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AMD shares fall after free cash flow dips below Q1
Free cash flow dropped to $1.558 billion in Q2 from $2.566 billion in Q1, with a higher AI-related capex bill and lower operating cash flow weighing on the margin.
Advanced Micro Devices reported strong Q2 revenue and earnings growth on Aug. 4, but the stock fell afterward as free cash flow declined below Q1 levels, according to Yahoo Finance.
AMD said free cash flow fell from $2.566 billion in Q1 to $1.558 billion in Q2, even as revenue and net income rose, with Q2 revenue up 50% year over year and net income up 163%. The outlet tied the FCF decline to a $419 million increase in AI-related capex from Q1 to Q2 and a $589 million drop in operating cash flow, largely linked to higher working capital needs.
As working capital rose, inventory, receivables, and other assets increased to support data center demand, and AMD’s FCF margin fell from 25% in Q1 to 13.5% in Q2. Yahoo Finance added that trailing 12-month FCF margin was 20.3%, down from 22.9% over the prior period.
Despite the cash flow weakness, the piece argued the stock appears undervalued and referenced analysts’ higher price targets, noting AMD closed at $483.36 on the day it fell 6.8% from $518.58 reported on Aug. 4, after the earnings release.