In the fast-paced world of technology, two semiconductor giants stand out: Advanced Micro Devices, Inc. (AMD) and Arm Holdings plc. Both companies are pivotal in shaping the future of computing and graphics, yet they approach innovation and market strategy differently. AMD focuses on high-performance microprocessors and GPUs, while Arm excels in licensing its architecture to a range of industries. Join me as we explore which of these companies offers the most compelling investment opportunity in today’s dynamic landscape.
Table of contents
Company Overview
Advanced Micro Devices, Inc. Overview
Advanced Micro Devices, Inc. (AMD) is a prominent player in the semiconductor industry, focused on developing innovative computing and graphics solutions. Their mission is to drive the next generation of computing and graphics technologies by delivering high-performance products that cater to a wide range of applications, including gaming, data centers, and embedded systems. With a market capitalization of approximately $331B, AMD operates primarily in two segments: Computing and Graphics, and Enterprise, Embedded, and Semi-Custom. The company has established a strong position in the market with its Ryzen and EPYC processors, which compete directly with offerings from larger rivals. AMD’s commitment to research and development enables it to remain at the forefront of technological advancements.
Arm Holdings plc Overview
Arm Holdings plc is a key architect in the semiconductor ecosystem, specializing in the design and licensing of central processing unit (CPU) products and related technologies. Founded in 1990, Arm has positioned itself as a leader in providing intellectual property to semiconductor companies and original equipment manufacturers across various sectors, including automotive and Internet of Things (IoT). With a market capitalization of approximately $139B, Arm’s business model emphasizes collaboration and innovation, allowing partners to develop efficient and scalable solutions. The company’s recent IPO in September 2023 further solidifies its standing in the industry, showcasing its significant role in advancing computing technologies.
Key Similarities and Differences
Both AMD and Arm operate within the semiconductor industry and share a focus on innovation in computing technologies. However, while AMD manufactures and sells its own semiconductor products, Arm primarily licenses its technology to other manufacturers, allowing them to create customized solutions. This key difference in business models reflects their unique approaches to market engagement and revenue generation.
Income Statement Comparison
The following table presents a comparison of the income statements for Advanced Micro Devices, Inc. (AMD) and Arm Holdings plc for their most recent fiscal years, highlighting key financial metrics.
| Metric | AMD | ARM |
|---|---|---|
| Revenue | 25.8B | 4.0B |
| EBITDA | 5.3B | 902M |
| EBIT | 2.1B | 720M |
| Net Income | 1.6B | 792M |
| EPS | 1.01 | 0.75 |
Interpretation of Income Statement
In the most recent fiscal year, AMD reported a revenue increase to 25.8B, up from 22.7B the previous year, while ARM also showed revenue growth, rising from 3.2B to 4.0B. AMD’s net income improved significantly to 1.6B, reflecting operational efficiency, while ARM’s net income increased to 792M, indicating a steady performance. Both companies maintained healthy EBITDA margins, with AMD’s margins improving slightly, showcasing strong cost management. Overall, AMD’s growth trajectory appears robust, whereas ARM demonstrates stability with consistent growth in a competitive landscape. Caution is warranted, as market dynamics can shift rapidly.
Financial Ratios Comparison
The table below provides a comparison of the most recent financial ratios for Advanced Micro Devices, Inc. (AMD) and Arm Holdings plc (ARM). These metrics can help investors assess the financial health and performance of these companies.
| Metric | AMD | ARM |
|---|---|---|
| ROE | 2.85% | 11.58% |
| ROIC | 2.48% | 11.31% |
| P/E | 123.59 | 141.58 |
| P/B | 3.52 | 16.40 |
| Current Ratio | 2.62 | 5.20 |
| Quick Ratio | 1.83 | 5.20 |
| D/E | 0.04 | 0.05 |
| Debt-to-Assets | 3.35% | 3.99% |
| Interest Coverage | 20.65 | N/A |
| Asset Turnover | 0.37 | 0.45 |
| Fixed Asset Turnover | 10.63 | 5.61 |
| Payout Ratio | 0% | 0% |
| Dividend Yield | 0% | 0% |
Interpretation of Financial Ratios
In comparing AMD and ARM, ARM displays stronger profitability metrics such as ROE and ROIC, indicating better returns on equity and invested capital. However, AMD boasts a healthier current and quick ratio, suggesting superior liquidity. The P/E ratio for both companies indicates high valuations, with ARM’s being higher, potentially signaling overvaluation concerns. Both companies show no dividends, reflecting a focus on reinvestment over shareholder payouts.
Dividend and Shareholder Returns
Advanced Micro Devices, Inc. (AMD) does not currently pay dividends, as evidenced by a dividend payout ratio of 0. Instead, AMD focuses on reinvesting in its growth, which may be suitable given its high growth trajectory in the semiconductor industry. This strategy, coupled with share buyback programs, can potentially enhance long-term shareholder value.
On the other hand, Arm Holdings plc has not paid dividends either, prioritizing reinvestment over shareholder returns. While it maintains a robust operating cash flow, the absence of dividends aligns with its strategy to foster innovation and growth. Both companies appear to favor reinvestment strategies that may support sustainable long-term value creation for their shareholders.
Strategic Positioning
In the semiconductor market, AMD holds a significant position with a market cap of 331B, primarily through its competitive x86 microprocessors and GPUs. Its innovations continue to pressure rivals. Conversely, Arm, with a market cap of 139B, excels in licensing CPU architecture, facing competitive pressure from both established firms and emerging technologies. Both companies must navigate technological disruptions that could reshape their market dynamics.
Stock Comparison
In the past year, both Advanced Micro Devices, Inc. (AMD) and Arm Holdings plc (ARM) have exhibited notable price movements and trading dynamics, reflecting their performance in the competitive semiconductor market.
Trend Analysis
Advanced Micro Devices, Inc. (AMD) has experienced a significant price change of 38.24% over the past year, indicating a bullish trend. The stock has shown acceleration in its upward movement, with a highest price of 256.12 and a lowest price of 85.76. The standard deviation of 35.18 suggests a moderate level of volatility. Recently, from September 7, 2025, to November 23, 2025, AMD’s price change was 34.83%, further confirming the bullish sentiment with a trend slope of 9.34.
Arm Holdings plc (ARM), on the other hand, has reported a remarkable price increase of 75.08% overall, marking a bullish trend with acceleration as well. The stock reached a highest price of 181.19 and a lowest price of 67.05. ARM’s standard deviation stands at 24.15, indicating lower volatility compared to AMD. However, in the recent period from September 7, 2025, to November 23, 2025, ARM experienced a price decline of -4.78%, reflecting a neutral trend with a trend slope of 0.39.
In summary, while both companies have shown impressive overall growth, AMD is continuing its bullish trajectory, whereas ARM is experiencing a temporary setback in its recent performance.
Analyst Opinions
Recent recommendations for Advanced Micro Devices, Inc. (AMD) suggest a “Buy” rating from analysts, emphasizing strong performance metrics in return on assets and equity. Conversely, Arm Holdings plc (ARM) has garnered a “Hold” rating, with analysts noting concerns in its price-to-book and price-to-earnings ratios. The consensus for AMD is a strong buy, while ARM is viewed more cautiously. Overall, I recommend closely monitoring both stocks, taking into account their respective strengths and potential risks.
Stock Grades
In the dynamic landscape of stock trading, understanding the latest ratings can provide valuable insights for investors. Here are the most recent stock grades for two key companies.
Advanced Micro Devices, Inc. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Piper Sandler | maintain | Overweight | 2025-11-12 |
| B of A Securities | maintain | Buy | 2025-11-12 |
| Wells Fargo | maintain | Overweight | 2025-11-12 |
| Morgan Stanley | maintain | Equal Weight | 2025-11-12 |
| Wedbush | maintain | Outperform | 2025-11-12 |
| Roth Capital | maintain | Buy | 2025-11-12 |
| Rosenblatt | maintain | Buy | 2025-11-12 |
| Mizuho | maintain | Outperform | 2025-11-12 |
| Evercore ISI Group | maintain | Outperform | 2025-11-12 |
| Wedbush | maintain | Outperform | 2025-11-10 |
Arm Holdings plc American Depositary Shares Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Loop Capital | maintain | Buy | 2025-11-12 |
| Needham | maintain | Hold | 2025-11-06 |
| Wells Fargo | maintain | Overweight | 2025-11-06 |
| Keybanc | maintain | Overweight | 2025-11-06 |
| Benchmark | maintain | Hold | 2025-11-06 |
| UBS | maintain | Buy | 2025-11-06 |
| Mizuho | maintain | Outperform | 2025-11-06 |
| Barclays | maintain | Overweight | 2025-11-06 |
| TD Cowen | maintain | Buy | 2025-11-06 |
| Rosenblatt | maintain | Buy | 2025-11-06 |
Overall, the trend in grades for both Advanced Micro Devices and Arm Holdings reflects a strong consensus among analysts, with many maintaining positive ratings such as “Buy” and “Overweight.” This suggests a favorable outlook for these companies in the near term, making them potentially attractive options for investment.
Target Prices
The consensus target prices for both Advanced Micro Devices, Inc. (AMD) and Arm Holdings plc (ARM) reflect positive expectations from analysts.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| AMD | 380 | 200 | 295.24 |
| ARM | 210 | 190 | 200 |
Analysts expect AMD to reach a consensus price of 295.24, significantly above its current price of 203.78. ARM’s consensus target of 200 also indicates a potential upside from its current price of 131.57.
Strengths and Weaknesses
Below is a comparative analysis of the strengths and weaknesses of Advanced Micro Devices, Inc. (AMD) and Arm Holdings plc (ARM).
| Criterion | AMD | ARM |
|---|---|---|
| Diversification | Moderate | High |
| Profitability | Moderate | High |
| Innovation | High | High |
| Global presence | High | Moderate |
| Market Share | Significant | Growing |
| Debt level | Low | Very Low |
Key takeaways: AMD shows a strong focus on innovation and global presence, though its diversification is moderate. In contrast, ARM excels in profitability and diversification, with minimal debt levels, making it a compelling option for investors.
Risk Analysis
The following table outlines the key risks associated with Advanced Micro Devices, Inc. (AMD) and Arm Holdings plc (ARM) as of the most recent year.
| Metric | AMD | ARM |
|---|---|---|
| Market Risk | High | Moderate |
| Regulatory Risk | Moderate | High |
| Operational Risk | Moderate | Moderate |
| Environmental Risk | Low | Low |
| Geopolitical Risk | High | High |
Both companies face significant market and geopolitical risks, especially given the volatile nature of the semiconductor industry and ongoing global tensions. Regulatory scrutiny, particularly for ARM, could impact operations and profitability.
Which one to choose?
When comparing Advanced Micro Devices, Inc. (AMD) and Arm Holdings plc (ARM), several key factors emerge. AMD demonstrates a robust gross profit margin of 49.35% and a current ratio of 2.62, indicating financial stability. In contrast, ARM shows a higher gross profit margin of 94.86% but with a lower overall rating of B- compared to AMD’s B. While AMD’s stock trend is bullish with a 38.24% price increase, ARM exhibits an impressive 75.08% increase but has recently lost 4.78%. Analysts rate AMD favorably with a score of 3, while ARM has a score of 2.
Investors focusing on long-term growth may prefer AMD due to its solid fundamentals and bullish trend, while those seeking high short-term growth might lean towards ARM, keeping in mind its recent volatility. Both companies face risks, including competitive pressures and market dependence.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Go further
I encourage you to read the complete analyses of Advanced Micro Devices, Inc. and Arm Holdings plc American Depositary Shares to enhance your investment decisions:
