11.5 — -23.5 2.0 18.3 14.0 51.0 42.9 4.1 1.3 0.7 2.5
Asset Turnover 1.4 1.2 1.3 1.5 1.6 1.3 1.3 1.5 0.6 0.3 0.2 0.3
Financial Leverage
Fiscal Year, ends 31 Dec 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Recent Qtr TTM
Debt/Capital % 91.6 — 77.5 69.0 46.8 19.5 8.3 4.5 5.0 3.9 3.8 —
Equity/Assets % 5.0 — 12.5 16.8 27.8 46.9 65.1 60.4 81.0 82.3 83.3 —
Total Debt/EBITDA -122.9 — -9.0 5.3 2.0 0.9 0.3 0.2 0.5 0.7 1.1 —
EBITDA/Interest Expense -0.1 -2.0 -1.0 2.1 5.1 7.7 35.7 122.5 62.9 39.1 40.4 42.4

Morningstar Analyst Historical/Forecast Summary as of 19 Aug 2024

Financials Estimates Forward Valuation Estimates
2022 2023 2024 2025 2026
Fiscal Year, ends 31 Dec 2023 2022 2023 2024 2025 2026
Price/Sales 4.4 10.5 9.9 8.3 6.9
Revenue (USD Mil) 23,601 22,680 25,527 30,606 36,931 Price/Earnings 18.5 55.6 47.5 31.1 23.5
Revenue Growth % 43.6 -3.9 12.6 19.9 20.7 Price/Cash Flow — — — — —
EBITDA (USD Mil) 5,438 3,854 5,015 7,576 10,861 Dividend Yield % — — — — —
EBITDA Margin % 23.0 17.0 19.6 24.8 29.4 Price/Book 1.9 4.3 4.3 4.1 3.7
EV/EBITDA 18.7 61.0 50.0 33.1 23.1
Operating Income (USD Mil) 1,162 367 2,048 4,745 7,999
Operating Margin % 4.9 1.6 8.0 15.5 21.7
Net Income (USD Mil) 5,504 4,302 5,410 8,246 10,949
Net Margin % 23.3 19.0 21.2 26.9 29.7
Diluted Shares Outstanding (Mil) 1,571 1,625 1,640 1,640 1,640
Diluted Earnings Per Share(USD) 3.50 2.65 3.30 5.03 6.68
Dividends Per Share(USD) 0.00 0.00 0.00 0.00 0.00

Advanced Micro Devices Inc AMD QQQ 15 Oct 2024 21:25, UTC

ESG Risk Rating Breakdown

Exposure Subject Subindustry (33.0) u Exposure represents a company’s vulnerability to ESG

Company Exposure1 32.0 risks driven by their business model
32.0
u Exposure is assessed at the Subindustry level and then
– Manageable Risk 29.8 Low
2 0 55+ specified at the company level
Unmanageable Risk 2.1 u Scoring ranges from 0-55+ with categories of low, me-
Low Medium High
dium, and high-risk exposure

Management
u Management measures a company ’s ability to manage
Manageable Risk 29.8 ESG risks through its commitments and actions
60.8%
– Managed Risk3 18.1 Strong
u Management assesses a company's efficiency on ESG

Management Gap4 11.7 100 0 programs, practices, and policies

Strong Average Weak u Management score ranges from 0-100% showing how

Overall Unmanaged Risk 13.8 much manageable risk a company is managing

ESG Risk Rating ESG Risk Rating Assessment5

13.83
Low

Negligible Low Medium High Severe ESG Risk Rating is of Oct 02, 2024. Highest Controversy Level is as of Oct 08,
2024. Sustainalytics Subindustry: Semiconductor Design and Manufacturing.
ESG Risk Ratings measure the degree to which a company’s value is impacted by environmental, social, and governance Sustainalytics provides Morningstar with company ESG ratings and metrics
risks, by evaluating the company’s ability to manage the ESG risks it faces. on a monthly basis and as such, the ratings in Morningstar may not
necessarily reflect current Sustainalytics’ scores for the company. For the
1. A company's Exposure to material ESG issues 2. Unmanageable Risk refers to risks that are inherent to a particular business model that cannot be managed by most up to date rating and more information, please visit: [Link]/
programs or initiatives 3. Managed Risk = Manageable Risk multiplied by a Management score of 60.8% 4. Management Gap assesses risks that are not esg-ratings/.
managed, but are considered manageable 5. ESG Risk Rating Assessment = Overall Unmanaged Risk = Management Gap plus Unmanageable Risk

Peer Analysis 02 Oct 2024 Peers are selected from the company's Sustainalytics-defined Subindustry and are displayed based on the closest market cap values
Company Name Exposure Management ESG Risk Rating

Advanced Micro Devices Inc 32.0 | Low 0 55+ 60.8 | Strong 100 0 13.8 | Low 0 40+

Micron Technology Inc 51.9 | Medium 0 55+ 69.7 | Strong 100 0 18.6 | Low 0 40+

— —|— 0 55+ —|— 100 0 —|— 0 40+

Appendix
Historical Morningstar Rating
December
Advanced Micro November
Devices Inc October
AMD 15 Oct 2024 September
21:25, UTC August July May May April March February January

Dec 2024 Nov 2024 Oct 2024 Sep 2024 Aug 2024 Jul 2024 Jun 2024 May 2024 Apr 2024 Mar 2024 Feb 2024 Jan 2024
- - QQQ QQQ QQQ QQQ QQQ QQ QQQ QQ QQ QQ
Dec 2023 Nov 2023 Oct 2023 Sep 2023 Aug 2023 Jul 2023 Jun 2023 May 2023 Apr 2023 Mar 2023 Feb 2023 Jan 2023
QQ QQQ QQQQ QQQQ QQQQ QQQ QQQ QQQ QQQQ QQQQ QQQQ QQQQ
Dec 2022 Nov 2022 Oct 2022 Sep 2022 Aug 2022 Jul 2022 Jun 2022 May 2022 Apr 2022 Mar 2022 Feb 2022 Jan 2022
QQQQQ QQQQ QQQQQ QQQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQ QQQ QQQ
Dec 2021 Nov 2021 Oct 2021 Sep 2021 Aug 2021 Jul 2021 Jun 2021 May 2021 Apr 2021 Mar 2021 Feb 2021 Jan 2021
QQ QQ QQQ QQQ QQQ QQQ QQQ QQQQ QQQQ QQQ QQQ QQQ
Dec 2020 Nov 2020 Oct 2020 Sep 2020 Aug 2020 Jul 2020 Jun 2020 May 2020 Apr 2020 Mar 2020 Feb 2020 Jan 2020
QQ QQ QQQ Q Q Q Q Q Q Q Q Q
Dec 2019 Nov 2019 Oct 2019 Sep 2019 Aug 2019 Jul 2019 Jun 2019 May 2019 Apr 2019 Mar 2019 Feb 2019 Jan 2019
Q Q Q QQ QQ QQ QQ QQ Q Q Q Q

December
Intel Corp INTC November
15 Oct 2024 October
21:26, UTC September August July May May April March February January

Dec 2024 Nov 2024 Oct 2024 Sep 2024 Aug 2024 Jul 2024 Jun 2024 May 2024 Apr 2024 Mar 2024 Feb 2024 Jan 2024
- - QQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ
Dec 2023 Nov 2023 Oct 2023 Sep 2023 Aug 2023 Jul 2023 Jun 2023 May 2023 Apr 2023 Mar 2023 Feb 2023 Jan 2023
QQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQQ QQQQ
Dec 2022 Nov 2022 Oct 2022 Sep 2022 Aug 2022 Jul 2022 Jun 2022 May 2022 Apr 2022 Mar 2022 Feb 2022 Jan 2022
QQQQQ QQQQ QQQQ QQQQQ QQQQ QQQQ QQQQQ QQQQ QQQQ QQQQ QQQQ QQQQ
Dec 2021 Nov 2021 Oct 2021 Sep 2021 Aug 2021 Jul 2021 Jun 2021 May 2021 Apr 2021 Mar 2021 Feb 2021 Jan 2021
QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQ QQQ QQQ QQQ QQQ QQQ
Dec 2020 Nov 2020 Oct 2020 Sep 2020 Aug 2020 Jul 2020 Jun 2020 May 2020 Apr 2020 Mar 2020 Feb 2020 Jan 2020
QQQQQ QQQQQ QQQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQ
Dec 2019 Nov 2019 Oct 2019 Sep 2019 Aug 2019 Jul 2019 Jun 2019 May 2019 Apr 2019 Mar 2019 Feb 2019 Jan 2019
QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ QQQQ

December
NVIDIA Corp November
NVDA 15 Oct 2024 October
21:25, UTC September August July May May April March February January

Dec 2024 Nov 2024 Oct 2024 Sep 2024 Aug 2024 Jul 2024 Jun 2024 May 2024 Apr 2024 Mar 2024 Feb 2024 Jan 2024
- - QQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ QQQ QQ
Dec 2023 Nov 2023 Oct 2023 Sep 2023 Aug 2023 Jul 2023 Jun 2023 May 2023 Apr 2023 Mar 2023 Feb 2023 Jan 2023
QQQ QQQ QQQ QQQ QQQ QQ QQ QQ QQ QQ QQ QQQ
Dec 2022 Nov 2022 Oct 2022 Sep 2022 Aug 2022 Jul 2022 Jun 2022 May 2022 Apr 2022 Mar 2022 Feb 2022 Jan 2022
QQQQ QQQQ QQQQ QQQQ QQQQ QQQ QQQQ QQQ QQQ QQ QQQ QQQ
Dec 2021 Nov 2021 Oct 2021 Sep 2021 Aug 2021 Jul 2021 Jun 2021 May 2021 Apr 2021 Mar 2021 Feb 2021 Jan 2021
QQ QQ Q QQ QQ QQ QQ QQQ QQ QQ QQ QQ
Dec 2020 Nov 2020 Oct 2020 Sep 2020 Aug 2020 Jul 2020 Jun 2020 May 2020 Apr 2020 Mar 2020 Feb 2020 Jan 2020
QQ QQ QQ Q Q Q Q QQ Q QQ QQ QQ
Dec 2019 Nov 2019 Oct 2019 Sep 2019 Aug 2019 Jul 2019 Jun 2019 May 2019 Apr 2019 Mar 2019 Feb 2019 Jan 2019
QQ QQ QQ QQ QQ QQ QQ QQQ QQ QQ QQ QQQ

Research Methodology for Valuing Companies

Overview turns on invested capital (or ROIC) over and above our es- rive our annual free cash flow forecast.
At the heart of our valuation system is a detailed projec- timate of a firm’s cost of capital, or weighted average
Stage II: Fade
tion of a company’s future cash flows, resulting from our cost of capital (or WACC). Without a moat, profits are
The second stage of our model is the period it will take
analysts’ research. Analysts create custom industry and more susceptible to competition. We have identified five
the company ’s return on new invested capital—the re-
company assumptions to feed income statement, balance sources of economic moats: intangible assets, switching
turn on capital of the next dollar invested (“RONIC”)—to
sheet, and capital investment assumptions into our glob- costs, network effect, cost advantage, and efficient scale.
decline (or rise) to its cost of capital. During the Stage II
ally standardized, proprietary discounted cash flow, or
Companies with a narrow moat are those we believe are period, we use a formula to approximate cash flows in
DCF, modeling templates. We use scenario analysis, inde-
more likely than not to achieve normalized excess returns lieu of explicitly modeling the income statement, balance
pth competitive advantage analysis, and a variety of other
for at least the next 10 years. Wide-moat companies are sheet, and cash flow statement as we do in Stage I. The
analytical tools to augment this process. Moreover, we
those in which we have very high confidence that excess length of the second stage depends on the strength of
think analyzing valuation through discounted cash flows
returns will remain for 10 years, with excess returns more the company’s economic moat. We forecast this period to
presents a better lens for viewing cyclical companies,
likely than not to remain for at least 20 years. The longer last anywhere from one year (for companies with no eco-
high-growth firms, businesses with finite lives (e.g.,
a firm generates economic profits, the higher its intrinsic nomic moat) to 10–15 years or more (for wide-moat com-
mines), or companies expected to generate negative
value. We believe low-quality, no-moat companies will panies). During this period, cash flows are forecast using
earnings over the next few years. That said, we don’t dis-
see their normalized returns gravitate toward the firm’s four assumptions: an average growth rate for EBI over the
miss multiples altogether but rather use them as support-
cost of capital more quickly than companies with moats. period, a normalized investment rate, average return on
ing cross-checks for our DCF-based fair value estimates.
new invested capital (RONIC), and the number of years
We also acknowledge that DCF models offer their own
When considering a company's moat, we also assess until perpetuity, when excess returns cease. The invest-
challenges (including a potential proliferation of estim-
whether there is a substantial threat of value destruction, ment rate and return on new invested capital decline un-
ated inputs and the possibility that the method may miss
stemming from risks related to ESG, industry disruption, til a perpetuity value is calculated. In the case of firms
shortterm market-price movements), but we believe these
financial health, or other idiosyncratic issues. In this con- that do not earn their cost of capital, we assume marginal
negatives are mitigated by deep analysis and our
text, a risk is considered potentially value destructive if its ROICs rise to the firm’s cost of capital (usually attribut-
longterm approach.
occurrence would eliminate a firm’s economic profit on a able to less reinvestment), and we may truncate the
cumulative or midcycle basis. If we deem the probability second stage.
Morningstar’s equity research group (”we,” “our”) be-
lieves that a company’s intrinsic worth results from the of occurrence sufficiently high, we would not characterize
the company as possessing an economic moat. Stage III: Perpetuity
future cash flows it can generate. The Morningstar Rating
Once a company’s marginal ROIC hits its cost of capital,
for stocks identifies stocks trading at a discount or premi-
2. Estimated Fair Value we calculate a continuing value, using a standard per-
um to their intrinsic worth—or fair value estimate, in
Combining our analysts’ financial forecasts with the petuity formula. At perpetuity, we assume that any
Morningstar terminology. Five-star stocks sell for the
firm’s economic moat helps us assess how long returns growth or decline or investment in the business neither
biggest risk adjusted discount to their fair values, where-
on invested capital are likely to exceed the firm’s cost of creates nor destroys value and that any new investment
as 1-star stocks trade at premiums to their intrinsic worth.
capital. Returns of firms with a wide economic moat rat- provides a return in line with estimated WACC.
Four key components drive the Morningstar rating: (1) our ing are assumed to fade to the perpetuity period over a
longer period of time than the returns of narrow-moat Because a dollar earned today is worth more than a dollar
assessment of the firm’s economic moat, (2) our estimate
firms, and both will fade slower than no-moat firms, in- earned tomorrow, we discount our projections of cash
of the stock’s fair value, (3) our uncertainty around that
creasing our estimate of their intrinsic value. flows in stages I, II, and III to arrive at a total present
fair value estimate and (4) the current market price. This
value of expected future cash flows. Because we are
process ultimately culminates in our singlepoint star rat-
Our model is divided into three distinct stages: modeling free cash flow to the firm—representing cash
ing.
available to provide a return to all capital providers—we
discount future cash flows using the WACC, which is a
1. Economic Moat Stage I: Explicit Forecast
weighted average of the costs of equity, debt, and pre-
The concept of an economic moat plays a vital role not In this stage, which can last five to 10 years, analysts
ferred stock (and any other funding sources), using ex-
only in our qualitative assessment of a firm’s long-term make full financial statement forecasts, including items
pected future proportionate long-term, market-value
investment potential, but also in the actual calculation of such as revenue, profit margins, tax rates, changes in
weights.
our fair value estimates. An economic moat is a structural workingcapital accounts, and capital spending. Based on
feature that allows a firm to sustain excess profits over a these projections, we calculate earnings before interest,
3. Uncertainty Around That Fair Value Estimate
long period of time. We define economic profits as re- after taxes (EBI) and the net new investment (NNI) to de-
Morningstar’s Uncertainty Rating is designed to capture
the range of potential outcomes for a company ’s intrinsic
Morningstar Equity Research Star Rating Methodology
value. This rating is used to assign the margin of safety
required before investing, which in turn explicitly drives
our stock star rating system. The Uncertainty Rating is
aimed at identifying the confidence we should have in as-
signing a fair value estimate for a given stock.

Our Uncertainty Rating is meant to take into account any-

thing that can increase the potential dispersion of future
outcomes for the intrinsic value of a company, and any-
© Morningstar 2024. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Research Methodology for Valuing Companies

thing that can affect our ability to accurately predict Morningstar Equity Research Star Rating Methodology
these outcomes. The rating begins with a suggested rat-
ing produced by a quantitative process based on the trail-
ing 12-month standard deviation of daily stock returns.
An analyst overlay is then applied, with analysts using
the suggested rating, historical rating data, and their own
knowledge of the company to inform them as they make
the final Uncertainty Rating decision. Ultimately, the rat-
ing decision rests with the analyst. Analysts take into ac-
count many characteristics when making their final de-
cision, including cyclical factors, operational and financial
factors such as leverage, company-specific events, ESG
risks, and anything else that might increase the potential
dispersion of future outcomes and our ability to estimate
those outcomes.

Our recommended margin of safety—the discount to fair

value demanded before we’d recommend buying or
selling the stock—widens as our uncertainty of the es-
timated value of the equity increases. The more uncertain
we are about the potential dispersion of outcomes, the
greater the discount we require relative to our estimate of
the value of the firm before we would recommend the
purchase of the shares. In addition, the Uncertainty Rat-
ing provides guidance in portfolio construction based on
risk tolerance. Once we determine the fair value estimate of a stock, we justed return is highly likely over a multiyear time frame.
compare it with the stock’s current market price on a Scenario analysis developed by our analysts indicates
Our Uncertainty Ratings are: Low, Medium, High, Very daily basis, and the star rating is automatically re-calcu- that the current market price represents an excessively
High, and Extreme. lated at the market close on every day the market on pessimistic outlook, limiting downside risk and maximiz-
which the stock is listed is open. Our analysts keep close ing upside potential.
Margin of Safety
tabs on the companies they follow, and, based on thor-
Qualitative Analysis
QRating ough and ongoing analysis, raise or lower their fair value QQQQ We believe appreciation beyond a fair risk-ad-
Uncertainty Ratings QQQQQRating
estimates as warranted. justed return is likely.
Low 20% Discount 25% Premium
Medium 30% Discount 35% Premium QQQ Indicates our belief that investors are likely to re-
Please note, there is no predefined distribution of stars.
High 40% Discount 55% Premium ceive a fair risk-adjusted return (approximately cost of
That is, the percentage of stocks that earn 5 stars can
Very High 50% Discount 75% Premium equity).
fluctuate daily, so the star ratings, in the aggregate, can
Extreme 75% Discount 300% Premium serve as a gauge of the broader market’s valuation. When
there are many 5-star stocks, the stock market as a whole QQ We believe investors are likely to receive a less than
Our uncertainty rating is based on the interquartile range, fair risk-adjusted return.
is more undervalued, in our opinion, than when very few
or the middle 50% of potential outcomes, covering the
companies garner our highest rating.
25th percentile–75th percentile. This means that when a Q Indicates a high probability of undesirable risk-adjus-
stock hits 5 stars, we expect there is a 75% chance that ted returns from the current market price over a multiyear
We expect that if our base-case assumptions are true the
the intrinsic value of that stock lies above the current time frame, based on our analysis. Scenario analysis by
market price will converge on our fair value estimate over
market price. Similarly, when a stock hits 1 star, we ex- our analysts indicates that the market is pricing in an ex-
time generally within three years (although it is im-
pect there is a 75% chance that the intrinsic value of that cessively optimistic outlook, limiting upside potential and
possible to predict the exact time frame in which market
stock lies below the current market price. leaving the investor exposed to Capital loss.
prices may adjust).

4. Market Price Our star ratings are guideposts to a broad audience and Other Definitions
The market prices used in this analysis and noted in the individuals must consider their own specific investment Last Price: Price of the stock as of the close of the mar-
report come from exchange on which the stock is listed goals, risk tolerance, tax situation, time horizon, income ket of the last trading day before date of the report.
which we believe is a reliable source. needs, and complete investment portfolio, among other
factors. Capital Allocation Rating: Our Capital Allocation (or
For more details about our methodology, please go to Stewardship) Rating represents our assessment of the
[Link] The Morningstar Star Ratings for stocks are defined be- quality of management’s capital allocation, with particu-
low: lar emphasis on the firm ’s balance sheet, investments,
Morningstar Star Rating for Stocks QQQQQ We believe appreciation beyond a fair risk ad- and shareholder distributions. Analysts consider compan-
© Morningstar 2024. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Research Methodology for Valuing Companies

ies’ investment strategy and valuation, balance sheet starting at zero (no risk) with lower scores representing vice to any specific investor. Therefore, investments dis-
management, and dividend and share buyback policies. less unmanaged risk and, for 95% of cases, the unman- cussed herein may not be suitable for all investors; in-
Corporate governance factors are only considered if they aged ESG Risk score is below 50. vestors must exercise their own independent judgment as
are likely to materially impact shareholder value, though to the suitability of such investments and recommenda-
either the balance sheet, investment, or shareholder dis- Based on their quantitative scores, companies are tions in the light of their own investment objectives, ex-
tributions. Analysts assign one of three ratings: "Exem- grouped into one of five Risk Categories (negligible, low, perience, taxation status and financial position. Morning-
plary", "Standard", or "Poor". Analysts judge Capital Alloc- medium, high, severe). These risk categories are absolute, star encourages Report recipients to read all relevant is-
ation from an equity holder’s perspective. Ratings are de- meaning that a ‘high risk’ assessment reflects a compar- sue documents (e.g., prospectus) pertaining to the secur-
termined on a forward looking and absolute basis. The able degree of unmanaged ESG risk across all subindus- ity concerned, including without limitation, information
Standard rating is most common as most managers will tries covered. relevant to its investment objectives, risks, and costs be-
exhibit neither exceptionally strong nor poor capital alloc- fore making an investment decision and when deemed
ation. The ESG Risk Rating Assessment is a visual representa- necessary, to seek the advice of a financial, legal, tax,
tion of Sustainalytics ESG Risk Categories on a 1 to 5 and/or accounting professional. The information, data,
Capital Allocation (or Stewardship) analysis published pri- scale. Companies with Negligible Risk = 5 Globes, Low analyses and opinions presented herein are not warran-
or to Dec. 9, 2020, was determined using a different pro- Risk = 4, Medium Risk = 3 Globes, High Risk = 2 Globes, ted to be accurate, correct, complete or timely. Unless
cess. Beyond investment strategy, financial leverage, and Severe Risk = 1 Globe. For more information, please visit otherwise provided in a separate agreement, neither
dividend and share buyback policies, analysts also con- [Link]/esg-ratings/ Morningstar, Inc. or the Equity Research Group repres-
sidered execution, compensation, related party transac- ents that the report contents meet all of the presentation
tions, and accounting practices in the rating. Ratings should not be used as the sole basis in evaluating and/or disclosure standards applicable in the jurisdiction
a company or security. Ratings involve unknown risks and the recipient is located.
Capital Allocation Rating: Our Capital Allocation (or uncertainties which may cause our expectations not to
Stewardship) Rating represents our assessment of the occur or to differ significantly from what was expected Except as otherwise required by law or provided for in a
quality of management’s capital allocation, with particu- and should not be considered an offer or solicitation to separate agreement, the analyst, Morningstar, Inc. and
lar emphasis on the firm’s balance sheet, investments, buy or sell a security. the Equity Research Group and their officers, directors
and shareholder distributions. Analysts consider compan- and employees shall not be responsible or liable for any
ies’ investment strategy and valuation, balance sheet Risk Warning trading decisions, damages or other losses resulting from,
management, and dividend and share buyback policies. Please note that investments in securities are subject to or related to, the information, data, analyses or opinions
Corporate governance factors are only considered if they market and other risks and there is no assurance or guar- within the report.
are likely to materially impact shareholder value, though antee that the intended investment objectives will be
either the balance sheet, investment, or shareholder dis- achieved. Past performance of a security may or may not The Report and its contents are not directed to, or inten-
tributions. Analysts assign one of three ratings: "Exem- be sustained in future and is no indication of future per- ded for distribution to or use by, any person or entity who
plary", "Standard", or "Poor". Analysts judge Capital Alloc- formance. A security investment return and an investor ’s is a citizen or resident of or located in any locality, state,
ation from an equity holder’s perspective. Ratings are de- principal value will fluctuate so that, when redeemed, an country or other jurisdiction where such distribution, pub-
termined on a forward looking and absolute basis. The investor ’s shares may be worth more or less than their lication, availability or use would be contrary to law or
Standard rating is most common as most managers will original cost. A security’s current investment performance regulation or which would subject Morningstar, Inc. or its
exhibit neither exceptionally strong nor poor capital alloc- may be lower or higher than the investment performance affiliates to any registration or licensing requirements in
ation. noted within the report. Morningstar’s Uncertainty Rating such jurisdiction.
serves as a useful data point with respect to sensitivity
Capital Allocation (or Stewardship) analysis published pri- analysis of the assumptions used in our determining a fair Where this report is made available in a language other
or to Dec. 9, 2020, was determined using a different pro- value price. than English and in the case of inconsistencies between
cess. Beyond investment strategy, financial leverage, and the English and translated versions of the report, the Eng-
dividend and share buyback policies, analysts also con- lish version will control and supersede any ambiguities
sidered execution, compensation, related party transac- General Disclosure associated with any part or section of a report that has
tions, and accounting practices in the rating. been issued in a foreign language. Neither the analyst,
Unless otherwise provided in a separate agreement, re-
cipients accessing this report may only use it in the coun- Morningstar, Inc., or the Equity Research Group guaran-
Sustainalytics ESG Risk Rating Assessment:The ESG tees the accuracy of the translations.
try in which the Morningstar distributor is based. Unless
Risk Rating Assessment is provided by Sustainalytics; a
stated otherwise, the original distributor of the report is
Morningstar company. This report may be distributed in certain localities, coun-
Morningstar Research Services LLC, a U.S.A. domiciled
financial institution. tries and/or jurisdictions (“Territories ”) by independent
Sustainalytics’ ESG Risk Ratings measure the degree to third parties or independent intermediaries and/or distrib-
which company’s economic value at risk is driven by en- utors (“Distributors”). Such Distributors are not acting as
This Report is for informational purposes, should not be
vironment, social and governance (ESG) factors. agents or representatives of the analyst, Morningstar,
the sole piece of information used in making an invest-
ment decision, and has no regard to the specific invest- Inc. or the Equity Research Group. In Territories where a
Sustainalytics analyzes over 1,300 data points to assess a Distributor distributes our report, the Distributor is solely
ment objectives, financial situation or particular needs of
company’s exposure to and management of ESG risks. In responsible for complying with all applicable regulations,
any specific recipient. This publication is intended to
other words, ESG Risk Ratings measures a company’s un- laws, rules, circulars, codes and guidelines established by
provide information to assist investors in making their
managed ESG Risks represented as a quantitative score. local and/or regional regulatory bodies, including laws in
own investment decisions, not to provide investment ad-
Unmanaged Risk is measured on an open-ended scale
© Morningstar 2024. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions ®
presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The
opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting
ß
from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner,
without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and
governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report.
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Research Methodology for Valuing Companies

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Research Methodology for Valuing Companies

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AMD Fair Value Estimate and AI Insights

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AMD Fair Value Estimate and AI Insights

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Morningstar Equity Analyst Report | Report as of 16 Oct 2024 00:25, UTC | Reporting Currency: USD | Trading Currency: USD

| Exchange: NASDAQ - ALL MARKETS Page 1 of 22

Price vs. Fair Value

Last Close: 156.68

Bulls Say Brian Colello, CFA, Strategist, 31 Jan 2024

Bears Say Brian Colello, CFA, Strategist, 31 Jan 2024

Economic Moat Brian Colello, CFA, Strategist, 30 Jan 2024

Risk and Uncertainty Brian Colello, CFA, Strategist, 30 Jan 2024

Capital Allocation Brian Colello, CFA, Strategist, 30 Jan 2024

Analyst Notes Archive

emerge as a second source in AI.

Competitors Price vs. Fair Value

Intel Corp INTC

Last Close: 22.66

NVIDIA Corp NVDA

Last Close: 131.60

Morningstar Historical Summary

Valuation as of 30 Sep 2024

Morningstar Analyst Historical/Forecast Summary as of 19 Aug 2024

ESG Risk Rating Breakdown

Exposure Subject Subindustry (33.0) u Exposure represents a company’s vulnerability to ESG

Management Gap4 11.7 100 0 programs, practices, and policies

Overall Unmanaged Risk 13.8 much manageable risk a company is managing

ESG Risk Rating ESG Risk Rating Assessment5

— —|— 0 55+ —|— 100 0 —|— 0 40+

Research Methodology for Valuing Companies

Our Uncertainty Rating is meant to take into account any-

Research Methodology for Valuing Companies

Our recommended margin of safety—the discount to fair

Research Methodology for Valuing Companies

Research Methodology for Valuing Companies

Research Methodology for Valuing Companies

vestment Adviser India Private Limited offers Investment

For recipients in Japan: The Report is distributed by Ib-

For recipients in Singapore: For Institutional Investor

For recipients in Korea: The report is distributed by

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